For a utility that is so crucial to industrial processes, it is remarkable how little attention compressed air gets. The nicknames for compressed air even reflect this: “the hidden utility”, “the invisible utility”, and “the fourth utility.” And yet, compressed air accounts for 5-6% of all the electricity consumed in the world – consumption that is often frighteningly inefficient at the factory level because of poor leak management. Our audits have uncovered cases where clients were consuming up to 50% more energy than would normally be required, all because they had failed to identify and manage compressed air leaks.

Are these clients just negligent? So rich they don’t need to worry about energy bills? Certainly not – they lacked the tools and data to answer three critical questions properly:

• Scope: How many leaks do I have, and how much energy am I losing?
• Location: Where exactly are these leaks happening?
• Effectiveness: Did the leak repairs work, and how much did I save afterward?

One big issue is that “the invisible utility” tends to produce invisible problems. Water leaks will, at least, leave noticeable signs (puddles and water damage); compressed air leaks can’t be seen or heard by the human ear. When gas and water flow is disrupted, pressure levels drop; when compressed air is leaking, the pressure stays the same – the compressor simply burns more energy (and client money) to maintain the same levels.

Too many industrial clients carry on, assuming that their large energy bills are just part of the cost of doing business or with a vague sense that they are losing money and wasting energy, but are not equipped to make the needed fixes.

Learn more about our energy management solutions >>>

Kicking off your leakage identification and management (LIM) campaign

Now, the good news: with the right team and tools, all of this can be addressed quickly and cost-effectively. Lack of visibility and measurement can be resolved with smart sensors and an expert-backed digital management platform.

In fact, in very little time, you can begin and finish a compressed-air optimization project at your site (often called a LIM campaign). This will produce:

• Dramatic improvement in your energy costs
• Better compliance with environmental regulations and ESG reporting
• Indisputable before-and-after data to document savings made

While any time can be a good time for energy management optimization, many clients choose November and December. The reasons for this are quite pragmatic – LIM campaigns are one of the most effective ways to direct end-of-year budget overhang towards a high-results/high-impact outcome. Many clients see LIM as a great opportunity to close out the year in a strong position, with a few quick-turnaround wins in energy efficiency and costs.

The missing ingredients: data, baseline, and before-and-after

A traditional LIM process is undertaken in two phases. First, detection, where a technician follows compressed air lines with an ultrasound detector, locating and tagging leaks that cannot otherwise be heard by the human ear. Fixing is precisely what it sounds like and mostly involves tightening or replacing joints, replacing faulty lines, and repairing or replacing fixtures.

Of course, these steps will always be needed. But the missing ingredient is context – how was each asset performing before the repairs and afterward? It is critical to take the proper time to understand this. Historically, getting this picture would be extremely labor and cost-intensive. Today, though, sensor and digitalization technologies let us enormously expand our monitoring power, with a lighter onsite footprint.

Some key differences in the measurement can be summarized as follows:

Old model	New model
Error-prone	Verifiable
No measurement	Measurement by sensors
Arbitrary performance checks	Continuous monitoring
Indirect: guess by monthly bills	Direct: assess results by data

How we do it: Six steps to compressed-air energy optimization

Let’s dive into the specific steps of compressed air energy optimization.

Step 1: Define energy and business parameters

We always start by understanding your expectations and objectives concerning energy use and health and safety. If you have a stated energy reduction goal, we will help you move toward your objective. We will also take the time to understand your health and safety policies and procedures that will apply on-site when we carry out the detection and repair activities.

Step 2: Identify and register client compressors

This stage establishes the foundation for the continuous monitoring that is vital for understanding and optimizing the energy performance of your compressed air system. We will collect information about the compressors and air systems at your site, including fundamental data such as manufacturer and installation date.

Step 3: Install sensors for continuous monitoring

Before carrying out the LIM, we will install non-intrusive sensors to measure the process data streams for the compressed air system, for example, current, voltage, pressure, and dewpoint. Through machine learning, the data gathered from this initial monitoring will give you a rich picture of the existing performance of your system.

Step 4: Locate leaks

This is the action stage. Our technicians, armed with ultrasound microphones to pick up the sound of leaks undetectable by ear, will detect and tag the leaks and then log them into the register. We expect to detect around 95% of all leaks in your system (and the remaining leaks will be so minor as to be economically insignificant). 

