A July 2010 Gibbs & Soell Public Relations study of 304 Fortune 1000 executives throughout the U.S. indicated that only 29% believed that “most or all” businesses are committed to going green. 54% said “some” and 15% said only “a few” have made such a commitment. A major reason cited in the study why more companies are not implementing “green” programs is the belief that consumers are unwilling to pay a premium for “green” products. While polls indicate that U.S. consumers say they are willing to seek and even pay extra for “green”, more “sustainable” products, many of the polled executives believe this is not true on the shopping floor, based on sales records.

How can companies better communicate and drive up sales of their “green” products? Some studies indicate that many well-meaning consumers are confused about which products are “green”. A 2010 poll commissioned by SCA stated that 28% of consumers are most successfully reminded that a product is “green” by indications right on the store shelf; that is, reminders placed on or right next to the product. 19% of respondents were successfully informed of a “green” product by a visible store sign or flyer. Only 9% stated they learned of available “green” products from the company’s website. This latter result is interesting, as a “green” or “corporate responsibility” webpage is one of the most common ways a company informs stakeholders of its “green” products. There is also skepticism about “green” claims. The Federal Trade Commission (FTC) recently announced that it will issue updated rules about such claims shortly and said it will enforce them to minimize false “greenwashing”, which will, hopefully, be a standard the public will trust to judge and act on “green” claims.

What motivates a person to buy “green” products and what can be done to feed that motivation? An article in the March 2010 in the Journal of Personality and Social Psychology has a surprising answer. According to the study, people choose to buy environmentally-friendly products not as an action to protect the environment, but to enhance their social status. The researchers explored the roles that price, quality, and social reputation played in determining choices of non-green vs. environmentally-friendly products. Customers were more likely to buy more expensive “green” items when they believed other people would notice during their use or while shopping.

An example of this phenomenon may be the Toyota Prius which sells very well despite a hefty price tag and recent safety concerns. Just the name Prius now has become a status symbol for environmental consciousness. The authors cited a New York Times report that Prius owners ranked environmental concerns last on a list of 5 reasons they bought the car; the top reason was that it “made a statement about me.”

The bottom line to improve sales of “green” products which could encourage companies to strive to be more “green” themselves is to link these products to customer reputation by showing the customer that the products are “green” and useable in public places.

Earlier this month a group of major utilities, AEP, Duke Energy, Southern Company, Xcel Energy and the Tennessee Valley Authority petitioned the US Supreme Court to review an appeals court decision they fear could allow judges to set caps on greenhouse gas (GHG) emissions in response to complaints against them by regulatory agencies or the public as a “public nuisance” by emitting pollutants linked to climate change.

This was in response to a federal appeals court ruling in favor of 8 states and New York City. The US Court of Appeals for the 2nd Circuit in 2009 ruled against the 5 utilities to pursue nuisance claims over alleged harm to human health and property from climate change resulting from the utilities’ CO2 emissions, finding that all the states have standing in their suit against the utilities under federal common law (such as the Clean Air Act) for nuisance claims.

The petitioners stated that under the appeals court decision: “A single judge could set emission standards for regulated utilities across the country–or, as here, for just that subset of utilities that the plaintiffs have arbitrarily chosen to sue. Judges in subsequent cases could set standards for other utilities or industries, or conflicting standards for these same utilities.” They believe that the appeals court ruling would set a dangerous precedent, allowing “judicially-fashioned” caps on GHG emissions to be imposed on major emitters (such as utilities) based on complaints from states and private parties, rather than consistent limits based on a legislatively-approved regulation.

In addition, the USEPA has signaled its intention to apply the existing Clean Air Act to GHG emissions by applying such rules as Title V Permitting and Prevention of Significant Deterioration to CO2 emissions from large emitters (again, utilities). Therefore, in this petition, the utilities also want to the Supreme Court to rule on whether GHG emissions can be regulated by an authorized body, such as the USEPA, under a common law, such as the existing Clean Air Act. While the Clean Air Act was not created (or last amended in 1990) with GHG emissions in mind, it does contain criteria to allow the addition of new pollutants felt to be harmful to the general public or environment.

