Progress

ecomagination Report 2011

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Overview

Mark L. Vachon
Vice President, ecomagination
signature_Mark
vachon
immelt
Jeffrey R. Immelt
Chairman of the Board &
Chief Executive Officer, GE
signature_Jeff

As a business strategy, ecomagination has been a great success. It has helped us become more accountable, get closer to our customers and focus and prioritize our investments — to make sure we’re working on things that are both economically and environmentally smart. The ecomagination portfolio includes more than 140 products and solutions. We have generated more than $105 billion in revenue to date,

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Mark L. Vachon
Vice President, ecomagination
signature_Mark
vachon
immelt
Jeffrey R. Immelt
Chairman of the Board &
Chief Executive Officer, GE
signature_Jeff

To our investors, customers and other stakeholders:

At GE, we believe that innovation can solve the world’s toughest challenges. That belief motivates our people. It is why GE works. It is the basis for ecomagination.

As a business strategy, ecomagination has been a great success. It has helped us become more accountable, get closer to our customers and focus and prioritize our investments — to make sure we’re working on things that are both economically and environmentally smart. The ecomagination portfolio includes more than 140 products and solutions. We have generated more than $105 billion in revenue to date, exceeding our ecomagination growth targets and growing at a faster rate than the rest of GE.

But ecomagination itself is sustainable only because we understand that a lot has changed since we launched the strategy back in 2005. Growing populations, resource scarcity and a volatile economy have all led to new pressures. Whether they are countries, municipalities, companies or individual consumers, our customers put a premium on productivity. They all require solutions that emphasize efficiency. It is the only way to compete.

Put another way, clean energy may go in and out of favor with policy makers. In some parts of the world we operate in a tailwind and in others we face a headwind. But our customers all want the same thing. They want to make their operations more efficient and productive. So our answer is action.

Today, almost eight years after launching ecomagination by declaring “green is green,” we are focusing on growth and offering targeted, measurable and game-changing solutions. Taking into account not just our own internal operations but our entire value chain, we are working to maximize resources and improve performance and total impact. We are as committed as ever to renewables and, in fact, we just celebrated 10 years of advancing wind energy. In that time, GE Wind has generated $30 billion in revenues. By the end of this year, we expect nearly 20,000 wind turbines as part of our installed base.

But, recognizing that our world is 80 percent hydrocarbon-based, we are also hard at work at coal mines, from Pennsylvania to Peru, developing water solutions that allow customers to operate productively while achieving high environmental standards. We are working with our customers in China to tap into the world’s largest technically recoverable shale gas reserve. Solving tough problems for customers outside the traditional “green” space is also what ecomagination is about.

So is continuing to invest in advanced technology. From 2010 to 2015, we will have invested $10 billion in R&D. We see the product of that commitment to innovation in software and data solutions like the RailEdge Movement Planner, which by increasing average train velocity provides customers with diesel fuel savings of 37 million gallons per year. We see it in the FlexEfficiency 50 Combined Cycle Power Plant, which uses the latest in gas turbine technology to provide cleaner, more efficient energy onto the power grid and into people’s homes. And we see it in our commitment to electric vehicles (EVs). Last year, we committed to deploying 25,000 EVs in our own fleet. But more than that, we are building an entire infrastructure for alternative fuel vehicles. A vehicle fleet operator that uses GE’s CNG In A Box™ for natural gas fueling instead of traditional gasoline fueling can save about 40 percent in fuel costs — more than $1,500 per vehicle annually. Our Alternative Vehicle Innovation Center allows us to share alternative-fuel vehicle technologies and solutions with our customers, helping create demand that will put more of these vehicles on the road.

With a global customer base as diverse as ours, the resource efficiency that our ecomagination portfolio delivers takes many, game-changing forms.

We will continue to tackle the world’s toughest challenges both at GE’s businesses and in our Global Research Centers in Niskayuna, Beijing, Bangalore and Munich, and soon in Rio de Janeiro. But we also realize, of course, that GE can’t take on all of this alone.