Step 5: Repair leaks

We will then repair each leak as required, by tightening, repairing, or replacing fixtures, connections, and lines, then we will remove the tags and record the work as complete in the register. This step is where the big gains in energy efficiency happen – and we will give you the hard numbers quantifying this improvement in Step 6.

Step 6: Final monitoring

This is the game changer. Once we have repaired the leaks, this final phase of data collection helps us to understand and quantify for you the improvements in the compressed air system that have occurred as a result of the repairs. We will compare this data to that collected in Step 3 to calculate the energy savings that you will have gained. We will also use the data to help you improve your understanding of the optimal energy performance of the system free of leaks. We may also be able to develop recommendations in areas such as operational management to provide further energy optimization.

A fast route to energy savings              

If you are looking for a fast, easy win for energy savings at your site, don’t neglect your compressed air systems. It might be “just air,” but the size and speed of the savings are often quite remarkable. Compressed air leak management will help you see the value by optimizing the performance of your systems. It will give you the “why?” that is missing from the way most managers view compressed air maintenance.

Our solution gives you:

• A project with measurable returns completed in a short timeframe
• Hard data for sustainability or ESG reporting and compliance requirements
• Most importantly, a compressed air system that is working at peak efficiency

Achieving a low-carbon energy infrastructure is a top priority for many countries to combat climate change or reduce pollutants that harm air quality and local ecology. Growing demand for low-carbon development will drive up the construction rate of renewable energy resources and lead to more comprehensive carbon emissions policies. In China, where energy demand is still growing, the primary balancing act is how to transform energy infrastructure to have a smaller carbon footprint without suppressing energy demand.

The key has been to act quickly to build renewable energy capacity and make policy decisions that encourage the development of decentralized renewable energy infrastructure. Although this is a challenge, it is also an opportunity in the Chinese market. Developing renewables helps to decarbonize the grid and brings new employment opportunities and a refreshed momentum for economic development and social transformation.

For China to achieve its “dual carbon” goals of peak emissions by 2030 and carbon neutrality by 2060, the renewable energy industry, driven by developments in wind and solar power, boasts huge potential to achieve these goals while also boosting the economy and ecological recovery.

Wind & solar power

China’s push for decarbonization will involve a broader approach that includes the build-out of nuclear energy, hydroelectric, and ultra-high voltage transmission lines. However, the bedrock of its energy transformation is wind and solar power. Wind and solar power installations can be built quicker and decentralized. Decentralized renewable energy is when businesses (or individuals) install renewable power generation directly on their property, which can in turn power their buildings. If those assets produce enough power, they can even sell the excess energy back to the grid. Both centralized and decentralized renewable energy play a role in pushing towards a low-carbon future.

Wind Power

China’s onshore wind energy resources are unevenly distributed. Currently, wind farms are mainly located in Northern China, in areas that are sparsely populated and do not have significant local demand. But in economically developed regions, such as the eastern and southern regions, which account for more than 70% of electricity demand, wind energy resources are scarce.

Furthermore, the geographic requirements for wind turbines to be most effective makes it difficult to achieve wide decentralization.

Solar power

Every year, the cost of producing solar panels decreases. Today, the price of solar panels is even more competitive with coal and natural gas. At the same time, the development of new technologies and materials is constantly improving the efficiency of photovoltaic conversion. Furthermore, China’s photovoltaic industry has a full capacity up and down the entire industrial chain from upstream high-purity crystalline silicon and midstream high-efficiency solar cell production to the construction and operation of photovoltaic power plants. The Chinese solar panel market already has a well-developed value chain as well, including key intellectual property rights.

Solar energy is also a much more flexible source of green power, with application scenarios including large, centralized power stations, commercial or industrial rooftops, or off-grid power for people in remote areas. Providing reliable solar electricity does face a few challenges – namely instability due to weather and cloud cover. However, there are already a variety of solutions in existence or development, such as energy storage, solar thermal power plants, and intelligent photovoltaic generators.

Bolstering public works with policy

While the industrial capability to build out renewable infrastructure is a major part of reaching a low-carbon grid, it is not the only tool in the arsenal. Pushing businesses to take responsibility for their contributions to emissions is also a core part of the decarbonization strategy.