This case is an important one to look at. Given the unlikelihood that federal climate change legislation will pass the US Senate this year (given their recent withdrawal of legislation) and the unknown of the composition of Congress next year, we may end up with a hodgepodge of legislation, such as the application of Clean Air Act rules in some cases, judicial decisions, and state and regional legislation. If the US Supreme Court reviews this, we may end up with some clarity, although well down the road.

There is growing interest in the USGBC’s LEED program. Though criticized, this is an accepted, concrete (no pun intended) program that defines “green” building. Some companies who are cool to climate change (another pun, there!) or sustainability programs have embraced LEED for several reasons. First, it requires outside body certification. One accumulates points until a desired level is reached. If improvements implemented meet USGBC approval, then the building is LEED-certified, no ifs, ands, buts, or accusations of greenwashing. LEED is also called “high performing” building standards for good reason. LEED-certified buildings have lower costs, healthier indoor air, and other advantages with real financial benefits over non-LEED buildings.

So why isn’t everyone doing it? Well, initial investment costs turn firms off, although my recent blog shows that the gap between standard and “green” alternatives is narrowing, plus growing government incentive programs. The other problem is the perception that it is easier to design “green” features into a new building than to make “green” an existing building. While usually true, the reality is that in this economy there will be an excess of available existing buildings, and it makes greater economic sense to re-use them.

Opportunities to improve performance exist. Most pre-existing buildings are less than ideal because they were designed before LEED existed and developers often did not look to include the latest knowledge concerning lighting, energy efficiency, air quality, etc. LEED has a specific standard for Existing Buildings (“EBOM”). Converting an existing building to meet LEED-EBOM standards involves not only its physical structure and operating systems, but also on-going, day-to-day operating procedures and recordkeeping.

So how do you start? Do a “gaps” analysis of your existing building. It’s possible that your building already meets LEED-EBOM standards with no or few changes. If so, you can quickly certify and reap LEED benefits soon. A good gaps analysis will tell you how many LEED-EBOM points you probably already have, how far away you are from achieving a LEED level (Certified, Silver, Gold, or Platinum), and the most cost-effective steps (those with best ROI) to take to gain the points needed to reach the desired LEED level. A good gaps analysis would present you with extra options to allow you to choose which options you would like to pursue or disregard and still meet the LEED standard.

A “gaps” analysis is a good cost-effective method to determine where your existing building currently stands in terms of LEED and high performance, and gives you an effective road map of options to choose from to improve building performance to your desired level.

Marc Karell, President of Climate Change & Environmental Services, knows all about gaps analyses. He managed the gaps analysis of a “little” project, the greening of the design of the refurbishment of United Nations Headquarters in New York City. He led the team that suggested about 20 options to improve performance; the UN included nearly all of them.

As this is written, it appears that the oil spill in the Gulf of Mexico has been permanently capped. No more oil will be gushing directly into the Gulf (from this well). And a recent government report stated that 75% of the oil that spilled into the Gulf has been removed or remediated. Does this mean that press coverage of the incident will wane and end? Does this mean that the public will forget and move on? Can companies continue to manage environmental risk the same way in the future?

Even if the answers to the first two questions are each “Yes”, there will be profound changes at BP. The spill cost BP a lot of money, many billions of dollars. They will likely continue to pay for the spill for many years to come, given costs to monitor and repair long-term damaged regional ecosystems, compensation for the lost income of shrimpers and tourism businesses, and inevitable litigation. BP, being cash heavy, will likely survive the tragedy, although it has cost BP’s CEO and other officers their jobs. In addition, BP’s value indicated by its stock price has dropped markedly. Even if it comes back, it is hard to believe it will soon fully recover the stock value lost. As fatal accidents have occurred at other BP facilities, one would think they would “put out all the stops” to prevent even one more human or environmental accident or tragedy – at least to satisfy investors.

