All posts by Adam Aston

GreenBiz

Clean Energy Makes Big Strides, but Just How Sustainable is the Growth? | GreenBiz

Clean Energy Makes Big Strides, but Just How Sustainable is the Growth?

Global investment in clean energy capacity expanded by 5 percent in 2011 to $260 billion. The growth comes despite the considerable drag from economic crisis in Europe and weak growth in the U.S.

The new research, compiled by Bloomberg New Energy Finance, was announced yesterday in New York at United Nations headquarters building, site of the Investor Summit on Climate Risk & Energy Solutions.

Up from $247 billion in 2010, last year’s rise in spending on clean energy capacity offered reasons for optimism along with rising cause for concern. Note that this data includes spending on renewable energy technologies, but not advanced coal, nuclear or conventional big hydro.

The good news: Spending has quintupled in the past seven years, with outlays for solar power leading the expansion — soaring by 36 percent to $137.5 billion during 2011.

And in the global horse race for green energy leadership, the U.S. regained its lead over China for the first time since 2008. U.S. spending hit a record, at $55.4 billion, up 35 percent, as investment in China rose by just one percent to $48.9 billion.

“The performance of solar is even more remarkable when you consider that the price of photovoltaic modules fell by close to 50 percent during 2011, and now stands 75 percent lower than three years ago, in mid-2008,” Michael Liebreich, chief executive of Bloomberg New Energy Finance, said in a statement.

But lurking behind those big numbers are worries that U.S.’ resurgence in 2011 may turn out to be the lunge that precedes a stumble. Spending in the U.S. was buoyed by a big surge of stimulus funds, originally set aside in the 2008 stimulus bill, that will taper off sharply in the year ahead.

“The U.S. jumped back into the lead in clean energy investment last year,” Liebreich added. “However before anyone in Washington celebrates too much, the U.S. figure was achieved thanks in large part to support initiatives which have now expired.”

As those incentives shrink, the global wind and solar industries are set to consolidate. Supply in both the wind and solar markets exceeds demand significantly, leading to bankruptcies and pullbacks. In the solar space, Solyndra is the most visible, but one of a growing number of startups that crashed under pressure from falling solar cell prices.

Dominated by mature conglomerates such as GE and Siemens, the outlook for wind is dimmer than for solar: Global investment fell by 17 percent to $74.9 billion. To try to compete with lower-cost Chinese manufacturers Vestas, the world’s largest producer of turbines, yesterday announced it was shuttering a factory, and cutting 2,335 jobs, or about 10 percent of its staff.

Of course, oversupply means lower-cost energy systems for buyers. And even as subsidies are declining in the wealthy West, non-financial policy support remains resilient. In the U.S., renewable portfolio standards in 29 U.S. states represent a $400 billion investment opportunity, as other states finalize similar commitments.

Meanwhile, stepped up subsidies in emerging markets — especially Brazil and India — are upgrading energy services to virgin markets. Spending in these areas will replace some of the investment that is retreating in North America and Europe, said Ethan Zindler, Head of Policy Analysis at Bloomberg New Energy Finance.

Financial innovation remains a weak spot, however, especially in the U.S., where clever capital solutions could help fill the gap left by shrinking federal subsidies. Given the multi-billion dollar scale of many clean-energy investment projects, there’s been a dearth of the sorts of high-efficiency financial instruments that can bundle up batches of projects, and finance them at low cost in public markets, Zindler added.

There have been some promising precedents — such as PACE loans and solar lease-to-own programs. But nothing has yet emerged to substitute for large-scale, multi-billion federal subsidy programs. Proposals such as green bonds or a national infrastructure bank are stuck in the starting gate, said Zindler.

Institutional investors, meanwhile, are hungry for more diversified ways to put money into greener projects. “Investors need diversified, sustainable strategies that maximize risk-adjusted returns in a volatile investment environment,” said Ceres head Mindy Lubber, which directs the Investor Network on Climate Risk, a network of 100 institutional investors with collective assets totaling about $10 trillion.

The retreat of subsidies may enhance the competitiveness of products and strategies already honed to deliver higher efficiency and energy savings, said Marc Vachon, vice president of ecomagination at GE. He added that GE’s ecomagination product line is growing at twice the rate of the rest of the company, having already generated $85 billion in revenues to date.

The event saw the release of two other reports of note for folks following investment trends in green business and clean tech:

• Global investment consultant Mercer issued a new report showing how leading global investors, including the nation’s largest public pension fund, CalPERS, are integrating climate change considerations into investment risk management and asset allocations. The report, “Through the Looking Glass: How Investors are Applying Results of the Climate Change Scenarios Study” comes on the heels of a Mercer report last year showing that climate change could contribute as much as 10 percent to portfolio risk over the next 20 years.

• Deutsche Asset Management also released a new report, “2011: The Good, The Bad, and the Ugly,” describing generally mixed results on climate investments and policy in 2011 but projecting long-term growth in cleaner energy markets to continue. Positive trends included China and Germany’s continued low-carbon leadership, the U.S. Environmental Protection Agency’s issuance of new rules on hazardous air pollutants, Australia’s new carbon legislation, and Japan’s commitment to supporting the deployment of more renewable energy.