Last year, the National Energy Administration announced a list of pilot zones for county-wide solar panel roof installations, involving 676 counties and cities. In 2021, China’s new PV installation reached 53GW of capacity, generating 29GW, accounting for about 55% of new energy generation in the country, which for the first time accounted for more than half of the new generation.

On April 1 this year, China rolled out its first mandatory code for carbon emissions in buildings, the General Code for Energy Efficiency and Renewable Energy Use in Buildings, which sets higher requirements for the use of renewable energy, and new building complexes and buildings must also contain planned usage of renewable energy. The code requires new buildings to install solar energy systems and establishes detailed requirements, including the minimum lifespan for solar thermal collection systems (15 years), and photovoltaic modules in solar photovoltaic power systems (25 years).

Solar energy & ecological restoration

In the context of economic development, Chinese officials often evoke a deep concern for nature as well: “lucid waters and lush mountains are invaluable assets.” This means that the overarching approach to promoting energy transformation and improving energy structure is not only to stimulate rapid economic and social development but also undertaken to protect the environment and hurry the repair of the ecology that has been damaged.

In recent years, China has taken an initiative to revitalize the environment around abandoned mines, attempting to restore the immediate areas around the old mine through ecological restoration, land reclamation, landscape preservation and reconstruction, reuse of abandoned mines, and construction of national mine parks. These sites are also being used to construct solar power installations – turning a once desolate area into a generator of clean energy.

The construction of solar power plants on some abandoned mines makes full use of the deserted mine sites. Many of the largest mining areas suffer from soil erosion and desertification, as well as damage to vegetation. Photovoltaic power plants, when installed in these areas, can promote soil restoration, prevent further soil erosion, and restore local ecological damage to improve ecosystem functions.

Meanwhile, photovoltaic projects can also be integrated with agriculture, fisheries, tourism, and other sectors to achieve cross-industry development. In Datian, Fujian Province, there is a “terraced field” created by solar panels installed on a former agricultural site. In Houshe coalmine in Shangjiang, a similar project was undertaken to reuse abandoned fields, warehouses, courts, coal platforms, sheds and other lands.

Transforming areas in a state of disuse into a new generator of renewable energy revives abandoned work sites without needing to develop a separate, untouched plot of land.

Decarbonization is not a choice

China has committed repeatedly to its “dual carbon” goals of peak carbon and carbon neutrality and encouraged the use of renewable energy as the method to achieve them. For many reasons, wind and solar are the foundation of this infrastructure due to improving cost, efficiency, and flexibility in installation. Over the past year, we’ve seen a continuous rollout of policies pushing both public and private actors to reduce carbon emissions with solar panels – and those are unlikely to slow down. Aligning with the national interest of decarbonization and ecological restoration is now less of a choice, and closer to being law of the land.

Overview

• New regulations on low-carbon buildings set to take effect in April 2022
• New and existing projects will be required to submit full energy audits
• New buildings are required to utilize solar and improve renewable energy mix
• Continual improvement targets are expected
• Ambitious Residential and industrial targets for energy savings are set

Background In 2020, China made the pledge to reach carbon neutrality by 2060, as well as peak carbon emissions by 2030. These promises were reaffirmed with the 14th Five-Year Plan release in 2021. Since then, there have been several policies that have come into effect, starting with a national carbon trading scheme.

Last October, the Ministry of Housing and Urban-Rural Development issued a new regulation, the General Code for Building Energy Conservation and Renewable Energy Utilization, which goes into effect on April 1, 2022. This is the first mandatory regulation for carbon emissions from buildings and construction, and its scope is wide—including existing buildings, new buildings, construction commissioning and approval, renewable energy systems, as well as buildings operations.

Why now?

The construction industry in China accounts for more than half of the total carbon emissions nationwide. In order to meet the country’s ambitious carbon reduction targets, this policy is one in a line of many that will come into effect over the coming years. The new General Code will require stringent energy savings in residential, industrial, and in new building construction.

Shoring up and improving existing standards

This regulation is intended to solve multiple issues in the existing green regulatory framework, introducing mandatory policies around green buildings, including for the first time a clear mandatory standard for carbon emission intensity, which solves the problem of no clear quantitative index requirements for building carbon emissions in the past.

