February 14, 2012

Occasionally, when I tell people at a professional or social event that I am a climate change engineer, I get scorn – from climate change skeptics. Perhaps you’ve met such people, too, when you identify yourself as working in the environmental or sustainability area. I divide such people into 2 groups: those idealistically anti-climate change or the environment and those who are unsure, but swayed by what they hear from political pundits. For the former, I simply change the subject. Nothing I say, no amount of proof will change their views. They are so convinced that they will deny proof as a conspiracy.

But for the other group the question really is: has it been proven that climate change exists and is a manmade phenomenon? Such questions are asked because they have heard from some who believe that climate change has not been proven.

The only response I have is based strictly on science. Simply put, the overwhelming majority of scientists who study this believe that manmade emissions of GHGs at least contributes significantly, if not is the main factor, to climate change. This is not a 51:49 majority of scientists or even a larger 70:30 majority. According to a recent UN poll, it is a 98:2 majority that agree with this contention. And for anything in any realm to get 98% agreement is very rare! Remember, these are scientists devoted to studying the topic, not TV pundits without scientific credentials who are out to stir controversy for ratings. If you were ill, who would you listen to, your doctor or a pundit? Scientists in the area are the ones we should listen to on matters of science. I can’t find the source, but I read of a study of papers published in refereed scientific journals. In the 10-year period from 1996 and 2005, there were about 950 such papers about climate change. Every one showed proof of the view that climate change exists and/or manmade emissions of GHGs causes this. Not one article in a scientific journal showed any proof of the opposite view.

Finally, let’s look at the logic. Scientists determined that GHGs are capable of capturing radiation and release the energy as heat back in the 19th century! The concentrations of these GHGs in our atmosphere have increased – by direct measurement. The increase of CO2, the most common GHG, corresponds strongly to the increased use of fossil fuels on the planet (such as proliferation of the automobile), and corresponds with the temperature rise we are all seeing in terms of climate change. These relationships have been determined by these scientists of the highest credentials to be strong.

Climate change skeptics are in many places, including the workplace, and may affect the opportunity to grow a “green” or sustainability program. Knowing how to answer such skeptics in an intelligent way is an important factor to keep your program growing.

CCES can help your company grow your sustainability programs and engender support from employees, stakeholders, etc. Contact CCES to help you see the benefits.

January 31, 2012

Though some US municipalities are beginning to address it, climate change adaptation or how an entity will cope with the likely incremental increases in temperatures and precipitation (both greater rainfall and droughts) is not discussed much in board meetings or other strategic sessions. The trends are real and no longer something that can be delayed to a future generation. A recent Weather Channel survey showed twice as many all-time high temperatures compared to all-time lows. Certainly the news is full of stories of greater intensity hurricanes, tornados, and storms occurring more often.

But there is action on the global front about climate change adaptation. The Global Adaptation Institute has developed a Global Adaptation Index (GAIN). The U.S. is ranked 8th in the world with a particularly high “readiness” quotient because we already have a well-developed business infrastructure. Many countries that are smaller, more geographically vulnerable, or have fewer safeguards have a much lower GAIN ranking.
Industries and companies are addressing adaptation in future plans – some to strategize to minimize disruptions and some as an opportunity for enhanced business. Here are two examples from the UN Framework Convention on Climate Change.

Network Rail, which overseas railroad operations in the UK, studied the operational impacts of increased heat and precipitation and issued a report last year. They identified several issues in the future that would need to be addressed, such as employee and passenger heat stress (reducing the former’s productivity and requiring more frequent railway efforts for the latter); an increase in railroad track buckling (requiring more frequent speed restrictions throughout the system); and increasing frequency of storm surges and flooding (risking the efficacy of certain trackside equipment and damaging stations and tracks and embankments and their equipment). With this information, Network Rail will identify particular regions of concern and develop strategies to reduce losses in these catastrophic cases (i.e., raise certain equipment above ground).

BASF has been conducting research in several areas related to climate change and is slowly introducing new products, such as crops that can adapt to more extremes in temperature and rainfall, a polymer that can help a dike resist the forces of braking water, and a polymer that can sit in the soil and absorb, hold on to, and gradually release rainwater in regions that get little rain, but get high volumes when it comes. These and other products will eventually be commercialized to help many countries and individuals adapt to climate change and also help their business bottom line.

CCES and our experts can help your company assess the worthiness of potential green building projects for your existing and new buildings with a proper gaps analysis.