The report also highlights negative trends such as the weak performance of cleantech public equity stocks in 2011 and the expiration of several U.S. federal renewable energy incentive programs, including the “highly successful” Treasury Grant Program that expired Dec. 31, 2011. The report noted that the TGP program, in 2 1/2 years, leveraged nearly $23 billion in private sector investment for 22,000 projects in every state across a dozen clean energy industries.

Last but not least, a plug. If you, like me, have concluded that the “end of coal” is all but inevitable to prevent catastrophic climate change, check out this remarkable presentation — which ended with a standing ovation — by Richard Trumka, President of the AFL-CIO at yesterday’s summit.

Trumka, a former miner, spoke with passion about how the “end of coal” message is landing on the ground in blue-collar coal country, even as he acknowledged the dire need to address climate risks and build a low-carbon economy.

His message is cause to reflect on how labor’s interests are often misunderstood and under-represented in climate policy discussions. Where coal miners see their jobs, housing values, and culture imperiled, it’s no surprise that the politics of climate change become hard to swallow — no matter how chaotic the climate change signals may be. The same labor issues vex the proposed XL Pipeline, about which Trumka says labor remains divided, and natural gas fracking as well.

Read the transcript here or watch his talk below, starting just before the 14-minute mark. It’s well worth the 15-minute running time. If the embedded player isn’t working, point your browser here: http://www.unmultimedia.org/tv/webcast/2012/01/2012-investor-summit-on-climate-risk-and-energy-solutions-2.html:

Wind turbine photo CC-licensed by Samuel Stocker.

Global CCS Institute

A recipe to jumpstart CCS in the US – the rewards of collaborating with China, 3 of 3 | Global CCS Institute

This is the third and final installment of a Q&A with John Thompson of the Clean Air Task Force. Previously we talked about Canada’s leadership in CCS and the problems posed by focusing on CCS liability in advance of scaling the technology. In this last part of the Q&A, Thompson outlines his vision of the benefits available to the American CCS agenda by collaborating with Chinese utilities and oil companies.

For context on how quickly China is emerging as a hothouse of CCS pilots, a recent report from Bloomberg New Energy Finance (BNEF) estimated that China is home to nearly one-third of active pilot-scale CCS projects globally, many of which are focused on carbon use. China, after all, coined the term carbon capture use and storage (CCUS), notes BNEF, adding that China offers US utilities a test bed with lower labor costs, lower regulatory hurdles, ultra-fast construction timelines, ample capital, and an appetite to learn from the West.

To spur EOR, how can we bring down carbon capture costs?

There’s where we think China comes in. China has very low‑cost capture technology, but they have no or little EOR experience. Texas and the Gulf states have lots of EOR experience, but to get more oil from their mature fields will require anthropogenic CO2. We see a huge opportunity to partner with China here, to bring lower‑cost Chinese CO2 capture technology to the US. A bigger supply of lower-cost CO2 will in turn help capture more of our oil. In turn, we can export EOR technology back to China.

CATF recently hired a new staff person in Texas to develop this vision, Dr. Frank Chou. He’s a 30-year veteran of various refining and chemical companies, most recently Shell. Our aim is to develop links between China and the Gulf states region as a way to promote carbon capture in both countries. China builds projects at twice the speed of the US, and at a fraction of cost. If we can harness these global synergies, we have the potential to really drive down costs globally.

How far has this collaboration gone?

We’ve already brought AEP into partnership with Huaneng, and linked Duke with Huaneng as well. I mentioned Southern Co’s Plant Radcliff earlier: the technology there is a TRIG gasifier, developed in Mobile, Ala., by KBR and Southern Co. That technology is being built in China first, in a small, 120‑megawatt power plant about two hours from Hong Kong. That operational data will help refine the design as Kemper is built.

How has China become a leader in low-cost carbon capture?

We’ve all heard that ‘China builds one coal plant a week’. That may or may not be quite true at the moment, but they’re building at an incredible rate (see chart below), and much of the capacity is at the cutting edge of coal technology. They’re building an advanced coal gasification plant about once a month, where the US has only a handful.

It’s no different than China’s experience with factory manufacturing: there are economies of scale taking place that lower the cost to build advanced coal plants. For example, there’s a plant called Shidonkou, outside of Shanghai. They’re capturing CO2 at about $30 a ton. That same project in the United States would probably be double or triple that cost.

And then there’s the potential appetite in China for EOR. We estimate they have the potential, easily, to build 30 gigawatts of CCS capacity to supply EOR in China. Yet right now, there’s maybe only one EOR project there. With more know-how from the US, there’s huge potential for that number to grow.

But why would China be better able to solve the problem of scaling up carbon capture than here?

The math suggests that China may be able to build CCS on power plants using EOR with little or no incentives. In China, they refer to EOR-CCS as ‘CCUS’ where the ‘U’ is for utilisation.

