By Scott Malone
NEW YORK (Reuters) - Having changed its tune on global warming, Corporate America is increasingly banging the green drum of energy efficiency. But with oil prices easing off last summer's record high near $80 a barrel, some executives say customers' ardor for power-saving equipment has eased.
"Most businesses won't invest unless something is a two-year payback or less on smaller products. It's just the way they look at stuff," said David Cote, chairman and chief executive of Honeywell International Inc. (HON.N: Quote, Profile, Research, Stock Buzz), speaking at the Reuters Manufacturing Summit in New York.
"When oil was around $25 to $30 a barrel, payback on energy efficiency products was generally six to seven years. And when it got to $60, $70 a barrel, payback was in the three- to three-and-a-half year range and significantly better, but still when bumped up against a lot of other things, not enough to push people over," Cote said. "At $50 to $60, still good, still a better return than it was, but it's still not a return where it hits everybody's screen and everybody is clamoring for it."
U.S. oil futures CLc1 were trading around $61 a barrel on Thursday, well off their July peak above $78.
That easing in prices has meant that energy conservation has fallen off the list of some CEOs' top concerns.
"We as companies respond to what is causing the biggest problem," said Herb Henkel, chief executive at Ingersoll-Rand Co. Ltd. (IR.N: Quote, Profile, Research, Stock Buzz) "We're always built to focus in on that which is the burning problem at the time you're dealing with it. I think that's human nature."
Still, companies are not completely ignoring the issue. Last month a group of 100 major corporations, international organizations called on governments for urgent action against global warming.
Caused by the release of greenhouse gases into the atmosphere, a byproduct of the burning of fossil fuels like oil, the documented rise in world temperatures is linked to more severe storms, worse droughts and rising seas. Continued...
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