Changing one’s ways or implementing new initiatives is difficult. It’s inconvenient. This seems especially true in the U.S. in recent years. Thus, the reluctance to implement smarter, cleaner strategies. Businesses in other nations have demonstrated that clean approaches – in operations and also in business strategies – have been successful in meeting the challenges of the global recession. Now there is a U.S. industry that can be a model for companies across the business spectrum to add value while addressing sustainability concerns, and that is the automobile industry.

For decades “Big Auto” did things the same old way, ignoring the fact that technology and consumer preferences were changing and that more people no longer wanted to drive gas guzzlers, whether because of rising gasoline prices or concern with the environment. Perhaps they thought they can affect consumer attitudes with advertising.

The results for U.S. auto makers were disastrous. By failing to be more sustainable, U.S. automakers weakened their bottom line and lost their lead position in global sales. GM was rescued from potentially going totally out of business by a federal bailout with oversight that insisted the company make the type of cars that people had requested for years. Chrysler, besides getting bailout money, was taken over by a European buyer, infusing their sustainability experience. While Ford was not bailed out, they were on the verge of bankruptcy and also began to build more fuel-efficient cars that they had been fighting for decades. Although some Americans are unsure about climate change, Big Auto finally learned that addressing sustainability helps consumers get more value from their car, which everyone supports. All 3 firms have improved sales and the bottom line. Even SUV sales have improved recently, but for models with better gas mileage.

Which other U.S. industries have not addressed changing technologies and consumer preferences and can use the U.S. auto industry as a model? One that comes to mind is the power industry, as major electricity producers have fought new regulatory initiatives and renewable energy. Power companies have the opportunity to gradually replace their oldest, dirtiest power plants with cleaner energy, but many appear reluctant to do so.

An example is the new draft mercury rules for power plants. The US EPA, after listening to industry and environmental sectors, crafted new rules with an economic analysis that estimates both avoided deaths and emergency room visits that could be caused by this rule, based on current scientific knowledge, and the overall national economic gain. Instead, power companies are lobbying against this bill and even pushing Congress to pass a bill preventing the US EPA from passing new rules. Some have intimated that plants may shut down and perhaps potentially deprive areas of electricity.

It may seem counterintuitive, but smart federal rules that represent compromises between industry and environmental groups and based on current health-based, scientific knowledge and economic analysis, may be the best thing for the power and all industries. Such efforts result in a “level playing field” for all companies and a more satisfied public, both in terms of health cost savings, energy independence, energy source choices and risk, and environmental concerns. With all the debate in the last few years about federal health care legislation and record health insurance costs, it is certainly non-partisan and in everybody’s interest to enact laws that can reduce factors that lead to fatalities and the need for health care, based on current knowledge.

There is also the case of “unwanted consequences” by squelching smart legislation. An example for all industries is federal climate change or “carbon” legislation, which did not pass Congress. Failure to enact uniform legislation does not mean that greenhouse gas (GHG) emissions are not regulated. Instead they are regulated in a “quilt” of rules in different states, regions, and even cities. The Northeast U.S. has the “RGGI” rule for GHG emissions from power plants there, while California’s new AB-32 has demanding rules for many industries. And then there are rules that only indirectly affect carbon emissions, such as “green building” rules and renewable energy standards. Even federal GHG rules are not gone. First, the GHG Mandatory Reporting Rule (40 CFR Part 98) requires a variety of industries to report (not reduce) their direct emissions. Finally, the US EPA will be required to pass legislation to reduce GHG emissions through the Clean Air Act (CAA). Required? Yes. Several courts have ruled that GHGs are a “pollutant”, and the CAA requires the US EPA to regulate all pollutants. But, the CAA is not the ideal way to legislate reductions of compounds with no direct, health-based effects. Rules based on the CAA may impact some industries harder than others compared to specific GHG-based rules (theory of “square peg in a round hole”).

The writing is on the wall for many U.S. industries, including the power industry. Change positively with the times, seek consumer preferences, and work with new technologies and together with the government and there is a chance to benefit from the available transition to clean energy and benefit the bottom line. A New Year’s Wish for 2012.

Get more useful information in our blog: www.CCESworld.com/blog
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This Environmental News for You is meant to provide background on draft rules. CCES experts can assist you in strategizing to comply reliably with these new and other regulatory standards.

November 8, 2011

This seems a bit of an oxymoron. After all, how much can banks contribute to environmental sustainability? Banks do not require a lot of water to operate or release toxic pollutants into the air. To my knowledge the printing of money does not have a large carbon footprint. While banks and all office-based enterprises can be made more energy and paper-efficient, saving significant expense, it won’t save the world.