Keep in mind the value of CO2 for EOR purposes is set by the global price of oil. So whether you’re in Texas, Norway or Beijing, you’re basically paying the same global price for oil and that price establishes the same economic value of the CO2 used for EOR regardless of where you are doing it. On the other hand, capture costs do vary by region and country and in China they’re a fraction of the costs elsewhere.

So, if you buy CO2 for EOR at roughly the same price in China and Texas, but your China capture costs are a third or half what they are in Texas, you may be able to do EOR‑CCS in China on power plants without any extra economic incentives, without any need for a price on carbon.

That’s not true in Texas yet, given today’s cost of capture. To develop power plant CO2 sources, you’re either going to need some kind of incentive or deep reduction in the cost of capture technology.

But we can lower capture costs with China’s help. We can harness that global synergy to scale up 30 gigawatts worth of CCS for EOR in China in a matter of years. That scale of development lowers costs of capture technology globally. Building that much CCS first in the West would take decades. China is a really significant strategic opportunity that we’re trying to exploit.

So a lot of what we’re trying to do in China is break down the barriers between Chinese CO2 suppliers and Chinese oil companies, because the oil companies have the knowledge. They understand the geology but they don’t produce the CO2. If we can create US-Chinese business partnerships, the transfer of technology both ways could take years off the time when CCS is widely deployed.

At the outset, I mentioned that for me, CCS can also mean ‘Copy Canada’s Successes’. Someday, it could also mean ‘Copy China’s Successes’ too. China could be the key to creating global synergies that allow us to develop CCS technology with little or no subsidies, and no price on carbon.

Global CCS Institute

A recipe to jumpstart CCS in the US – the liability barrier, 2 of 3 | Global CCS Institute

I started my three-part Q&A with John Thompson of the Clean Air Task Force by focusing on Canada’s leadership in CCS. In this installment, Thompson outlines the problems posed by focusing on CCS liability in advance of scaling the technology.

Outside of the Texas, Oklahoma and Louisiana oilfields, questions over liability of sequestered CO2 have distracted the discussion, and arguably slowed or even stymied projects. Do you see liability fears as a barrier?

My bias has always been to deemphasize those things because, while important and necessary, they’re not urgent at this stage. As soon as you start getting the incentives and a few pilots off the ground, then the people that matter come to the table and start figuring out what really works and what doesn’t work, including for liability.

Liability risks are very important, but they’re second tier at this stage. It’s a chicken and egg problem: there isn’t a reason to worry about these risks if we can’t develop the technology. It’s like deciding, in 1914, what are the speed limits and color of signs for the interstate highway system.

I’m a firm believer that the regulations on this have to evolve as we learn from projects. We have much of the necessary expertise to get these right, again, with the EOR industry, which is very comfortable with liability.

So a lot of the things that we’ve done in the United States — Class VI rules for saline injection, we’ve done by learning from rules developed for Class II wells for EOR. Certain states have accepted liability while others that have chosen different paths — all that’s well and good, and will become more important and will evolve as soon as we get real projects on the ground.

Do you see a difference in the liability outlook for CCS in oil formations versus in saline injection?

There is an advantage for the first round of CCS development to put CO2 into old oil fields instead of saline sites. EOR provides certainty and revenue needed to finance projects. The likelihood is strong that the cap rock must be pretty good. Otherwise, you wouldn’t have oil there or natural gas in the first place. The issue is whether you’ve punctured that geology with old wells, and whether those old wells are closed properly and won’t become a pathway to the surface. Saline is critical too, but often less is known about the geology and so more studies are needed.

The allure of saline injections, presumably, is that the geology is more common, which would minimize the CO2 transport networks. Isn’t that a good reason to explore saline first?

The challenge with saline is that everybody who has a power plant or a large industrial source wants to minimize the pipeline costs and inject directly beneath their site. So how do you set up a system that actually begins to develop the best saline sites first and discourages people from, say, injecting under their own property where geology might not be as good just because it’s the least costly option?

One of the things that we think would be really helpful on the saline side is something we call a geologic storage utility. It would be a utility charged with handling the CO2 in a one or two‑state area and figures out where the best sites are first and helps build out the pipelines, so that we actually develop what’s easiest to characterize, and avoid black eyes.

Speaking of black eyes, given rising public opposition to natural gas hydrofracking in the US, do you worry about resistance to CO2 injection trials?

Resistance will depend on the site and the scale and a lot of other things, but the risk is rising. And certainly, the last thing we want is one failed site — a CO2 leak — to discourage the whole industry. To reduce resistance, people need to feel the project is safe. They need to believe it is worthwhile. This is a point where better education is needed. Quite simply, it’s game over for avoiding the worst aspects of climate change if CCS isn’t widely used. Fossil fuels use worldwide is projected to rise 50 per cent by 2035. CCS is effective because it can capture 90 per cent of the CO2 from stationary sources — new, existing, gas, or coal.

In that sense EOR can turn the CCS story into a potential success story – it helps recover more oil – shifting the focus away from worry over what CO2 does in the ground. Is the EOR potential big enough to drive significant carbon capture investment?

