SUSTAINABLE HOTEL DESIGN
2.2 ENERGY AND CO 2 AUDITING
While sustainability in the hospitality industry is an applied approach to en- vironmental, social and economic concerns, the environmental pillar has long been at the center-stage of activities (Sloan, Legrand and Chen, 2012). En- vironmental protection is often perceived in terms of degrees of energy con- sumption and related carbon emissions other areas are however equally impor- tant such as wastewater disposal or solid waste disposal. Continuous energy cost increases has led to improved energy efficiency, which has become the ultimate goal for many hoteliers in regards to investments for greater sustain- ability (Legrand et al., 2012). Before considering individual activities, which aim at mitigating both the use of energy and CO2 emissions, proper auditing must first be conducted (Djassemi, 2012). Olson (2010) states that a clear tendency towards the measurement of different greenhouse gas emissions can be noted which is supported by the development of regulations in different countries. Various regulations such as Australia’s National Greenhouse and Energy Reporting (NGER) Act of 2007 or the Global Warming Solutions Act,
or “AB 32” legislation in California, USA, and policies such the European Union’s (EU) 20–2020 goal which aims in reducing greenhouse gases (GHG) by 20% by 2020 compared to 1990 levels (European Commission, 2012) are all examples of mechanisms acting as a push factors for companies to take up auditing to report energy use and energy conservation performance. Vol- untary auditing of GHGs and CO2 in particular is a trend across all industries including the hospitality industry (Olson, 2010). Energy auditing is seen to play an important role in energy efficiency measures and energy management programs (Krarti, 2011; Thumann, et al., 2009).
2.2.1 TYPES OF ENERGY AUDITS
An energy audit is defined as a process evaluating a building’s energy usage in addition to identifying opportunities to reduce energy consumption (Thu- mann, et al., 2009). In the case of a hotel the audit is completed through a systematic review of energy consuming activities (Sloan, Legrand and Chen, 2012). Three levels of energy audits are commonly used; (1) the walk-through audits (2) the standard audit, and (3) the computer simulation. The level one audit, the walk-through audit entails a tour of a property to visually inspect the systems, which are using energy (Thumann, et al., 2009). The walk-through audit also involves the analysis of energy bills resulting in an estimate of energy efficiency of the business and its processes. The level one audit is the easiest of the three levels but also produces the crudest results. The sec- ond level is the standard audit where energy uses and losses are quantified through a detailed analysis involving engineering calculations and economic analysis of recommended conservation measures (often in form of a Return on Investment analysis or ROI) (Thumann, et al., 2009). The third level audit, the computer simulation, analyzes energy use patterns and produces detailed information on energy use by function to assure that all possible risks are assessed and reliable estimates of performance are given (Thumann, et al., 2009). To keep the approach as organized as possible, the walk-through audit process is often split into three components being the (1) self explanation/pre- site work (2) the site visit, and (3) the post-site work.
2.2.2 INTERNAL AUDITING
The Institute of Internal Auditors (IIA) established guidelines for internal au- dits through its Standards for Professional Practice of Internal Auditing that offers advisory and practical guidance (Cascarino and Van Esch, 2007). The
2002 revised definition of internal auditing by the IIA defines it as “an inde- pendent, objective assurance and consulting activity designed to add value and improve an organization’s operations (helping) an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance pro- cesses (Cascarino and Van Esch, 2007). Contrary to external auditing where external auditors examine conditions common in the industry or local area (Shirvastava, 2003), internal auditing is a neutral and independent assessment within the company (Strich, 1996). The internal auditing process studies the practices and policies of the company giving special relevance to “the review of internal practices, the policy impact assessment and the management audit”
(Shirvastava, 2003). The review of internal practices evaluates the direct im- pact of the organization’s activities. In the case of an environmental audit, the energy efficiency of machines, recycling or disposal of waste or the impact of it’s purchasing. Thereafter the policy impact assessment analyzes the impact of the firm in its role as motivator, regulator, educator, enforcer and enabler (Shirvastava, 2003). Finally, the organizational structures, job descriptions, patterns of their responsibility and communication are evaluated (Shirvastava, 2003). While internal audits generally aim to test and improve the company’s efficiency and effectiveness, the exact scope of such an internal audit is de- cided by the management and can be focused strictly inwardly or be wide enough to include a review of the efficiency of the enterprise’s resource utili- zation (Gupta, 2005).
2.2.3 SELF AUDITING
Self-audits, an abbreviation of self-administered or self conducted audits, are described as “a system for obtaining and verifying audit evidence, objective- ly examining the evidence against audit criteria, and incorporating the audit findings into business planning, for the purpose of continuous improvement”
(Karapetrovic and Willborn, 1984). Self-administered audits are conducted and evaluated by the same person at the same location where it is commonly performed (Legrand, et al., 2012). Environmental self audits are less costly and more accurate than audits performed by regulators (Pfaff and Sanchiri- co, 2004) Self audits carry the following benefits for companies: increased awareness of the environmental impacts of the operation, operational activi- ties requiring permits, waste minimization possibilities, leading to possible cost savings, efficiency and productivity enhancement, improved employee morale and public image (NHDES, 2004).
