GHP’s decision to focus on a green approach while renovating their retail stores was a logical next step. Commercial electricity at GHP’s Sanlitun location in Beijing costs 1.2 RMB (about 20 cents) per kilowatt hour. In contrast, the average cost of electricity to commercial customers in the US is about 10 cents per kilowatt hour. The high variable cost of electricity in Beijing provided a compelling case to invest in energy efficiency.

From an environmental standpoint, improvement in efficiency reduces pollution. China’s air pollution, a dire problem on the eastern seaboard, is largely caused by the mix of fuel sources used in the production of electricity. The majority—70 percent—of China’s electricity is generated with coal. By comparison, 40 percent of the United States’ electricity comes from coal. Only 4 percent of China’s electricity is created through natural gas, which burns much cleaner, compared to nearly 40 percent in the US, and hydroelectricity and nuclear energy play relatively negligible roles in China.

Given that China is steadily increasing goods output, it is important to consider energy intensity, which measures the amount of energy required for each dollar of GDP. In 2011, China’s energy intensity was 24,708 Btu per dollar of GDP, while in the US it was a third of that at 7,328. Reducing energy intensity creates economic benefit by maintaining output but reducing consumption.

“The most obvious benefit is where we were wasting resources earlier. Laura (Laura Xiao, the in-house environmental manager) helped identify potential areas for savings in utilities – energy, water, waste” Jade Gray, co-owner of GHP, said after GHP measured the energy consumption of several major pieces of equipment in their stores.  “We discovered that 20-30 percent of the power in one retail store was being used by an extraction fan. We realized we didn’t need that on all day but only during rush hour,” he said. “We cut that off, and saw savings of thousands of RMBs. Then by blocking draft at our doors and windows, we saved 10-20 percent on heating costs.”

GHP installed switchable power outlets, and LED and fluorescent lamps in the staff areas and replaced the biggest source of electricity consumption – the electric pizza oven – with a gas-fired oven. But the company didn’t stop there. A simple payback analysis was performed for an electric versus a gas dishwasher. The initial cost of the gas dishwasher was about twice as much as the electric option. However, the energy cost per wash of the gas dishwasher proved to be much lower than that of the electric dishwasher. Because of the high cost of electricity, the capital cost of investment in gas over an electric dishwasher would be recovered in one to three years, depending on usage. GHP has management training in energy efficiency and performs weekly spot checks to ensure everyone is on board.