But in reality the financial industry can have a major impact on global climate change and energy issues by how it finances new projects. Banks provide the capital that every new project or business needs to start and grow. To maximize its payback for money lent or invested and to reduce risk of loss, “green” is being recognized as very important. Several major banks and investment houses are beginning to recognize that investment in green buildings and clean and smarter infrastructure is needed in the U.S. and can result in good returns and low risk of failure. They recognize this as good economics and not being “cool” in any way. A study by AT Kearney showed that between 2008 and 2009 (during the economic crisis), companies that had a sustainability focus (i.e., listed on the Dow Jones Sustainability Index or Goldman Sachs SUSTAIN list) outperformed equivalent companies across the board by 10 to over 25%. That certainly would be preferable companies for financial firms to invest in.

And then there is growing concern about climate change. The banking community is now taking the cue from the overwhelming majority of the scientific community that now believes climate change is real and could potentially do extreme damage to manmade structures and projects. The risks and liability are real. The United Nations Environmental Programme estimated that lost value of buildings and structures because of climate change could total $1 trillion every year by 2040. This is forcing the insurance and banking industries to look into more investments in projects that are less vulnerable to storms, etc. and/or represent positive steps for climate change mitigation.

Finally, many investment houses are beginning to recognize that companies or projects with potential environmental issues represent a major investment repayment risk. Incidents like last year’s BP Deepwater Horizon resulted in reputational issues for the firm, as well as the billions of dollars spent to clean up natural areas and places where people live, work, and play. Companies now realize that the government and the public will expect nothing less than complete restoration of a site to its pre-accident condition, money not withstanding. While BP was flush with cash, most others would have had to declare bankruptcy and not pay back investors. Financial institutions are now including “what if” environmental risk in their calculation of whether to invest or not.

CCES can help your firm develop a viable and recognized sustainability program and can help determine whether projects have potential high climate change risk or not.

April 19, 2011

This blog has provided many reasons to go “green”, both for companies, as well as the nation and the world. Here is another that has not been mentioned yet: a serious attempt to go green will spur technical innovation, new inventions, and cut costs on others. We have seen this already with the space program. While it got us to the moon in 1969, perhaps more important, it lead to the patenting and development of many technologies that directly influence our lives today (i.e., better performing engines and tires, the Internet). The quest for “clean” energy and less polluting activities has already spurred some new inventions taking reasonable steps to achieve this.

A North Carolina State University team has successfully demonstrated preliminarily that water gel-based solar devices (called: “artificial leaves”) can act like solar cells to make electricity. According to an article in the Journal of Materials Chemistry, bendable units composed of water-based gel infused light-sensitive molecules (like plant chlorophyll) coupled with electrodes coated by carbon materials can successfully generate electricity. Some researcher believe the best way of developing renewable energy sources is to make them more closely imitate nature. Such units could be more beneficial to our environment than the present standard silicon-based solar cells.

Another example is an invention marketed by a company called DEC Green called “Big Belly” Trash Compactors. These are solar-powered trash compactors placed in outdoor areas, such as parks, to compact trash placed inside of it, saving the municipality labor in terms of number of times garbage is picked up in a large park and the energy of their existing services compacting whole trash. In addition, such trash compactors is a very visible symbol that a municipality is looking to “go green” and save energy.

Finally, comes the ambitious plans from a company called A Better Place to provide electric cars which will not burn gasoline and cause emissions at the ground level. Cars will be run on batteries powered from electricity derived from a power plant some distanc away, whose emissions at least exit from a more efficient turbine at a high point and more diluted before it reaches ground level. A problem with this technology is that no one would drive such a car without the opportunity to recharge or replace the battery at convenient intervals. A Better Place is focusing on Israel and Denmark and parts of Ontario and of California to install the infrastructure to have frequent stations to remove and replace batteries in a matter of minutes for the convenience of the driver. This is a big gamble and investment, but could go far to wean many off of gasoline in the future.

CCES can help you research new and innovative technologies to save you considerable energy use and costs and provide you with information about them, their ability to work for you, their advantages and disadvantages, and cost savings of such technologies.

April 5, 2011

I recently attended a local ½ day workshop on sustainability. 4 speakers from 4 major companies each spoke about their companies’ efforts to reduce their carbon footprint, reduce waste generation, conserve water, etc. Smiley talk, of course; they want to put their companies in the best light. During Q&A, a person in the audience asked what each company was doing about climate change adaptation. Not one of the speakers – and these are managers in their companies – understood the concept. They all repeated how they are reducing GHG emissions. Oh, Brother!