Residential area buildings will be required to have average energy savings of 75% in cold and extremely cold areas, and other climate zones will be expected to have an average energy savings of 65%. These numbers are pegged to energy consumption levels in 1980-1981.

Industrial targets will be increased by 20% as well.

Energy audits to set a baseline for emissions reduction

First and foremost it means a new layer of planning and forecasting energy consumption in line with international standards. In order to meet reduction goals and hit the national “3060” goal of peak carbon by 2030 and carbon neutrality by 2060, a baseline must be established in order for reductions to be made verifiably.

In addition to a full energy audit, renewable energy usage and carbon emissions reports will have to be submitted as well. Lifecycle emissions will have to be calculated based on projected energy use and energy type for both new and existing buildings. At every level of the building’s lifecycle, from surveying and design to live management to demolition, energy usage reports will have to be calculated and submitted. These will have to be approved according to the specifications within the law.

Energy calculations for new buildings will have to be calculated across 3 distinct levels:

Direct emissions

This will include the direct hydrocarbon fuel usage of the building’s operation. Cooking, steam, and any other direct usage of hydrocarbon fuel in regular operations are all included.

Indirect emissions

This includes consumption of grid electricity for heating and general operation. This is the primary source of emissions for a building during operations. Direct and indirect emissions combined represent the total emissions of a building’s operations.

Embodied emissions

These are the emissions involved in the design, construction and materials of the building—estimated to represent about 20% of a building’s lifetime emissions cost. New construction is encouraged to use low carbon construction methods and materials where possible in order to continually produce more energy savings.

Improving the energy mix

In addition to focusing on the reduction of energy use through design, construction, and operation, businesses and building owners will need to improve efforts to source power through clean energy sources.

Currently most energy in operations is generated using fossil fuels, such as coal or natural gas. On average, the proportion of renewable energy used is only about 6%. Audits will require the determination of carbon emissions based on the carbon emission factor of different energy types including coal, natural gas, etc. in order to encourage use of renewables.

New buildings will also be required to implement solar energy via photovoltaic panels and submit the total energy generation. This drive towards renewable energy will be met in design goals including an increase in the use of natural lighting, insulation, air thermal energy, biomass fuel sources, and geothermal power where appropriate.

Reductions in emissions through retrofits and smarter management

The scope of this policy applies to more than just new buildings and standing ones. It’s regulations will also extend to retrofits, renovations, and feasibility studies. Each of these processes will need to at the least match baselines, but reducing carbon will be heavily encouraged. Any increase from current levels of emissions will be forbidden.

There are many ways to reduce a building’s overall emissions profile in operations. Reducing direct electricity or fuel consumption, retrofitting utility assets like HVAC and compressed air to improve energy efficiency, using building or operational materials that are recycled or recyclable.

For buildings where retrofits prove to be too difficult or costly to implement, building standards for any future renovations will have to meet their current energy savings standards.

Building managers will have to think proactively and deeply about meeting emissions reductions targets and make changes wherever possible. To make serious carbon reductions will require partnership with energy and environmental management firms and technical asset management vendors. Building management will need to become smarter and more digitalized using software like digital twin building platforms. Daily facility operations can also benefit by sourcing facility management providers who are experienced in reducing carbon impact through sustainability best practices.

Stronger standards, greener buildings

Since the outlay of China’s 14th Five-Year Plan, it is clear that green buildings will be a major focus going forward. Policies will grow increasingly broad and granular, reaching across sectors and industries, and even into consumer goods and the promotion of new energy efficient standards for items such as lights, doors and windows.

In the past decade, there have been many successful green buildings seen in China, but there are also many projects embarked on with little regard for the new standards of green buildings—for various reasons such as shortcomings in the planning stage, lack of expertise, or lack of know-how during the construction process. Although compliance with green building standards and regulations represent a higher initial cost, over time the social benefits and total cost reductions in operations from green buildings will be worth it.

On July 16, China’s national carbon emission trading market opened. More than 2,000 power sector enterprises—accounting for more than 40% of the country’s carbon emissions—entered the market as the first batch of trading entities. On the first day, the average transaction price was 51.23 RMB / ton, the turnover volume was 4.104 million tons and the business volume exceeded 210 million RMB.

