Knauf plans state’s first ‘gold-certified’ building

For Knauf Insulation, the paradox was as uncomfortable as fiberglass insulation on bare skin.

The endless bats of insulation churned out by its Shelbyville plant since the 1970s have reduced energy consumption in buildings
across the continent–curbing greenhouse gas emissions.

But the energy Knauf uses to make insulation is made by power plants that expel that much more carbon dioxide into the atmosphere.

So in a rather uncommon move among Indiana manufacturers typically more preoccupied with foreign competition and deteriorating
margins, Knauf is seeking relief in the form of environmental investment.

Its research and development facility, destroyed in a fire last year, will be rebuilt to make it 30 percent more energy-efficient
than a conventional office building of its size.

It's believed to be the first building in Indiana designed to earn new construction Leadership in Energy and Environmental
Design, or LEED, "gold certification" from the U.S. Green Building Council.

And at a time when Knauf and other companies are sweating out a home-building downturn, the company is spending more than
$10 million on "regenerative thermal oxidizers" that capture heat from ovens in its manufacturing plants that would
otherwise go up and out chimneys.

That captured heat is sent back through ovens, reducing the amount of electricity and natural gas needed to fire them. The
president of Knauf's North American operations, Robert Claxton, figures the ovens now are so efficient that their carbon
dioxide impact is 90 percent less because "we simply burn less electricity and/or gas.

"We decided to put our money where our mouth is. We wanted to be out on the leading edge," Claxton added. "We
certainly cannot be in the industry and not lead by example."

Energy-efficiency investments would seem to be a no-brainer in the long run. But this is Indiana, where coal is like black
gold, providing inexpensive energy.

"The cost of energy in Indiana compared with the West Coast is cheap," noted Patrick Bennett, vice president of
environment, energy and infrastructure at the Indiana Manufacturers Association.

Not for long. Electric costs, in particular, are only going to rise in coming years, warned Grant Smith, executive director
of Citizens Action Coalition, which intervenes in utility matters before the state.

He cites higher coal commodity costs, anticipated carbon dioxide emission regulations and rising demand for electricity in
Indiana that's driven utilities to propose expensive new plants.

Duke Energy, for example, is building a $2 billion coal gasification electric generating plant in Edwardsport that is projected
to boost customer rates an average of 16 percent by 2012. CAC is appealing the Indiana Utility Regulatory Commission's
approval of the plant.

Smith said efforts by manufacturers such as Knauf to reduce energy consumption are a good step forward. His group for years
has argued for state policies to encourage energy conservation.

"Manufacturing is extremely important because that is a huge part of our demand," Smith said. "What we really
need is a comprehensive statewide program that looks at all customer classes."

But the public is often ahead of policymakers in Indiana. Claxton said Knauf sees itself as a leader in energy conservation,
and, "We also know we have to lead by example."

Say what you will about the cause of global warming, but damage done to the environment "is there," he said. "It's
still a very valid point that we've done great damage to the environment."

Beyond energy used for manufacturing and lighting, roughly 40 percent of energy consumed is used to heat and cool buildings,
Claxton said.

Knauf's new engineering center will use a variety of methods to slash energy and water use: a combination of improved
insulating techniques, more efficient HVAC systems and even equipment to recapture heat similar to the regenerative thermal
oxidizers being installed on the plant floor.

Some of the building will be made of recycled materials. The roof will sport a white membrane to reduce the "heat island"
effect. Retention ponds won't just store rainwater–they'll hold it to be purified for reuse inside the building.

One side benefit: "We'll have an effective showroom," Claxton said of the insulation maker's engineering
facility.

Knauf, an arm of German building materials conglomerate Knauf Group, has also been conducting efficiency makeovers at its
other U.S. plants. Its Shasta Lake, Calif., plant also got a regenerative thermal oxidizer estimated to reduce the plant's
carbon dioxide emissions at least 13,000 tons annually. That's roughly equivalent to removing 1,800 cars from the road.

The unit also could reduce gas consumption by an amount equivalent to that used by 4,400 homes per year.

But in California, Knauf had some help in the form of a $625,000 rebate from Pacific Gas and Electric Co.

"Would it help if there were incentives [in Indiana]? Sure. But those aren't cheap," Bennett said of investments
in so-called environmental sustainability.

Indiana's General Assembly has been focused this year on property tax relief for homeowners and businesses.

Asking for incentives this year "is a good way to get your nose broken."

Knauf has raised its environmental profile in other ways. It recently became the first corporate funding partner to Purdue
University's "Hestia" project, said to be the first data-driven model to quantify and analyze fossil fuel emissions
down to the street level.

The effort is being led by Kevin Gurney, an assistant professor of earth and atmospheric science at Purdue, who was a 2007
Nobel Peace Prize co-recipient.