I think that’s really the interesting, fun fact here. Policymakers don’t necessarily understand that if you want to really reach the full potential of domestic oil production in the lower 48, particularly in Texas, and Mississippi, you’ve got to capture CO2 from power plants.

We’re running out of low-cost natural sources of CO2. To really develop the residual oil zones that are in the watery layers below the traditional producing wells, you need high volumes of CO2 and it will have to come from industry. Some of that will come from low‑cost sources such as natural gas processing and chemical manufacturer refineries. But ultimately, it’s going to take power plants.

Thanks John. We will continue our conversation tomorrow with a focus on the Clean Air Task Force’s plans to spur collaboration between the utilities and the oil sector in the US and China to accelerate the development of CCS.

Next…

  • A recipe to jumpstart CCS in the US: the rewards of collaborating with China – A conversation with John Thompson of the Clean Air Task Force (Part III)
Global CCS Institute

To jumpstart CCS in the US, look to Canada and China, 1 of 3 | Global CCS Institute

To John Thompson, CCS is an acronym with more than one meaning. To anyone in the Global CCS Institute’s community it means ‘carbon capture and storage, or sequestration.’ As director of the Coal Transition Project at the Clean Air Task Force, Thompson’s career is committed to accelerating the development of technologies to help cut greenhouse gas emissions from coal. He sees other possibilities for the three-letter acronym too.

On eyeing the progress being made by Canada, Thompson quips that the US might benefit if we took the acronym to mean ‘Copy Canada’s Success.’ He contends our northern neighbor has gotten the mix of incentives, policies, and industry concentration just right, so that programs are gaining momentum, at a time when US efforts are off-again than on-again.

China offers another variant of the acronym: ‘Collaborate with China’s System.’ Thompson sees huge potential gains for the US by collaborating with China, as its huge energy sector continues to binge new coal-fired power plants. With its deep capital resources, fast construction timelines, and willingness to demo cutting edge carbon capture systems.

My introduction to Thompson’s views came in New York last fall at the Institute’s roundtable for Climate Week. Intrigued by his vision of the promise of cross border collaboration, I spoke with him more recently at greater length to learn more about his take on CCS in the US, Canada and China. I’ve broken down our conversation in three parts. This first part, below, touches on US and Canadian efforts. In Part II, due tomorrow, Thompson opines on the barrier posed by a premature focus on CCS liability. In Part III, due Wednesday, he outlines an ambitious collaboration his organisation is developing between utilities and enhanced oil recovery (EOR) players in the US with their peers in China.

There is a lot of criticism saying that CCS efforts in the US are foundering. You’ve suggested we look to the north for a better way. Why?

It’s my version of CCS: ‘Copy Canada’s Successes.’ There are three things that Canada has done well that are key to making CCS work. One is incentives — the carrot part. For example, Alberta has put C$2 billion on the table to move a number of projects that will probably sequester about five million tons annually of CO2 by 2015. Some of those are going to break ground in 2012 or even this year.

The second thing: they’ve done regulations right, in a way that provides a reason to do CCS. These aren’t final, admittedly. But they’re taking shape. In the fall, Canada issued draft federal regulations that will set, for the first time, CO2 emission limits on coal plants. These rules set emissions at the level of an uncontrolled natural gas plant — so, call it a 65 per cent reduction. The key thing is you have to meet that standard whether you’re a new or an existing plant. But if you’ve certified that you’re going to put on carbon capture and storage, you can meet the new standard in 2025. That timing is important. It sets up an achievable standard — what I call a ‘partial capture’ level — and offers enough time to actually get the planning and construction completed. That’s a really good formulation that the US could learn from.

Then the third thing that they’ve done right is what I call the ‘nucleus’ of a CCS industry: the ICO2N network, which brings together coal, oil sands, and power utilities, all of whom have a strong interest in developing CO2 capture and storage in Canada.

What makes for a CCS nucleus area?

Look, this is no different than the car business. If you wanted to start manufacturing autos 50 years ago, you needed a lot of other industries assembled around you, to give you the component parts, the engineering services, and so on. It’s not quite a perfect analogy, but with CO2 there is a similarity.

For a one‑off CCS project, that’s an approach that can be done once, practically anywhere. But if you really want to do two or three projects, you need to create a community of skills and resources that is more sustainable, to build pipeline infrastructure, develop regulatory knowhow, nurture a critical mass of specialized engineers and geologists, and so on.

It’s the combination of incentives, rules, and an industry nucleus that make up the ‘secret sauce,’ so to speak, that we need to be replicated elsewhere around the world for CCS to thrive.

Some have said the US experience has suffered for being spread too thin, with projects in the South, Midwest and Northeast. Does the concentration of resources help?

Yes. Creating a density of projects in a certain area facilitates other things, like pipeline development, or developing regulations and regulatory expertise that enable projects to move ahead.

I think the Department of Energy has put forward something like US$8 billion over the years on CCS projects in various locations. But imagine if you had focused all that money, say, in Texas, where there’s a lot of EOR. You might have seen a faster, bigger bang for your buck. Canada, for its part, is concentrating more of its efforts in its middle section, though there are other projects farther afield.