Climate change poses major risks to all of us. Predictions of higher temperatures and greater and more intense storms will have major impacts on our health, how we live, how businesses survive, how we grow crops. Is this the “lamestream media bitching”? Fear of disastrous Climate Change effects is being voiced by none other than the insurance industry. They are worried about being responsible for growing payments on waterfront property and storm damage. In the last 30 years, direct economic losses due to natural catastrophes, of which 78% are weather-related, averaged $90 billion a year. If climate change exacerbates this, the number of disasters and costs to mitigate will increase. This has been brought to the forefront by the horrific natural disaster in Japan.

Even “minor” flooding or storms can impact businesses, such as by affecting how raw materials are produced and transported to and from a manufacturing plant and shopping patterns. Not getting product out to market can be existential for many companies. And so much of manufacturing is now global as raw materials and assembly are, more and more, taking place on different continents. By helping countries adapt to the potential worst case natural disaster effects of climate change, risk of product not being manufactured or brought to market will be reduced.

But preparation begins with the company, identifying potentially vulnerable areas and understanding the flow of raw materials, assembly, warehousing, and markets. How may changing crop yields affect the product. Many companies based in Europe and other areas are already planning for contingencies based on climate change scenarios.

Adaptation to climate change effects is actually a big public issue in Europe, but hardly discussed in the U.S. It’s funny. Of the four companies represented at that workshop, two were European-based. They probably have at least begun a climate change adaptation program. If only their sustainability managers even understood the issue!

CCES can help your company plan for potential climate change-caused disasters.

May 23 2010
Special thanks to Dennis Shelly of Apex Companies (www.apexcos.com), leader in due diligence assessments for his contributions to this article.

As I’ve written a number of times, climate change has moved in the last year from being a voluntary program for companies that’s good for the bottom line and the Earth to a program tied to regulation. There will likely be federal legislation in the next few years as Sens. Kerry and Lieberman released draft climate/energy legislation that they believe can win bipartisan support. In the meantime, a number of states and even cities and counties have or are seriously planning climate change or greenhouse gas (GHG) emission reduction rules, some written as changes to energy and building codes. They will impact how facilities operate and can result in penalties for noncompliance.

Therefore, when you are performing an environmental compliance audit or a compliance assessment as part of due diligence for a proposed merger or acquisition, an understanding of the potential obligations associated with climate change rules may be a material consideration. Certainly an assessment is vital to understanding whether significant actions will be required on the part of the operation to respond to this growing issue. In addition, the SEC has recently required companies to disclose the potential impacts of climate change on their business as part of the annual reporting process.

Here are some questions to consider involving GHGs and energy that can be incorporated into the data collection stage of an audit or due diligence exercise:
• Has a facility carbon footprint been performed? Is it subject to 40CFR Pt 98? What contributes to GHG emissions (fuel usage, electricity, mobile sources)?
• What state and/or local climate change and energy conservation rules exist? Do any potentially apply to the facility?
• For the previous three years, what were the facility’s electrical, gas and water usage and costs? Are there usage trends? What rates does the facility pay? Are they discounted compared to other similar local industries or buildings?
• Does the facility operate within any voluntary climate change or energy goals, such as USEPA Climate Leaders, Energy Star, or LEED? If so, under what operating and monitoring requirements must the facility continue to operate?
• Has an audit to identify potential reductions in energy, water consumption, and waste generation been performed at the facility? What were the results? Were actions taken on audit recommendations and if so, what gains were made?
• What are the sources of the facility’s electricity, fuel, and water? Are there options (i.e., renewable sources)? What fuel do the facility’s boilers and other equipment use? Is a cheaper or “cleaner” fuel available (e.g., are there natural gas lines that can reach the facility)? Does the region have abundant or limited fresh water sources? Does the facility own Renewable Energy Credits (RECs)?

Answers to these questions provide valuable information regarding energy, sustainability, and climate change issues affecting facilities and their monetary impacts. With more climate change rules on the way, this is important information to consider.

Environmental News for You – March 2010

Discussions about climate change policy focus on how we can reach the goal that a large majority of the world’s scientists believe is necessary: to reduce global greenhouse gas (GHG) emissions by 70-80% from a 1990 baseline by 2050. One suggested system to achieve this is called “Cap and Trade”.

Cap and trade has been bashed in many U.S. news talk shows (particularly among conservative commentators) so thoroughly that it has become tainted and even politicians who support aggressive GHG emission reductions are afraid to discuss cap and trade as a means to achieve this, lest they be associated with an unpopular approach. Let’s step back and learn what cap and trade is to determine whether it might afford a way to reduce GHG emissions with the least amount of agony to businesses.

