Can energy efficiency help companies gain a competitive advantage? During today's OnPoint, Michael McQuade, senior vice president of science and technology at United Technologies, explains how UTC-owned companies have used efficiency to improve the economics of their business. McQuade, a member of Energy Secretary Steven Chu's Advisory Board, also discusses the direction and focus of the agency.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Michael McQuade, senior vice president of science and technology at United Technologies. Michael is also a member of Energy Secretary Chu's Advisory Board. Michael, thanks for coming on the show.
Michael McQuade: Thanks, glad to be here.
Monica Trauzzi: Michael, as someone who sits on Secretary Chu's Advisory Board, what's your assessment of sort of how the machinery of DOE is working right now? There's been some criticism of the department.
Michael McQuade: Yeah, I tend to focus more on the research and development side coming out of DOE and I think that's a real positive statement. I think the new programs, like ARPA-E, that have been stood up and have been very successful at both the programs they've generated and the support they've generated, both in the government and outside. I think those are working very well. I think the energy innovation hubs that have been started, the few of those that are up and running, I think those are all positive success stories. So I'm pretty positive on how the research element of what DOE is working has been in operation.
Monica Trauzzi: What does the secretary look for from the board of advisers?
Michael McQuade: You know, the secretary is a scientist and, as a scientist, he's always interested in as much diverse opinion, not just on the science side, but on the policy side and the other places that people can bring expertise into the organization. So, it's a diverse board. He looks for opinions from that board on where we see the science projecting, where we see the programs going. We've done some work on technology transfer out of DOE, so I think a broad way for him to get perspective from a very broad set of individuals on that committee.
Monica Trauzzi: UTC has been doing a lot in the way of energy efficiency across the board through all of its companies. Why do you see efficiency has such a critical element to your business plan?
Michael McQuade: I think at the end of the day energy efficiency is I'll say easy, I don't mean it's easy in an absolute sense. It is the easiest way for us, as a nation, as a world, to make progress on energy consumption. The ability for a company like UTC to bring energy-efficient solutions to aerospace, so new jet engines that are significantly more efficient, the ability to bring solutions to buildings to reduce the consumption in buildings. Buildings consume 40 percent of the energy in this country and for our ability to cost-effectively reduce energy consumption in buildings is the single easiest, most productive thing we can do to reduce the energy footprint in this country.
Monica Trauzzi: It seems like it's a little difficult for some people to understand efficiency though, because things like solar and wind, they're tangible.
Michael McQuade: Right.
Monica Trauzzi: So, do you think that efficiency can help you get a competitive advantage?
Michael McQuade: I think the answer is yes. As a company, it's clearly a competitive advantage. That is how we compete in every product we sell. People want our jet engines to provide thrust. They want our elevators to move people up and down. But today, in the 21st century, they want those products to work as efficiently as possible and that is one of the primary ways on which we compete.
Monica Trauzzi: So, how has the conversation on efficiency changed with your customers? It sounds like a lot of them are calling for more efficient measures.
Michael McQuade: Absolutely, I mean I come from an era when we didn't talk about the energy consumption of products. In my younger days we talked about the specifications and we did not consider the energy consumption of our products in any great extent. Today it is a part of every conversation. Aerospace engines for commercial aircraft are the single, the energy used in an airplane is the single largest cost of operating an airline. And the ability to deliver energy-efficient solutions to those customers is the first conversation we have.
Monica Trauzzi: We've seen significant changes in how federal agencies are approaching R&D and energy and technology partnerships. How is the public-private partnership model changing?
Michael McQuade: I'm not sure, let's talk about how good it is first.
Monica Trauzzi: OK.
Michael McQuade: And then we can talk about how it changes. My opinion is the public, private and academic partnership in this country is the single most important way over the last 75 years that we have competed as a country. It is the unique feature that the United States brings to international competition. This ecosystem of private investment, companies like UTC, the premier research universities in the world combined with the government playing its role in early-stage creation of science and technology is what has allowed us to create the economic revolutions. That continues to be the most important thing from a government policy on research that we pay attention to and this administration, I think, has done a good job of keeping that front and center.
Monica Trauzzi: And UTC is working with DOD and DOE on some projects. Specifically, what are you working on with the agencies?
Michael McQuade: So, with DOD for example, we have a significant partnership looking at how we manage clusters of buildings. So, the DOD is the largest landholder, or largest building holder in the United States, 300,000 buildings. We're looking at programs on how you manage fleets of buildings for energy efficiency. Bringing solutions to not just one building, but multiple buildings from a central control. With DOE we're investing through ARPA-E and some fundamental science programs, new battery systems for grid-scale storage, new compressor systems for high-efficiency air conditioning systems. So, we're heavily involved in many of those programs with the DOE.
Monica Trauzzi: All right, we'll end it there. Thank you for coming on the show.
Michael McQuade: Great, thanks very much.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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