Challenges in Energy Efficiency Performance Measurement in the Process Industry

Purpose – The accounting literature has demonstrated increased concern over issues of sustainability. One of the most critical issues that corporations face at the moment is climate change. This especially concerns companies that are substantial consumers of materials and energy. Corporations have increasingly acknowledged that to address this issue the existing ways of managing business must be changed. This study examines the challenges posed by measurement of energy efficiency performance in an energy-intensive industry. It covers the challenges encountered with respect to the energy efficiency indicator and its use as a management tool. Methodology – The case study method was used to conduct the research, which took place in a single firm in an energy-intensive process industry. Findings – The results indicate that the current energy efficiency indicator, specific energy consumption (SEC), does not meet the criteria for good performance measurement. In particular, the controllability of energy efficiency seems problematic. Another major challenge is target setting. Measurable targets are needed to identify and prioritise areas where consumption and emission can be reduced. Practical implications – The study provides practical knowledge on what is happening in organisations that pursue sustainable development and in particular, environmental efficiency. Originality/value – Although the conceptual challenges in energy efficiency measurement are well known in the technical literature, discussions dealing with its management have been few in number. This study is a cross-disciplinary work and combines technical energy efficiency literature and management accounting research on performance management.