But this is not just about BP. The whole world has been following this tragedy, and all companies with operations and potential environmental impacts must be wondering if this could happen to them and their existential risk. This incident may change the way companies do business or invest in the future.

Oil exploration and, of course, all business are a matter of risk management. No operation is sure (otherwise everybody would do it) and there is greater risk for more complex projects, such as oil exploration given that there is little oil to be obtained from “easy” sources. Now, in addition to the technical issues of drilling 5,000 feet below sea level, oil companies will need to address environmental and safety issues not only to succeed in a given exploration, but in terms of stakeholders, investors, workers, and regulatory agencies.

How does a company manage risk for a major project? In addition to complying with any applicable regulations, companies develop internal procedures to minimize risky, unsafe practices. But risk is present in nearly all operations, as is the desire for profits. Many companies prepare to address some level of accident or tragedy that inevitably will occur and/or contract out parcels of the effort (and risk) to smaller specialty firms who cannot address overall environmental and safety risk.

The BP oil spill has raised concerns about environmental impacts around the world. This will likely put pressure on governments to tighten regulatory requirements. The US is in the process of reorganizing the MMS agency which permitted the BP well. And governments seeing potential embarrassment in the long period of time it took to get this oil spill under control now has a motivation to enhance safety and environmental regulations (in the name of preventing future tragedies) in other industries. Even other countries that historically have had lax environmental regulations, such as the Gulf States, China, India, and Brazil, may be forced to tighten such rules to satisfy their growing middle classes.

The visibility of the BP oil spill (the continuous camera showing uncontrolled oil entering the Gulf) should make any company consider (perhaps for the first time) worst case environmental and safety scenarios before beginning a major project. Companies should recognize the need for detailed safety and environmental plans and what-if scenarios during the planning of a new venture or operation.

This is where good management and communication will have to come in. Large companies will need to manage environmental and safety risk more tightly and develop accountable programs. They will need to communicate and enforce these new internal rules with their employees and manage their contractors in a more hands-on manner. They will need to directly address environmental and safety risk issues and give managers the responsibility to oversee the growing risks of operations.

While focusing on environmental risk up until now, discussion about Climate Change risk is in order. The US Senate recently withdrew the “Climate” Bill, meaning there will be no federal standards this year and perhaps next year, too. But that does not relieve companies of Climate Change risk. Led by states and entrepreneurs, such rules are being advocated and promulgated around the country, some as “energy” rules. According to a recent report of the Natural Capitalism Solutions Foundation:
• Over 30 states have their own unique climate action plans or are developing them
• A similar number have renewable energy portfolio standards
• Three regional cap-and-trade systems are underway or in serious development mode
• Several states have created their own appliance, vehicle, and fuel efficiency standards.
Independent of Congress, President Obama has called for federal agencies to work with states and local governments to develop “energy transition partnerships” and defending state and local governments against preemption by Congress, except for a comprehensive national policy. Plus the USEPA is already planning to apply Clean Air Act regulations to control GHGs nationwide.

Therefore, companies need to address regulatory Climate Change risk, a difficult proposition given the complex quilt of regulations that is currently being built. This is an issue that companies can no longer ignore or wait until Federal legislation.

Get more useful information in our blog: www.CCESworld.com/blog
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This Environmental News for You is meant to provide general ideas on environmental and climate change risk. You should evaluate these and their effects on your company. CCES experts have the experience to assist you in the technical tasks involved in evaluating potential risk and strategies to minimize such risk.

Senate Majority Leader Harry Reid formally withdrew the climate change bill, already containing compromises such as removal of a formal cap and trade program, from consideration. Although the U.S. spoke last year of being a leader in the fight against climate change (also growing our economy and reducing dependence on foreign energy sources), we could not pass a comprehensive climate change or energy bill. What caused its demise? Commentators blame many sources, such as “Green” Groups who declared climate change science a done deal and refused to debate deniers and fearmongers who, through the Internet, became influential; Republicans for not even attempting to compromise on the issue (they were even against a provision requiring utilities to generate 15% of their electricity from renewable sources, a figure many had already achieved) and backtracking on earlier promises of support (remember, Presi-dential candidate McCain favored cap and trade); President Obama for not taking the debate to the public and discussing its many benefits; corporate lobbies who either wanted to defeat the bill or put in pro-business provisions (such as free allowances); and Democrats, who were themselves divisive.