Here in the US, we have a similar nucleus in the Gulf states, where oil and CO2knowhow are deeply rooted. What’s the potential there?

[We] just hired Dr. Frank Chou, a 30-year veteran of the petrochemical industry, in Texas to facilitate what we call the Gulf States-China Initiative. Think about Louisiana, Alabama, Mississippi, Texas: they’re all places with either a lot of oil fields, a lot of EOR — or a lot of potential EOR — and a lot of expertise. You have many of the key resources in place, such as the Texas Bureau of Economic Geology. You have companies like Denbury that build pipelines. You have a billion tons of CO2 injected over the last 30 years in the Permian Basin alone. There is a lot of real, hands-on experience there, ranging from the drilling, to the pipeline, to the monitoring.

It’s interesting to look where US CCS integrated projects are happening at the highest rate. There was a lot of flurry in the Midwest, initially, over the last 10 years, but it’s really been places like Mississippi and Texas where the projects are actually breaking ground. You have the Kemper Plant in Radcliffe, Miss., Southern Co.’s 582 megawatt IGCC plant with 65 per cent capture that broke ground last December. And there’s Summit Power’s Texas Clean Energy Project, too, which looks to be on track to break ground next year.

Both of these plants are globally important. Kemper is a big deal: this isn’t a pilot-scale project. It’s the real deal, a full-scale IGCC plant, approved by the Mississippi Public Service Commission to be funded out of the utility’s rate-base. And, it’s selling the CO2 for use in EOR, via a pipeline being built by Denbury. Likewise, TCEP’s model is all about commercial viability, by converting some of the CO2 into urea and other chemical by-products, and selling the remainder of the CO2for EOR.

This ends part I of my chat with Thompson. Tomorrow he discusses how worries over liability of CO2 storage are putting the cart before the horse.

Next…

** For more on the Texas Clean Energy Project, check out my recent Q&A with Summit Power’s Laura Miller, who is championing the TCEP project.

GreenBiz

How EnerNOC is Evolving Smart Grids and Building Energy Management | GreenBiz

How EnerNOC is Evolving Smart Grids and Building Energy Management

When I first met EnerNOC co-founder Tim Healy back in 2007, he was riding high on the results of a successful IPO. Catching up with Healy just a few weeks ago, I was struck by the dimming of the outlook for cleantech in the intervening years.

Five years ago, EnerNOC’s IPO was a bellwether in all-too-brief moment of exuberance for cleantech that marked that year. Listing in late May 2007 at a price of $26, EnerNOC’s IPO was a hit. The share price surged 20 percent in its first day of trading, and nearly doubled to $50 within six months.

At the time, EnerNOC offered something counterintuitive amidst all the breathless coverage of next-gen solar panels and complex batteries recipes. Rather than generate clean energy, EnerNOC was helping to solve energy shortages by reducing demand.

By taking control of commercial customers’ big equipment — think office building air conditioning systems — and turning them down briefly during periods of peak demand, EnerNOC could cut its customers’ bills by negotiating discounts with utilities. The plan helped utilities too, by giving them a way to cut the risk of costly blackouts.

These days, the atmospherics around cleantech are decidedly less exuberant, damped by partisan bashing, cheap natural gas and especially economic recession. EnerNOC’s stock has settled into a range just above $10 in recent months. Yet its business model has thrived and evolved, establishing demand response (or demand reduction, DR) as a fast-growing business and attracting a raft of competitors.

“We were among a small pack at the beginning competing for a land grab in the demand response market,” said Healy, the company’s CEO and chairman.

By most measures, EnerNOC scored well in that land grab. From a few dozen utility partners in 2007, the company now has contracts with hundreds and has expanded internationally, most recently to the United Kingdom and New Zealand. And its technology has evolved dramatically.

In the early days, said Healy, demand reduction amounted to relatively simple on-or-off decisions. During times of peak demand, equipment would simply be shut off.

“We call that DR with a machete,” he said.

These days it’s more like DR by microscope and tweezers. The combination of EnerNOC’s remote management software and advances in customers’ equipment — from freezers to digital lighting — make it possible to throttle down demand incrementally, following complex priorities. This ultra-fine control minimizes disruptions to operations, while delivering maximum dollar savings and maintaining grid stability.

This evolution toward automatic response technologies has accelerated DR’s business, and opened new opportunities. Where requests for reductions used to arrive a day or hours ahead of anticipated needs, these days contracts call for response times of minutes or seconds.

This is drawing EnerNOC and its peers into the role of automated grid management. The company’s recently-inked 150-megawatt DR project with the Alberta (Canada) Electric System Operator delivers not DR per se, but rapid response to grid variations to help maintain stability in the regional grid.

The fast-growing scale of wind and solar in recent few years has opened up a surprising variant for EnerNOC’s technology that works in reverse to demand reduction. In the Northwest, the Bonneville Power Administration has experienced periods when its dams and windmills spin out too much power, which can overload the grid. So the BPA has been searching for a way to increase demand on short notice.

EnerNOC is helping it to do so. In a pilot project, EnerNOC can push excess power to commercial facilities to heat up ceramic brick room heaters and/or boost the temperature of water heaters. The technology essentially stores excess electricity as heat, which can be drawn down later.