So what is carbon trading? Why the need to establish a nationwide unified carbon-trading market? How will this market affect enterprises with carbon emission demands? Here is what you need to know.

What is carbon trading?

Carbon trading, also known as carbon emission allowance (CEA) trading is a market-based mechanism in which carbon dioxide emission allowances are traded as commodities. The carbon market does not actually buy and sell CO2. What it trades are quotas, or allowances, for energy enterprises, industrial plants or other buildings to emit a certain amount of CO2. If a site or building reaches its emissions cap, it must purchase more emissions allowances as a price per ton of CO2 (tCO2) from the carbon trading market. This is also known as a cap-and-trade system.

Before trading, the government will determine the required total amount of local emissions reduction and supply market entities such as enterprises with a quota of allowances based on that figure. If an enterprise emits more than its allowed quota, it has to buy allowances from the market. On the other hand, if a company’s actual carbon emissions total less than the quota, the remaining quota can be sold in the market. This way the enterprises which perform better in terms of greenhouse gas emissions generate a value.

Why the need to establish a nationwide unified carbon market?

China has already proposed the national initiative to reach peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060. Both initiatives were reinforced at the Two Sessions earlier this year when the politburo announced the contents of the new five-year plan. Establishing and gradually improving the national carbon market is one of the core policy tools to achieve these goals.

China’s national carbon market breaks geographical and technology constraints and enables carbon abatement to be produced wherever it is more efficient and cheap, which is expected to significantly reduce the cost of reducing total emissions. The first batch of enterprises included in the national carbon market emits more than 4 billion tons of carbon dioxide, which means that China’s carbon trading market will become the largest carbon emissions trading market in the world.

Who can participate in carbon market trading?

At present, the market is in the initial stage, with 2,225 power generation enterprises taking the lead in trading. However, it is predicted that as the market improves and matures, more industries, industrial and commercial enterprises will enter into the emissions trading market.

The Ministry of Ecology and Environment of the People’s Republic of China has already carried out carbon emission data reporting and verification for enterprises in related industries. In addition to the power generation industry, the report also covers building materials, nonferrous metals, steel, petrochemical, chemical, papermaking, aviation, etc. In the future, with the expansion of the carbon market, enterprises’ demand for energy conservation and emission reduction will continue to increase, thus they will be more inclined to use clean energy and low-carbon energy.

Meanwhile, companies currently not involved in the carbon market can take steps to get their total emissions and carbon impact under control. There are a variety of energy management solutions that can relatively quickly shave off total greenhouse gas contributions such as HVAC optimization and compressed air leak management.

How can companies adapt to the new carbon market?

The best bet for companies who need a quick transition to low carbon operations is to find a strategic partner. A good energy partner can identify exactly where your operations have the highest carbon impact and help reduce it without affecting your bottom line. There are even options to do so with zero CAPEX needed. One of those methods is to collaborate with an ESCO or Energy Service Company that can take over energy management and retrofits, but there can be downsides especially when it comes to discrepancies over transparency. That’s one of the reasons Aden created Aden Energies, which uses Akila—an AI+IoT platform—to track those metrics for total transparency and use machine learning to optimize energy efficiency and reliability.

Moving towards a zero-carbon future

Total carbon emission controls benefit the whole society. However, some companies will face many challenges such as regulatory compliance, cost reduction and efficiency improvement. Nevertheless, businesses still need to keep up with the quick pace of change and respond positively. Finding a solid energy partner can help move your business in the right direction no matter which stages your business is at regarding energy efficiency management or sustainable development. With the opening of the carbon trading market and the national 2030 and 2060 initiatives, there is no better time to start than right now.

HVAC is the whole system of space heating, cooling and ventilation, commonly known as air conditioning. HVAC has conquered the built environment since its invention at the turn of the 20th century. In Asia, space heating and cooling have seen most of its growth in just the past 20 years. Much of this is due to economic growth in the region. Workforces in China and Southeast Asia are becoming more educated and moving toward white-collar office work. These workers expect a certain level of comfort in their working environments, leading toward full-time space cooling in offices.