In 2011, we formed new partnerships and engaged in important dialogues globally in places like Australia and China. We also opened GE to outside innovation through the ecomagination Challenge. Collaborating with venture capital firms, we invested more than $130 million in 22 companies to help bring exciting new energy technologies to life. One of our winners builds prefabricated buildings that are highly efficient and quick to assemble. Another reduces electricity consumption in data centers. All have the potential to transform markets and radically increase resource efficiency. And that is why we are so committed to connecting the best ideas with GE’s global scale and our unmatched ability to accelerate the commercialization of these products.

Innovation is a value proposition at GE. When you add it to our scale and expertise, and when you apply it with laserlike focus to global challenges like resource efficiency, it becomes even more valuable for our customers and communities. That’s what ecomagination is all about.

Last year, we raised the bar. We produced great products, and our revenue increased. We established more of a global presence while remaining a very local partner for our customers. We further solidified our position as leader in traditional clean-tech areas like EVs and renewables. But we also brought ecomagination to resource-intensive industries like oil and gas production and mining. The world in which we operate has changed dramatically. Ecomagination allows GE and our customers to be ready. It prepares us to compete and win.

We are only getting started.

We are fully committed to doing not only what GE can, but what only GE can. Ecomagination works to deliver value to our customers and investors by ensuring that GE builds, powers, moves and cures the world in the efficient and productive ways our future demands.

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29%
reduction in GHG emmissions

Reduce
GHG emissions
and energy use

13.5%
reduction in water use since 2010

Reduce water use

$2.3B
invested in R&D

Pledge to double our investment in R&D

$21B
in revenues in 2011

Increase revenues from ecomagination products

engaged
communities in collaborative ideation

Keep the public informed

Ecomagination Progress on Our Commitments:

energy-mgmt-data-circles

Reducing GHG Emissions and Energy Use

A cross-functional approach to energy management allows GE to focus on optimizing energy use and fulfilling our compliance obligations across our global operations.

Experts from the operations, finance, environmental, sourcing and legal organizations, and from GE’s Global Research Center, join forces on our cross-functional team.

We use a variety of strategies: operational footprint reductions, new technology, utilities sourcing, and innovative financing. The team also focuses on compliance strategies for reporting GHG emissions in various jurisdictions, including the U.S. EPA’s reporting requirements and the EU Emissions Trading Scheme.

This cross-functional approach is a very effective mechanism for driving various aspects of energy use reduction into GE’s operations.

energy-mgmt-data-circles

Reducing GHG Emissions and Energy Use

Opportunities to optimize energy use come from a range of sources. Since 2005, we have completed more than 200 Treasure Hunts in our global manufacturing and service facilities. Leveraging lessons from Toyota and other leaders in energy management, we have trained more than 6,000 employees to identify and quantify opportunities for energy use reduction. Over a three-day period, employees compile an itemized list of opportunities that include energy and GHG reduction benefits, cost savings and return on investment. Leaders in the local operations use these lists to implement projects that save costs and reduce energy use. Using employees, aligned with experts from GE’s Global Research Center, sales teams from our technology offerings, and external support personnel, also helps to drive awareness and a change in energy use culture.

One of GE’s largest businesses is piloting an employee-engagement program called “Ecomagination Nation.” The program encourages employees to volunteer for training as “ecomagination ambassadors.” These individuals, from various functions and from around the globe, lead teams to identify and implement site-based projects derived from grass-roots efforts. Ecomagination Nation uses online collaboration and training to equip these self-designated ambassadors to drive projects and provides recognition for their meaningful contributions to optimize energy use and reduce operational cost. Several other GE businesses also use versions of this approach.

energy-mgmt-data-tables

Reducing GHG Emissions and Energy Use

In 2012, GE is piloting the implementation of an energy management system that specifies organizational and technical aspects of energy use for its operations. This framework, leveraged from our experience in driving EHS operational excellence, engages employees, sets performance specifications in 14 types of energy-using equipment and processes, and measures implementation of the system. In keeping with our cross-functional approach, the tool was developed internally by a team of experts in facilities engineering, environmental health and safety, sourcing, and utilities management. This tool will set performance expectations for managing our varied operations globally and allow continuous improvement in the area of energy use reduction.