“We’re not just curtailing load. We’re ramping load up too,” said Healy. In addition to making more heat, making more cold also works. Cold storage facilities, for instance, can pull in surplus juice to chill their facilities to lower temperatures or make more ice, essentially storing excess load as cold.

Next Page: EnerNOC’s move into grid management, ‘persistent commissioning’ and more.

In addition to grid management, EnerNOC is also using demand reduction as a stepping stone to enter the broader field of energy management, to run the buildings and campuses of its clients. This gives EnerNOC a broader marketplace, for sure, but also brings it into head-on competition with bigger, deeper-pocketed incumbents such as Johnson Controls, IBM and Siemens.

It’s been a natural extension of EnerNOC’s expertise. As the company has grown, its software engineers have had to master an increasing diversity of software standards, control protocols, and other arcana — the code that runs offices, buildings, and the machines inside them. Expertise in these software layers has opened up a new frontier the EnerNOC: smart building systems.

“We want to drive towards a goal of ‘persistent commissioning,’ ” said Healy, where EnerNOC provides not just demand reduction services but real-time management of building systems.

The approach permits on-the-fly performance optimization, as well as the ability to detect faults. By mapping regular user patterns — escalators are always off from midnight ’til 6 a.m., for example — software can learn to take action if, for instance, an escalator motor energizes at 3 a.m.

“Managers have information systems for their finances, sales, manufacturing, practically every aspect of their operations,” said Healy, “Everything except energy. There needs to be better intelligence for the customer and utilities.”

Meanwhile, the DR market continues to mature.

“We’re seeing sectors coming to us that weren’t on our radar a few years ago,” said Healy. EnerNOC has recently begun to develop DR services for big farms, orchards and vineyards. They’re a natural fit. Big agriculture operations use lots of power to run remote irrigation pumps and other machines. These can be temporarily turned down with little harm to the crops. Installing intelligent sensors and controls on this network of pumps can deliver energy savings and other benefits too, such as reduced labor needs and fault detection.

Another potential growth segment is commercial sites that have until recently been too small to invest in DR: drug stores, convenience shops and gas stations. With all the fridges and display cases, these sites, in aggregate, face sizeable energy bills, yet are often too small to invest individually in smart energy management systems.

“If you could bring a packaged solution to these guys,” said Healy, “bundling up a series of outlets, you could see 10 percent or better savings at each site.”

I asked if the slow growth of power demand poses a drag on EnerNOC’s outlook. After all, during the recession, U.S. electricity consumption actually shrank and has grown only very slowly since. Healy told me overall electric demand growth is secondary to other trends.

First, there’s a coming wave of power plant retirements. With the EPA’s adoption of mercury rules on Dec. 21, utilities across the nation must shutter scores of their oldest, dirtiest plants, and will have to find alternatives. Secondly, the renewable energy standards now in place in most states drive demand for the sorts of grid stabilization services that EnerNOC is expanding into. Next, utilities continue to scale up spending on efficiency programs, an area where EnerNOC is positioned to help meet goals.

Plus, with overall growth flat, companies are working to shave costs: “One of the common refrains we’re hearing from customers is, ‘My top line isn’t growing, what can I do to cut costs to improve my bottom line?’ ”

And lastly, even if some factories have eliminated one of three shifts, for instance, they’re typically running daytime shifts at max, such that peak demand is still high.

“Even though overall usage is down or flat in some areas, we still continue to see peak records being set,” said Healy.

EnerNOC has some $1.3 billion in projects in its pipeline, Healy said. That’s roughly five times last year’s revenue of $280 million. The healthy pipeline has led many analysts to tag EnerNOC’s shares as undervalued. Thinking back to the IPO, Healy couldn’t agree more.

For more on EnerNOC, check out this podcast of Chrissy Coughlin’s conversation with Tim Healy here for GreenBiz.com.

GreenBiz

How SolarReserve Navigates Darkening Prospects for Big Solar in the US | GreenBiz

How SolarReserve Navigates Bleak Predictions for Solar in the US

On the sun-baked plains outside Tonopah, Nevada, a huge white pillar is inching upwards, as concrete piles up towards an ultimate height of some 60 stories. The slender structure is evidence of the tangible progress — and rising risks — facing a dwindling number of developers of large-scale power plants in the deserts of the western U.S. slated to make electricity by converting the sun’s heat into power.

I recently caught up with Kevin Smith, the Chief Executive Officer of SolarReserve. The Santa Monica, Calif. company is building the tower that will sit at the heart of its $900 million Crescent Dunes Solar Energy Project. Smith emphasized that while the tower attracts a lot of attention, it may be that the project’s ability to store the sun’s energy will become its most competitive virtue, particularly at a time when as the solar market is being rocked by plummeting prices for photovoltaic panels, a competing technology.