What is the history of cap and trade, at least applied to environmental concerns? People will be surprised to learn that the first cap and trade program occurred in the U.S. and has been widely applauded across the political spectrum as a success in terms of meeting environmental goals in a way to minimize economic hardship. Another irony: this program was implemented by a conservative president (George H.W. Bush) against the fiery complaints of environmental groups. This cap and trade program was for the Acid Rain Program, Title IV of the Clean Air Act Amendments of 1990.

It was understood that several major parks and forests in the eastern part of the U.S. were being damaged (fish kills, trees dying, etc.) by “acid rain” caused by large emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx) from large coal-fired power plants in the U.S. Midwest and south traveling hundreds of miles, converted in the atmosphere to sulfuric and nitric acids, and falling with rain. Scientists predicted that forests could recover if acid emission rates would decrease significantly.

President Bush’s USEPA implemented cap and trade into the Acid Rain Program, mandating a group of strategically located coal-fired power plants to cumulatively reduce SO2 and NOx emissions by 50% from a worst-case baseline of the 1980’s. Instead of the traditional “command and control” mandating each facility reduce emissions by at least 50% no matter how difficult it would be, cap and trade gave facilities the option of reducing emissions by less than 50% or even not at all as long as they can buy credits on an open market from other facilities that controlled their emissions by more than 50%. While environmentalists complained that this represented “buying one’s way out of reducing emissions”, for the power companies buying credits represented an extra option to consider. In addition, cap and trade also represented an economic incentive to overcontrol emissions as facilities could earn credits and turn them into revenue. From the government and public’s point of view, the approach represented a guarantee that acid emissions would be halved. Since effects are regional, the exact degree of reductions at each plant was less important than the overall decrease being met.

The program was a success. The group of power plants met the 50% reduction criteria for both pollutants and surveys showed they were pleased to have these flexible compliance options and the entrepreneurial opportunity to make money. A few years later, the USEPA successfully lowered the reduction criteria to 70%. Perhaps, most important, the Adirondacks of NY, the Shenandoah Valley of VA, and other areas “came back”. Damage to trees and lakes were reversed and they fully recovered.
So critics cannot say it has not been tried successfully. Can cap and trade work on a global level for GHG emissions? There are differences which can affect success. Meeting the reduction criteria was fairly easy for SO2 and NOx; for CO2 emissions from a power plant, it is more complex. More complex strategies must be developed and implemented to reduce GHGs, such as improving energy efficiency and using renewable sources of energy. It is likely that a large reduction in GHG emissions, if applied to a company, would be more expensive to achieve. However, as a result, carbon credits would be more valuable, as we see in the Kyoto and voluntary markets. Applied to climate change, we are looking at a worldwide program applied to more industries than certain power plants. Can we scale up a regional system covering only one industry to a worldwide system covering economy-wide sources?
Results appear to be mixed. The European Trading Scheme (ETS) was considered by many a failure in that the price of carbon credits fluctuated wildly in short times. Some companies made a lot of money by overcontrolling GHG emissions and selling at the right time; others spent a lot of money to comply.

There is currently a mandatory climate change cap and trade program in the U.S., called the Regional Greenhouse Gas Initiative (RGGI) applying to power plants in 10 northeastern states. Beginning in 2009, they had to meet a baseline GHG emissions level based on actual emissions in the early 2000’s. Eventually a net decrease of absolute GHG emissions must be achieved. Cap and trade allows a plant to address unexpected electricity demand and still purchase credits to cover emissions. Virtually all credits are auctioned by the states, so one must pay to emit GHGs. In 2009, the price of credits remained fairly low for the entire year, alleviating concern that some power plants would stop generating electricity in fear that credits may be unavailable. It did help that a cooler than normal summer and a recession in 2009 helped reduce electricity demand compared to previous years.

Whether it is called “cap and trade” or whether the name is changed, a system of mandatory GHG emission reductions with incentives and credits is likely to emerge from an eventual federal climate change bill. The public, which favors addressing climate change, sees this as a way to guarantee a net reduction, while affected companies see this as a method to give them some needed flexibility. No matter what type of bill is passed, now is the time to prepare by doing the basics, such as preparing a baseline GHG emissions inventory and researching good payback strategies to reduce emissions.

Read more material in the blog: www.CCESworld.com/blog
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This Environmental News for You is not meant to be a complete discussion about cap and trade. Work with professional technical, financial, and legal experts to prepare. CCES experts can assist you in developing a program to address cap and trade and gain from of potential opportunities to gain market share and revenues.