Many of our new buildings and retrofitted operations are using the international LEED standard to optimize energy use. Currently GE has 10 global facilities that are LEED-certified. We were also awarded the UK government-approved Carbon Saver Gold Standard by Carbon Saver Limited as part of the UK's Carbon Reduction Commitment (CRC) program.

In addition, GE uses its own energy-efficient technologies, and employs renewable technologies in operations from Durham, North Carolina, to Fairfield, Connecticut, and in Hungary, India and beyond.

energy-mgmt-data-tables

Reducing GHG Emissions and Energy Use

In keeping with GE’s performance-driven culture, we recognize excellence for those operations that contribute most dramatically to reductions in energy use. In 2011, GE recognized sites that reduced the energy intensity of their operations by 50 percent or more, in addition to any changes in production. Thirty-two facilities globally decreased their energy use by an aggregate 805,000 million BTUs and GHG emissions by 125,000 MT CO2 equivalents from GE’s 2004 baseline year.

In 2011, GE lowered its energy use to 48.17 million MMBtu, a reduction of 19 percent from our adjusted 2004 baseline, and a 4 percent reduction from 2010 levels (Table 1). In addition, we lowered our greenhouse gas emissions to 5.09 million metric tons of CO2 equivalents, a reduction of 29 percent from our adjusted 2004 baseline (Table 2).

At the same time, our Energy Financial Services installed base of wind turbines helped avoid GHG emissions equivalent to 5.8 million metric tons of CO2 equivalent in 2011, compared to approximately 4.7 million metric tons reported in 2010. Portfolio additions and improved wind resources increased the projects’ renewable energy production, resulting in an increase of avoided CO2 equivalent emissions of approximately 17 percent from 2010 to 2011. A change in the U.S. Environmental Protection Agency's CO2 emissions rate calculation also accounted for about a 6 percent increase in the avoided emissions figures.

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Reducing GHG Emissions and Energy Use

In addition, the total installed base of all GE wind turbines delivered to all customers through 2011 increased from 24,500 mW in 2010 to 27,200 mW in 2011. These wind turbines avoided around 50 million metric tons of CO2 equivalent emissions in 2011, a value that is much larger than the 5.09 million metric tons of CO2 equivalent emissions from GE Operations in 2011.

In 2011, GE's energy intensity improved by 32 percent from the 2004 baseline year (measured as energy/$ Million revenue) (Table 3).

However, we are still somewhat below the 37 percent energy intensity improvement we reported in 2008. We believe this is due to changes in GE’s portfolio and the slow economic recovery. Our total operational energy use is depicted in the graph shown. GE’s energy use is dominated by natural gas (primarily for steam and heat) and electricity use (Table 4). GHG intensity has improved by 40 percent since 2004 (Table 5). We attribute this to changes in process improvements in areas where non-CO2 GHG materials are used in operations, particularly the foam insulation process used in GE’s Appliances business.

See Chart (Table 4)
energy-mgmt-data-tables2

Reducing GHG Emissions and Energy Use

We also report greenhouse gas emissions from investments in power projects by GE Energy Financial Services (GE EFS). GE EFS invests in power projects in a number of ways: equity, lease, and debt. We are reporting emissions from investments in which GE EFS holds an equity interest based upon the business unit’s percentage of equity ownership. With investment exposures totaling $6 billion at the end of 2011, renewable energy now constitutes approximately 30 percent of GE EFS’s overall portfolio, up from about 6 percent in 2006. The investments have spanned 19 countries, 125 wind farms, 48 solar installations, 19 hydroelectric projects, 41 landfill gas facilities, and 22 projects involving other technologies, across a wide spectrum of capital — from project equity to debt and venture capital.