Topping out at over 600 feet, the Crescent Dunes solar tower will rank among the tallest structures in Nevada. It has to be that tall to absorb the reflected light from some 10,000 billboard-sized mirrors that will be installed in concentric half circles around its base. Once complete, the pillar will be capped with a collector, at which all those mirrors will point, focusing the sun’s rays. Where the reflected rays converge, temperatures will hit over 1,000 degrees Fahrenheit.

To make electric power, this thermal energy can be used immediately to generate steam in a turbine. Or the heat can be stored, absorbed in molten salts kept in insulated containers. This trick solves the intermittency problem that bedevils most renewables. Drawing on this stored heat, the facility can control when and how much electricity to make, and command a higher price from utilities by supplying power when demand is highest.

This ability to deliver power on demand makes the Tonopah project different from all but a very few large-scale renewable energy installation in the U.S. Windmills and other kinds of solar farms can store energy only by using costly battery banks, or pumped air storage or pumped hydro, both of which require relatively rare sighting conditions. Tonopah’s design is the largest of its kind, building on precedents set by a pair of smaller solar towers that have been operating in Spain and Arizona.

Since construction started in Tonopah last August, Smith would seem to have plenty to celebrate. Once the tower is complete, laying out the field of reflecting mirrors will follow. Come December 2013, the project is slated to begin feeding up to 110 megawatts of power into the western grid. What’s more, Tonopah is just one of a backlog of some 3,000 megawatts of energy projects SolarReserve has in its pipeline, including contracts to build two other solar towers in Spain and California.

But, when asked there would expect to see more projects in the U.S. further out, Smith was pessimistic. While financing for current projects is locked in, the Dec. 31 expiry of the so-called 1603 Treasury grant program — which offers a 30 percent federal cash grant to qualified renewable energy projects — threatens to stall the development of future large-scale solar plants.

The grant, along with many other renewable energy subsidies has been drawn into the toxic politics stemming from the failure of Solyndra, which was granted $535 million federal loan guarantee to commercialize a novel design for tube-based solar panels. Critics have gone on the warpath, questioning practically all renewable-energy projects that have received federal funds. SolarReserve was offered a $737 million loan guarantee by the DOE last May to help build the Tonopah project.

The hostile partisanship, together with shrinking federal funding, is souring a hot market here. “Unfortunately, U.S. policy is going in the opposite direction of much of the world,” Smith told me. “We’d love to have our home market continue to develop, but it looks like the next 12 months will be pretty flat.” In response to this uncertainty, SolarReserve has been expanding its development efforts overseas.

Were SolarReserve to de-emphasize U.S. projects, it would be another in a series of setbacks for U.S. solar technology and developers. Beyond the partisan backlash and broader economic recession, a key cause for these woes has been the plummeting cost of conventional photovoltaic panels, which have collapsed by roughly half over past two years.

The downward price spiral was the key culprit and Solyndra’s crash, and others have followed suit. U.S. players Evergreen Solar and SpectraWatt have likewise gone under. Just before Christmas, energy giant BP, once famous for a commitment “Beyond Petroleum”, fully exited the solar business, saying it “can’t make money” selling panels. Analysts agree that this brutal shakeout will continue, jeopardizing mature and startup solar players alike.

Plummeting PV prices are affecting SolarReserve’s competitors too. Indeed, its progress in Tonapah is all the more notable given the attrition rate of other efforts to build very large concentrated solar thermal (CST) projects. Once regarded as a low-cost way to capture the sun’s energy, many CST facilities have been done in by the tumbling price of conventional solar panels. To date, solar farms totaling 3,000 megawatts of capacity have switched from CST to conventional panels. That SolarReserve has avoided having to make such a switch is partly due to the edge offered by its ability to store energy.

Complicating any discussion on the future of solar is that, for all the harm ultra-cheap PV panels have done to some U.S. manufacturers, they have provided windfall savings for many panel buyers and many project developers. In the U.S., the industry is closing out its biggest ever year, with upwards of 1,700 megawatts worth of solar brought on-line, nearly double the 887 megawatts installed in 2010. Blue-chip investors continue to pile into new projects, too. Last week, Google laid out $94 million to fund four new solar power farms near Sacramento, Calif.

Come 2013, when SolarReserve’s solar tower starts to glow, the sight will surely attract tourists, press and industry attention. Here’s hoping the tall tower won’t mark the nadir of home-grown U.S. solar technology, as well.

NRDC OnEarth

Meet the Change Makers: Avon Calls for a Green Makeover | OnEarth

Q&A with Avon’s director of corporate responsibility Susan Arnot Heaney

The first “Avon Lady” started knocking on doors in New Hampshire back in 1886, selling beauty products directly to her friends and neighbors. The door-to-door approach may seem familiar — even quaint — today, but it was groundbreaking at a time when women had few job options outside the farm or factory and rarely owned or ran their own businesses. By offering credit, products, and sales support, Avon created the possibility for them to do so. By the turn of the century, the ranks of Avon Ladies surpassed 5,000.

Today, more than 6.5 million independent sales representatives sell Avon products in over 100 countries to more than 300 million customers. Echoing its original appeal in the United States, the brand continues to find fast success opening up opportunities to women in emerging markets such as Kazakhstan and Saudi Arabia. With a product line that now spans makeup, perfume, and jewelry, as well as gifts, clothes, jewelry, and housewares, Avon’s sales totaled $11.3 billion through September.