So, what will happen – particularly in light of the UK’s announcement of its plan to reduce its GHG emissions by 80% by 2050? Without a climate change bill and its potential revenue can the government in an age of budget cuts support renewable energy research? The good news is that the U.S. is making progress on the climate change front. U.S. GHG emissions have dropped in recent years, and many economists think this has occurred for reasons other than the recession. More renewable energy projects are being implemented; energy use per capita is at least leveling off. A cap and trade program like RGGI appears to be satisfying all parties and leveling off GHG emissions. The USDOE supports over 7,000 clean energy projects. Texas, a bastian for climate change deniers, has one of the most sophisticated wind energy infrastructures around, reducing dependence on foreign oil and creating local jobs. Many states and municipalities require the “greening” of their buildings and projects. More corporations are addressing these issues, too, and demonstrating real financial benefits in competitive markets. Together, as these successes are publicly displayed, greater opportunities for federal legislation support should develop. The USEPA is readying itself to regulate GHG emissions from major plants under its air rules, and this may have a great impact in the future. As RGGI continues, if California’s AB-32 survives a voter recall, and other state programs are implemented, those being regulated will see the folly of a web of inconsistent regulations, and likely call for meaningful, long-term federal GHG emission reduction rules.

Some major news recently on the Air front. The USEPA recently published a proposal aimed at reducing SO2 and NOx emissions from power plants. Such emissions may be transported hundreds of miles downwind across state boundaries before it reaches ground level, impacting millions of people. Many believe this is the reason many downwind states cannot meet National Ambient Air Quality Standards for PM2.5 (SO2 and NOx are potential precursors) and ozone (NOx a precursor). That’s why this rule has been termed the “transport” rule. The Clean Air Act Amendments of 1990 contain provisions to addresses potential harmful emissions from upwind pollution sources.

The rule targets power plants whose SO2 and NOx emissions likely transport to 31 eastern states plus the District of Columbia. The USEPA believes the transport rule will result in a 71% reduction of SO2 and 52% reduction of NOx vs. 2005 levels. The proposed Transport Rule is the USEPA’s response to the DC District US Court of Appeals which ordered the USEPA in 2008 to improve upon and replace the 2005 Clean Air Interstate Rule (CAIR).

“This rule is designed to cut pollution that spreads hundreds of miles and has enormous negative impacts on millions of Americans,” said USEPA Administrator Lisa P. Jackson. “We’re working to limit pollution at its source… The reductions we’re proposing will save billions in health costs, help increase American educational and economic productivity, and — most importantly — save lives.” The transport rule would also provide further benefit to ecosystems, such as the Appalachians, lakes in the Adirondacks, and estuaries and coastal waters. It would improve visibility in state and national parks.

The preferred approach would be to publish emission limits for each of the 31 impacted states, allow intrastate trading, but limited interstate trading. A secondary approach that the USEPA is considering is to set emission limits for the two pollutants for each applicable power plant, but allow emission averaging within a state.

The proposed Transport Rule will have a major impact on power plant operations. Facilities will need to implement air pollution control devices, such as scrubbers and/or ammonia injection and/or will need to switch fuels. The rule is not final and ongoing public comment and hearings will need to be addressed by the USEPA.

More information on the proposed Transport Rule can be found at: http://www.epa.gov/airtransport/actions.html#jul10

I haven’t yet commented on the BP Gulf Catastrophe. We are now at Day 90 since the initial explosion, and as I write this there is great optimism that the cap appears to be working to stop the oil leak (at least most of it), and that the relief well is ahead of schedule and should end the rupture “permanently” next month. I hope that this good news and being in the midst of summer and taking it easy and vacations does not cause us to forget the incredible issues that the catastrophe has brought up.