By the end of this decade, 95% of non-residential building space in China is projected to be cooled. The growing demand for air conditioning is creating enormous costs for businesses and taking a huge toll on the environment through emissions.

HVAC energy impact

Space cooling and heating have a significant carbon footprint, and the numbers are striking. Currently, buildings account for nearly 25% of all primary energy use and emissions in China and ASEAN. That number is projected to reach 35% by 2030. Of those emissions, over 40% are generated by commercial and industrial HVAC.

Historically, electricity costs in Asia have been comparatively low, and there have been fewer regulations regarding emissions. However, that is changing. At the same time, workers are now considering factors such as carbon footprints when they look for employers. In turn, many tenants are looking for more efficiently managed buildings.

Even if building owners weren’t motivated by sustainability (although many now are), there are pressures that they now cannot ignore. Governments in Asia are increasingly rolling out regulations that penalize companies for their carbon impact. For example, China’s recent 2030 and 2060 initiatives to reach peak emissions and carbon neutrality, respectively.

At the same time, building owners are facing a growing amount of pressure from tenants who demand energy and environmental plans. In a recent survey by the Building Owners and Managers Association (BOMA) China, 68% of companies consider energy and environment management as “very important,” while another 31% said it was “somewhat important.”

There is also pressure on businesses and buildings from investors demanding lower carbon operations. ESG investing is growing in popularity in Asia. To continue attracting investment, companies and building managers will need not only to reduce carbon footprints—they will need to do so in a documented and transparent way.

Despite the pressure from cost and growing regulation, many companies are currently struggling to find a path toward energy efficiency. Today, somewhere around 80% of industrial and commercial buildings aren’t doing anything to optimize HVAC usage and pay the price. Industrial and commercial buildings will need to take serious action to remain competitive and compliant in the future.

That is why companies are increasingly turning to technologically driven solutions for efficiency.

What causes HVAC inefficiency?

There are two primary causes of HVAC inefficiency: technical causes and human causes. Technical causes include:

• Delayed response time between thermostats and sensors, leads to overproduction of chilled air.
• Lack of technical setup to track factors such as room occupancy and external weather conditions.

Human causes can include:

• Lack of understanding of how HVAC systems work and where they are wasteful.
• Inattention – for instance, employees forget to turn off the AC after work or meetings, leading to energy wasted cooling an empty space.
• Occupants changing the temperature, which puts added strain on the chillers and boilers.

Optimizing HVAC systems solves both of these problems. It gives building managers a way to maintain comfortable conditions for occupants while reducing both costs and environmental impact. The best part is the first phase only takes as little as one month without interfering with daily operations.

How does HVAC energy efficiency optimization work?

HVAC optimization is a solution that integrates AI, IoT and other technologies with human expertise to create smart and responsive environmental controls. The first step is to work with a team of experts who can audit your current system and set up a baseline by which to measure results. Then, the engineers get to work installing IoT sensors inside and outside the building. The sensors will collect data – such as room occupancy and weather conditions – and send it to a digitalized management platform in real-time. Finally, the platform uses AI logic (or machine learning) to take control of installed HVAC assets such as chillers and fans, automating some or most degrees of their functioning, based on real-time IoT data.

One critical point in HVAC optimization is knowing what to look for. Many companies have fallen into the trap of collecting too much data without a well-defined focus, resulting in an unusable data swamp. Knowing what to exclude is probably as important as knowing what to include. This is where it is critical to carefully set parameters and work closely with energy and data experts to ensure your system is properly set up to deliver actionable information.

At this stage, the full power of the smart HVAC system starts to show results. The system becomes even more intelligent through usage, adapting and optimizing from the growing pool of historical data it has collected. The system gathers information from day to day, month to month and across seasons. The electricity used over time is known as the load curve. With this data, the system can do more than just react more quickly; it can predict and preemptively optimize HVAC usage.

After this setup, businesses can expect to see an average of 17% in energy savings. However, companies and building managers looking for even higher savings and efficiency have a further opportunity to do so.

HVAC efficiency upgrades

One advantage of HVAC optimization (or a light retrofit) is that it can be performed quickly on existing equipment. But, after initial optimization, there may come a time when it becomes more cost-effective to upgrade. Using the load curve data generated from the smart HVAC system, engineers can put their expertise to work planning an HVAC upgrade (or a deep retrofit). They can recommend the ideal low carbon assets or equipment, such as chillers, air/ground source heat pumps, cooling storage and beyond.

