Sustainability > EHS > 2006 Environmental Performance

Energy Usage and Cost Management

While energy conservation benefits the environment, it also makes good business sense; energy is among Baxter's most costly manufacturing inputs. Since 2002, Baxter's energy costs have increased more than 10 percent per year while company energy usage has remained essentially flat. This trend is due to sharply increasing energy prices, especially for oil and natural gas.

In response, Baxter has strengthened its energy management program. The company hired a director of energy management in 2005 to enhance long-term strategic energy planning and coordinate energy conservation activities.

In 2006, a team led by the director of energy management developed an energy management strategy that includes the following tactics: increasing the number of facility energy reviews, expanding the use of utility invoice payment services that ensure accurate invoices and rate schedules, and promoting best practices across the company.

Baxter's Manufacturing Council sponsors the company's energy management activities, which are part of an integrated energy-conservation and cost-reduction initiative. The following groups participate:

GROUP	ENERGY MANAGEMENT ACTIVITIES
Facilities Engineering Services	Develops energy conservation and cost-reduction strategies Manages global energy-conservation programs Tracks quarterly facility energy usage and costs Monitors global energy trends Coordinates companywide technical resources and training
Environment, Health and Safety	Tracks and reports energy-related greenhouse gas (GHG) emissions Ensures forward-looking environmental views are considered in energy management initiatives, GHG-reduction efforts and company policies
Purchasing and Supplier Management	Seeks cost-competitive energy sources Manages natural gas purchasing for multiple U.S. Baxter locations
Energy Managers at Major Facilities/Sites	Implement energy conservation and cost-reduction strategy Coordinate energy conservation activities Set annual facility energy usage goals Identify and implement energy-conservation projects Track energy efficiency performance

Baxter Facilities Engineering Services Global Energy Conference

Baxter Facilities Engineering Services hosted its biannual global energy conference for Baxter facility energy managers in November 2006. Agenda items included best practices sharing, technical training on specific topics, site visits to award-winning manufacturing plants and individual employee awards. At the end of the conference, as usual, each facility identified and committed to implement three energy projects during 2007-2008. Facilities plan to report results at the next conference in 2008.

Performance

From 2005 to 2006, energy consumption at Baxter remained flat while the company improved overall energy efficiency (energy usage/revenue) by 5 percent. This puts the company on-track to meet its 2010 goal to reduce energy usage by 20 percent per million dollars of sales.

In 2006, energy management initiatives achieved combined global savings and cost avoidance of approximately $6 million, compared to $9.3 million in 2005. Energy costs did not increase as significantly in 2006 as in 2005, which resulted in a smaller cost-avoidance value for 2006 (see Environmental Financial Statement for detail).

Energy efficiency improvements in 2006 are due to more systematic implementation of energy conservation projects. About every three years, Baxter reviews the primary utility systems at each manufacturing facility and large office, covering steam generation and distribution; water usage; electricity distribution; compressed air consumption; and heating, ventilating and air conditioning. In the past, the energy management program lacked a mechanism to ensure completion of projects identified through these reviews. In response, in 2006, Facilities Engineering Services began providing quarterly updates to the Manufacturing Council on identified projects.

Facility-based energy-conservation projects in 2006 included the following:

Memphis, Tennessee – A lighting upgrade project at this Baxter replenishment center reduced electricity consumption by more than 50 percent and saved approximately $140,000 per year.
Mountain Home, Arkansas – Use of an online water chiller¹ monitoring system at this Baxter facility helped optimize chiller utilization and has reduced chiller operating costs by nearly $10,000 per year. Baxter anticipates similar savings opportunities at many other manufacturing facilities.
Jayuya, Puerto Rico – Heat and water recovery from the product sterilization process at this Baxter facility reduced energy consumption for steam generation by 1,250 gigajoules, recovered approximately 47 million liters of water and saved approximately $170,000 per year.

¹A chiller is a machine that removes heat from a liquid using a vapor-compression or absorption refrigeration cycle.

ENERGY USAGE AND GREENHOUSE GAS EMISSIONS

View full document (pdf)

Energy Management in Baxter BioScience

Baxter's BioScience business unit, which launched its own energy-reduction program in 2005 to augment that of Facilities Engineering Services, expanded its program in 2006 with the following activities:

Held monthly meetings with site representatives to share best practices;
Tracked and benchmarked site energy usage and reduction projects; and
Added an energy-conservation training module to each site's required new-hire orientation training

Although BioScience manufacturing facilities increased absolute energy usage by 1 percent in 2006, usage per unit revenue decreased by 9 percent. This reduction was due to increased efficiency at higher production volume, the commencement of approximately 30 energy efficiency projects across the business unit and increased employee awareness through training and other efforts. For 2007, BioScience has goals to reduce absolute energy use by 1 percent and normalized energy use by 3 percent, compared to 2006.