This is an environmental catastrophe of great proportions because even if it is isolated to just one coast line and 4 states, it has put to risk our tidal estuary breeding-grounds, many livelihoods, and important food sources. We are hurt by a broader issue here, and that’s our dependence on oil. As we have exhausted the “easy” sources of oil (i.e., the TV/movie images of digging a few feet into the ground and a geyser of oil erupts or “bubblin’ crude”), we find riskier sources of oil that require a greater amount of energy invested to obtain it. While the ratio of energy developed to that invested for the easy sources was often 20:1, we now have projects that are closer to 5:1 (estimated ratio for the Alberta tar shale), not to mention the greater risks of environmental damage.

Another thing that cannot be forgotten is the direct financial cost to BP. It appears that BP will survive this incident, but only because of its vast wealth and profits. The economic burden of this mess, the tens of billions of dollars it will spend to “get it right”, will hurt them temporarily, but not put them out of business. For many other companies, such a disaster would put them out of business.

Therefore, this should be a warning to companies. Plan and invest in prevention of environmental consequences big and small. Invest in contingencies at the ready. Design intelligently with redundant systems to minimize failures. This should teach all companies interested in investing in projects to make profits, that this is a small, wise investment compared to the risk of an unanticipated failure. Environmental risk is real.

From the government’s point of view, the federal government should not allow any new deep water projects until approved plans are in place with multiple-redundant systems to minimize the risk of catastrophies. President Obama says that his is a scientifically-driven administration. Great. Put together right now a commission of the brightest scientists, oil and gas engineers and drillers to determine the risks and develop minimum standards that should be implemented to minimize the chances of such a catastrophe happening. And also require appropriate reporting to demonstrate that such procedures are working and not ignored. The standards should be tested and upgraded periodically because the stakes are critical. Finally, any company doing deep water drilling should post an appropriate bond on projects and have insurance to cover at least this level of disaster. We shouldn’t have to scramble to find money.

Let’s not forget!

It goes without saying that when developing “green” strategies for a company the first thing that’s asked is “So, what’s this going to cost us?” The assumption is that green strategies – to save energy, to reduce GHG emissions, to reduce water use and waste generation – will always come at a premium, with greater upfront costs compared to traditional (non-green) approaches. While most people and companies understand that green strategies ultimately save money in the long term (reduced energy and water costs, carbon credits), many of these ROIs are out a few years. Our culture has changed to ignore even prudent investments in long term gains as pressure mounts for short ROIs. For example, several senior staffers at municipalities have told me that no project would ever be approved in their municipalities if the payback is realized after the current term of the mayor! And, of course, there is pressure from company boards, shareholders, and others for quick paybacks!

Fortunately, as research and experience grows and green strategies are implemented, the upfront costs of more and more green strategies are declining compared to conventional alternatives. And now in the area of buildings, some green building strategies have now been established to be less expensive upfront than the conventional alternative, while still providing the longer term benefits.

Of course, potential cost savings will depend on a number of variables for each individual project. Bob Faulhaber, “The Green Civil Engineer”, has written about some recent case studies that he is involved in showing that the upfront costs of “green” alternatives can be cheaper than conventional approaches. Here are a few examples. Remember, these may not apply exactly for every situation.

Bob developed a cost estimate comparison for a commercial stormwater management project: a parking lot with distributed rain gardens vs. traditional catch basins and a detention pond. Approximate costs and assumptions were made. The cost of rain gardens for the parking lot is cheaper than traditional lot drainage.

One more example also involves parking lots – pervious surface vs traditional. The data for this cost comparison is drawn from a small parking lot project. The options included underground detention in the form of pipe or chambers or using pervious pavement and stone base for storage. The proposed parking lot built with pervious pavement and underground water storage was significantly less expensive than an impervious parking lot with traditional rain drainage.

The key is the big picture – verify systemwide costs, not focus on individual project portions.