As far back as 2006, GE Energy Financial Services demonstrated leadership by becoming one of the first financial services companies to report greenhouse gas emissions associated with power project equity investments. Today, GE EFS continues this leadership by evaluating investments in energy conservation, considering efficiency, pricing CO2 for coal and other fossil fuel plants into deal approval processes, and continuing to voluntarily report emissions.

energy-mgmt-data-tables2

Reducing GHG Emissions and Energy Use

GE EFS’s greenhouse gas emissions in 2011 totaled approximately 8.0 million metric tons of CO2 equivalent from 22 investments. In 2010, by comparison, they held an equity interest in 22 power projects, which emitted approximately 8.7 million metric tons of CO2 equivalent. The decrease in emissions between 2010 and 2011 is primarily due to changes in portfolio composition, output from plants that completed construction or maintenance, and lower dispatch of existing assets.

The slow economic recovery, combined with a mild winter and increased domestic natural gas production, resulted in materially lower natural gas prices. This led to a generally lower dispatch of power plants in the GE EFS portfolio. In general, CO2 equivalent emissions from GE EFS investments will rise or fall based on various factors, and the business unit’s strategy continues to focus on identifying attractive energy sector investment opportunities.

saving-water-chart

Saving Water

At GE, we are exceeding our own goal for reducing freshwater use.

In May 2008, we announced our goal to reduce our freshwater consumption by 20 percent in 2012 from a baseline of 2006. In early 2009, we modified the goal to a 25 percent reduction by 2015.

Reduce water use and improve water reuse

In 2011, GE’s freshwater use was 9.1 billion gallons, a 35 percent reduction from the 2006 baseline and a 13.5 percent decrease from 2010.

Factors contributing to the observed decrease from last year’s results include the following:

  • Enhanced focus on water use management for once-through cooling operations at one of our largest sites
  • Successful implementation of Kaizen Blitz water reduction opportunities at select sites
  • Product testing campaigns (decrease in once-through cooling water use)

We annually collect water data for sites consuming more than 15 million gallons a year. This includes water used for potable, process, and sanitary purposes, as well as once-through cooling waters from freshwater sources. We adjust the data each year to reflect acquisitions and divestments.

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Pledge to Double Our Investment in R&D

  • We put $2.3 billion of R&D to work to develop innovative technologies that deliver great economics and drive resource efficiency.
  • We are committed to putting $10 billion of R&D to work from 2010 to 2015.
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Keep the Public Informed

  • We are committed to keeping our customers, stakeholders and communities informed and engaged. Through this annual progress report, ecomagination.com, and the GE Citizenship Report we provide updates on our progress and commitments.
  • We are inspired by our communities and continue to have important dialogues and engage in collaborative ideation and partnerships.
See infographic
informed
emissions-pie-chart
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ecomagination Portfolio

To make the products and services in our ecomagination portfolio even more effective, we are expanding our alliances with partners and creating more customer-centric solutions. In collaboration with our partners, we are developing products and solutions to meet our customers’ needs. These include:

  • GE Transportation and Motive Power Inc., collaborating on a new family of passenger locomotives.
  • GE Aviation and Bombardier, developing the GE Passport™ Integrated Propulsion System for the Bombardier Global 7000 & 8000 business jets.
product-portfolio-product1

We’ve also introduced our first two ecomagination-qualified solutions, providing enhanced customer value:

  • GE’s fleet electrification solution enables commercial fleet operators to speed the successful deployment of electric vehicles (EVs). This comprehensive offering includes vehicle assessment and leasing, charging station hardware and software, installation, servicing and analytics — all to improve cost savings, operational efficiency and environmental performance.
  • GE’s ecomagination Kitchen is a suite of refrigeration, cooking, and dishwashing products that offer improved energy efficiency compared to standard kitchen products.
product-portfolio-Electric_fleet

To qualify for the ecomagination portfolio, products and services must significantly and measurably improve customers’ operating performance or value proposition and environmental performance.

The growth momentum and opportunities driven by these offerings also provide value to our investors, employees and other key stakeholders.

OPERATING Performance

  • Improved value proposition
  • Improved customer competitiveness
  • Lower operating costs

ENVIRONMENTAL Performance

  • Less reliance on fossil fuels
  • Lower emissions
  • Higher efficiency

The ecomagination Product Review (ePR) process ensures that offerings meet necessary criteria and that associated marketing claims are clear, compelling and substantiated.