Furthermore, the precise data gathered from the smart HVAC system removes all guesswork. Engineers use the data to see precisely how performance would change by replacing a piece of equipment. They can even use the data to plan the right moment to go in and replace equipment with minimal interference to building operations.

Businesses that upgrade HVAC systems this way can see extraordinary results. Compounded numbers between the smart system and asset upgrades can easily reach a 40% reduction in energy use from the baseline by integrating super low-carbon equipment.

If HVAC optimization is so great, why don’t more companies do it?

Recent research shows that while the industrial sector takes energy management seriously, buildings only accounted for 18% of energy management contracts (EMC) from 2011-2016. Part of the reason is that there are greater potential energy savings in the industrial sector, while another factor is budget. Many building or site managers may not have the up-front capital to pay for optimization or upgrades, even if it is costing them down the line.

However, that situation is likely to change soon. Recently, there has been higher support for subsidy policies favoring buildings. Secondly, financing methods such as EMCs or financing-plus-operation contracts such as Energy as a Service (EaaS) are becoming more familiar in the market. As China’s building owners become more educated about the value of these solutions, more and more will choose to optimize.

HVAC energy efficiency optimization in summary

Asia’s energy market is changing rapidly as economies develop. Buildings are using more and more energy to cool and heat their space, leading to growing emissions and costs. Simultaneously, there is pressure from the government and stakeholders in reducing carbon footprints and increasing energy efficiency. As heating and cooling account for nearly half of a building’s energy use, HVAC optimization is a great place to start cutting costs and carbon. Today that process can be done without any significant interruption of operations.

More than ever, there are a variety of ways to finance those projects and even include long-term operations inside a single contract. As the market becomes more aware of these solutions, HVAC optimization will only gain in popularity as an answer to growing financial and regulatory pressures.

One of the big agendas at this year’s Two Sessions meetings (两会 lianghui), which laid out the economic development plan for the next five years, was green energy and CO2 emissions reduction. The two primary environmental goals for 2025 are reducing energy consumption by 13.5% and CO2 emissions by 18% per unit of GDP. According to Chinese experts, hitting these targets puts the country on track to reach peak emissions in 2030 and carbon-neutrality by 2060, both of which are major commitments made by the government last year.

Although the meeting did not outline specific policy implementation, there has already been some development earlier in the year with the launch of a national Emissions Trading Scheme (ETS) and carbon trading market. A long-expected emissions cap was notably absent from the plan, but that does not mean it won’t come sometime in the future. When it does, it will surely affect industrial and commercial businesses, which right now account for nearly 30% of all energy use.

All eyes on 2025: preparing for bottom-up policy roll-outs

The coming five years will most likely look similar to the last five, where provinces and cities in China were allowed to take different approaches to meet the national targets. Over the previous five-year period, this bottom-up arrangement resulted in some steadily implemented plans and other drastic actions taken by provinces to reach their goals. Businesses should prepare for similar plans and actions over the next five years. In fact, some major businesses, such as Ant Financial, are taking steps to prepare already.

Although there is still some level of the unknown, businesses and buildings are not without options to ready themselves. Facility managers and property owners can take action to prepare for whatever policies come down the pipeline.

Several ways they can do this are:

• Using digital tools to better manage and monitor energy and utilities
• Upgrading assets to more efficient models
• Building on-site renewable power sources and storage batteries

Getting a head start to make industrial and commercial sites more sustainable is an investment even without policy pressure. ROIs typically come within the first few years of operations, and can even come within the first year with a CapEx-free Energy as a Service plan (EaaS).

Even if the Two Sessions concluded without a concrete policy rollout, the current trend in China is towards more ecologically conscious and sustainable economic development. Last year in particular made this trend obvious at the national level, and it is continuing to grow at the investor and consumer levels. Over the next five years, bottom-up pressure may prove an even more powerful force than top-down pressure. The overall message is clear: businesses that are not making plans to reduce their emissions and operate in more transparent and sustainable ways are doing so at their own risk.

This post originally appeared on Aden Energies