There is also growing evidence that companies that commit to “going green” receive business benefits beyond the traditional ones of reduction in energy costs and reputational enhancement. D&W Inc., a company that supplies glass and mirrors, recently published the story of their green program. This is their words, but they have evidence that their program not only directly saved them money, but also reduced their regulatory profile and increased operational efficiencies. For example, based on some process changes to improve efficiency and reductions in the VOC content of their coatings, they were able to transition to a lower air permit level, reducing annual regulatory costs, red tape, and need for costly audits. In addition, the program simplified operations to enable easier cleanup at the end of the day, saving them labor costs and improving product quality.

Get more useful information in our blog: www.CCESworld.com/blog
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This Environmental News for You is meant to provide general ideas on how to implement effective “green” program strategies. You should evaluate these thoroughly before implementing. CCES experts have the experience to assist you in helping to organize, strategize, and implement a “green” program and properly evaluate potential strategies for their economic and environmental benefits.

Happy and Safe 4th everyone!

I have written a lot about the pure business reason for having a robust “green” program at your company, including putting your products in an environmentally positive light. Does that really do any good in terms of actual sales? Are Americans willing to pay more to “help the planet?”

Surveys and research in recent years show mixed results. But an interesting study recently published in the Journal of Personality and Social Psychology by V. Griskevicius, et al., U. of Minnesota examined this phenomenon. Why do people buy environmentally friendly products when they are more expensive than conventional products? According to these authors, status is a greater pull than knowing one has done good for the Earth. Customers buy less-luxurious and more-costly “green” products primarily when they know other people can notice.

The researchers conducted experiments involving more than 400 participants to explore the roles that price, quality, and social reputation play in determining why customers choose non-green versus environmentally friendly products. In one experiment, the authors found that people who were asked to imagine they were shopping alone online at home and were told to think about their reputation among their peers were more likely to choose luxurious, non-green products. But when those same individuals were asked what they would buy when shopping in public at stores, their preference for green products increased significantly; the authors believe that this was because others would witness them making the purchase. This was especially true when green products cost more. The researchers found that despite a higher price tag people wanted to show off they were willing to be seen with a product noted for being good for the environment. When deciding between two equally priced vehicles, one a car loaded with features and the other an environmentally friendly car, 55% chose the green car when reminded of its reputation versus only 37% in the control group, who were told to disregard reputation.

For companies looking to corner the market on green items, the study argues that the key is to link green products to status, especially for pricier goods. Companies should also, whenever possible, ensure that their products are sold and used in public spaces. Customers are looking to enhance their reputation when they buy green products.

The potential federal climate bill remains in limbo, as Congress has been distracted by other priorities, such as financial reform and the Gulf of Mexico oil leak. Majority Leader Harry Reid (D-NV) plans to bring a bill to the floor in July, but there are huge philosophical differences even within the Democratic Party on its critical elements.
There is no strong consensus on pricing and trading carbon. It is possible that any type of trading provisions will be eliminated or downplayed and the emphasis of the bill will be energy independence, conservation, and renewable sources.

Here are some of the latest proposed Senate bills.

• The latest proposed bill was suggested by Sen. Jeff Bingaman (D-NM) whose bill creates a national renewable energy standard but does not place a mandatory cap on GHG emissions.

• Sen. Maria Cantwell (D-WA) favors a “cap and dividend” approach, with revenue gained from carbon credit sales going directly back to taxpayers.

• Several months ago Sens. John Kerry (D-MA) and Joe Lieberman (I-CT) submitted draft legislation that would contain moving caps on GHG emissions and put a price on carbon.

• Finally an energy bill introduced by Sen. Richard Lugar (R-IN) has elements that may attract some Republican votes. Lugar’s legislation calls for retiring the costliest coal plants, expanding nuclear and renewable power, and increasing energy efficiency of buildings and vehicles, but has no GHG emission goals or caps.

The question is which approach – or combination of approaches – can result in 60 votes in the Senate, and, of course, also engender support from the House of Representatives and the White House.