GreenOrder, an LRN advisory group focused on sustainability strategy, verifies the offerings’ claims.

34 new ecomagination products and solutions were introduced in 2011

LCM

On Environmental Life-Cycle Management

The world’s most pressing environmental challenges also present an opportunity to do what we do best: imagine and build innovative solutions that benefit our customers and society.

We have long focused on designing the most efficient products for our customers, creating economic value with reduced impact on the environment. An emerging focus area, life-cycle management, or LCM, helps us to better understand the environmental impacts of our products and solutions in all phases of the product life cycle.

LCM is not new to GE. Since 2008, with the establishment of our Ecoassessment Center of Excellence, we have been working to apply our knowledge of LCM to drive transformation in our products for our customers, our businesses, and the industries that our products support. We are building on these successes within the company to champion a more strategic approach to LCM that better addresses the breadth of GE’s products and solutions and evolving stakeholder expectations.

lcm-image

To deliver maximum innovation and value-creation opportunities, we avoid taking a narrow, one-size-fits-all approach to LCM.

Instead, we are developing a variety of LCM tools and resources, including everything from basic screening to detailed life-cycle assessment (LCA), which can be customized for specific product or business applications to drive meaningful outcomes and enhance our leadership position.

LCM applied in this manner presents an opportunity for GE to create even greater value for our customers by focusing on the most promising opportunities for real change.

Our long-term vision is to inspire, design and build products and technologies that address the world’s challenging environmental and natural-resource needs. We will continue to measure our success based on the products we create and the value they provide to our customers.

lcm-image

We have undertaken a variety of LCM efforts that demonstrate our different approaches. Some of the most recent life-cycle assessment studies include:

GE Healthcare’s WAVE Bioreactor™, used for vaccine and other biotherapeutics production, enables cell culturing without requiring cleaning or steam sterilization because it uses disposable bags rather than large stainless steel tanks. This reduces water and energy consumption and staff time requirements, compared to the stainless steel bioreactor it replaces.

By performing a detailed LCA, we’ve learned that the use of WAVE Bioreactor process technology with a single-use Cellbag™ has a significantly lower environmental impact compared with traditional process equipment typically used for biotherapeutics production. Even considering the environmental impacts of single-use process technology, which requires the production, distribution and disposal of single-use components, the LCA determined that the single-use process technology reduces or eliminates the large quantities of steam, sanitizing chemicals, process water, and ultra-pure water needed for washing and sterilization of traditional process equipment. And the insights gained through the detailed LCA study are helping our customers evaluate and optimize their biotherapeutics process technologies with an eye toward increased productivity with reduced net environmental impact.

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GE Transportation’s Durathon energy storage system enables efficient and cost-effective storage, distribution and utilization of energy where they’re needed and when they’re needed. Durathon battery modules and complete energy storage solutions are designed for use in the telecom, parcel, energy management utility and motive power industries. They have a longer life, store more energy per unit weight, have improved performance in extreme conditions, are safe and have minimal maintenance costs and less impact on the environment compared to traditional lead acid batteries.

With energy demand on the rise in the face of an aging infrastructure, effective, reliable backup power has become that much more important. This remains especially true in areas like hospitals and data centers, where continuous power supply is crucial.

Through detailed LCA, we’ve determined that Durathon offers significant environmental benefits across the entire product life cycle compared to much of the incumbent technology in the telecom and uninterruptible power supply applications, providing our customers with the insight they need to make fully informed purchasing decisions.

lcm-image4

Advisory Board

GE brings together a group of eight energy and environment thought leaders serving on our ecomagination Advisory Board. This team advises the Company’s ecomagination team on critical environmental and business issues. The Board is also a venue for thought leaders to hear about what GE is doing and provide their insight and guidance.


Our Advisory Board assumes an innovative approach to environmental and business issues.

Meet the Members

Annual Reports


2010
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2009
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2008
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2007
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2006
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2005
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Since the launch of
ecomagination in May 2005,
GE has made significant
progress addressing challenges,
including the need for cleaner,
more efficient sources of energy,
reduced emissions and
abundant sources of
clean water.
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2011
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