2.2.4 BENCHMARKING
Benchmarking can be understood as a tool incorporated by businesses to compare and evaluate their performance in relation to other organization with same practices or a similar portfolio and structure (Sloan et al., 2012). The primary objective of benchmarking is a continuous improvement of processes and performance and the establishment of more efficient operational stan- dards (Bohdanowicz and Martinac, 2007). Benchmarking, similar to audits, can be separated into internal, measuring within an organization among the same or different departments and external, the comparison with other either competing (called competitive benchmarking), non-competing (best practice benchmarking) companies or with specific industries (sector benchmarking) (Bohdanowicz, Simanic and Martinac, 2005). While benchmarking provides a relative simple method to compare performance ‘cautions must be practiced when averages are used as benchmark, since individual buildings with exces- sive energy intensity may significantly increase averages, especially when the sample is small. Medians are less sensitive to extremes, but like averages, information conveyed by such a benchmark is rather limited’ (Xuchao, Priya- darsini and Eang, 2010). Despite the word of caution, environmental bench- marking has become an important and accepted management tool already in- corporated in many businesses (Chan, 2012). Environmental Benchmarking is used to achieve a good understanding of the businesses’ current energy use and to decide on the measures, which could or should be taken (Xuchao, Priyadarsini and Eang, 2010). Both the use of energy and the GHGs emis- sions are two very important sections with an environmental benchmarking in hotel organizations (Sloan, Legrand and Chen, 2012; Xuchao, Priyadarsini and Eang, 2010).
2.2.5 BENEFITS, CHALLENGES AND COSTS TO ENERGY AND CO2 AUDITING
Environmental audits and specifically energy and CO2 audits provide hospi- tality organizations with a clear understanding of current energy efficiency and an evaluation to what extent the set goals are met. Additionally, audits help managers to identify the areas in need of improvement. More extensive environmental audits which include the auditing of resources beyond energy such as water use, waste disposal or wastewater output can be beneficial be- cause they enable organizations to detect deviations from environmental leg- islation and provide companies with the possibility to correct such deviations
(Emery and Watson, 2003). A formal audit enables a company in publish- ing and communicating its environmental performance (Emery and Watson, 2003). If sufficient importance is attached to the audit and its implementation is done extensively, it can help to vitalize and advance corporate environmen- tal protection initiatives and can increase diffusion and enhancement of the environmental performance of the organization (Brümmer, 2000). Diffusion in this context means an increasing adherence of the entire organization to its Environmental Management System and a rising of environmental con- sciousness and engagement among all employees (Brümmer, 2000). Finally, according to the American Hotel and Lodging Association (2001), energy management and auditing of performance can lead to various benefits for an organization, such as:
• Reduced cost for electricity,
• Reduced costs for purchased fuel,
• Reduced costs for water,
• Reduced maintenance costs,
• Extended equipment lifetime,
• Improved employee morale,
• Improved awareness of operations,
• Positive environmental image for guests and community, and
• Positive contributions to reducing environmental impacts (American Hotel and Lodging Association, 2001).
Finally, financial investors are increasingly interested in including energy management in their analysis of an organization’s market value (Tunnessen, 2004).
The most apparent disadvantage of energy and CO2 auditing is that it re- quires time, effort and often incurs costs (Hoggart, 2001). According to the American Hotel and Lodging Association (2001), energy management and the consequent auditing of performance can lead to various challenges and costs for an organization, such as:
• Labor costs for historical and diagnostic energy audits,
• Labor costs to achieve initial activities,
• Labor and equipment costs for preventative maintenance,
• Equipment costs to achieve initial activities,
• Costs for auditing and training materials,
• Costs for in-house energy program marketing materials such as flyers, posters, guest room materials, staff buttons and stickers, and
• Incentive program costs to include materials and rewards (American Hotel and Lodging Association, 2001).
Although each hospitality organization must take into consideration the challenges and costs of implementing an energy management program and conducting energy audits, it is important to retain a return on investment ap- proach to decision making. Continuous energy price increases can be offset against the benefits accrued through auditing Energy management and au- diting may be best described by the adage “one needs to spend money to save money.” Hospitality organizations are advised to devise a budget with predetermined funding and a quantification of expenses (American Hotel and Lodging Association, 2001). Additionally, small- and medium-sized hospital- ity organizations and hospitality entrepreneurs may be particularly interested in the use of Free-of charge Online Self-administered Energy Audit (FOSEA) tools that can assist in the challenges of energy auditing and reduce the costs.
2.3 FREE-OF CHARGE ONLINE SELF-ADMINISTERED ENERGY