These big numbers inspire Susan Arnot Heaney, but they also make her job more difficult. As Avon’s director of corporate responsibility since 2006, Heaney focuses on developing, tracking, and reporting efforts to reduce the impact of Avon’s activities on the planet. Each year, the New York-based company has to balance expanding its business while also managing and reducing the use of resources, including trees to make hundreds of millions of catalogs, tons of palm oil for its cosmetics, more energy, water and other materials.

In recent years, Avon has mapped out in increasing detail how, when, and by how much it wants to alter its impact. Earlier this month, the company published its third corporate responsibility report detailing efforts and goals set out in 2009-2010. By 2020, for instance, Avon aims to cut its consumption of water per unit produced by 40 percent, compared with a 2005 baseline, while also aiming for 20 percent absolute reductions in energy use and greenhouse gas emissions. In the same period, Avon aims for its operations to produce zero waste by fully recycling or reusing any leftovers from its factories and distribution centers.

OnEarth contributor Adam Aston recently caught up with Heaney at the unveiling of the company’s new LEED Gold-certified Manhattan headquarters to learn more about the beauty brand’s sustainability agenda and how it aims to harness the power of millions of “affiliates” — better known as Avon ladies — to help further it.

Susan Arnot HeaneyThe “Avon Lady” is practically a cultural icon, yet on Main Street, Avon storefronts are conspicuously absent. How do you get by with no brick-and-mortar stores?

It goes back to 1886, when David H. McConnell founded the company. At the time, women had relatively limited job options: teaching, factory work, and farming jobs dominated. Very few owned their own businesses.

Starting with the first Avon Lady, in New Hampshire, McConnell devised a model that let women build a business of their own, by selling cosmetics face-to-face.

The approach also meant that Avon has never built shops or showrooms. Today, our store is a brochure, and our website. Our representatives use these to show products to millions of customers in more than 100 countries. Orders are delivered by via mail, online or through mobile technology.

In terms of our sustainability efforts, this means that, unlike other big retail chains, we have never had to build — or heat, cool, and fit out — storefronts. That said, we still have millions of square feet of real estate worldwide — offices, factories and distribution centers — and ourGreen Building Promise ensures all new or major renovations around the world are certified “green,” such as our U.S. headquarters in New York City.

But this model means you print a lot of paper?

Yes. We’re one of the largest printers in the country. Our product brochures — we call them “brochures” because that’s what they were dubbed in 1886, even though you would call them catalogs — are printed around the world.

They’re smaller than a regular magazine: our current holiday brochure is about 5.5 inches wide by 8 inches high and has 227 pages. And we produce one campaign like this every two weeks, all year long, printing here in the U.S. somewhere between 13 and 17 million copies for each. Then there are our even larger international sales. Brazil, for example, is a bigger market for us than the U.S.

Keep in mind, these product brochures are never mailed. We do not do anything direct-to-consumer. Instead, we ship them to our sales representatives, who order the quantity they need and then distribute them to their customers.

Isn’t the greener path to move towards paperless catalogs and ordering?

Yes. We’re paper-intensive, but we’re reducing that. Customers can go online and page through a virtual brochure. But that approach doesn’t yet address the needs of our face-to-face sales process. We’re very careful about altering that process, but we also have a robust online business and we are experimenting with lower-paper workflows.

In addition to the web, we have mobile apps for consumers and our sales representatives to place their orders. In Eastern Europe, where a smaller volume of business lets us experiment more easily, we’re testing a paperless sales model.

Recycled is considered the greenest option, since it reduces the amount of trees that are felled. Yet supplies are limited. How do you meet your enormous appetite for paper?

Yes, so we’re tackling the paper problem through a number of efforts. Last year, we launched our Hello Green Tomorrow initiative, which ties together our global environmental management work, including paper, forestry conservation, and palm oil. As part of that we announced the Avon Paper Promise, where we instituted very stringent internal guidelines for our paper buyers.

The policy was developed with input from several environmental NGOs, including the World Wildlife Fund (WWF). In October 2010 we were invited to join the Global Forest & Trade Network (GFTN), a WWF program to end illegal logging and improve some of the world’s most threatened forests.

Our goal is that by 2020 — and I’m certain we’ll do it sooner — 100 percent of our paper will be either Forest Stewardship Council (FSC)-certified or post-consumer recycled content. FSC is our preference among the “green” options for paper, when possible. But FSC is still evolving, and at any given moment, there may not be sufficient supplies available to match the size of our paper needs.

Currently, 74 percent of our product brochures, which account for the vast majority of our paper use, have already met the Paper Promise commitment. Of that, about 25 percent of our paper is already FSC-certified, and the remainder is recycled or carries other certification.

What about product packaging?

Our impact on paper is largely driven by our brochures. Because of our direct sales approach, we tend to have far less packaging per product than brands whose products sit on a shelf in a store. In those environments, the products need more packaging to prevent damage. They need more visible branding too, to fight for a buyer’s attention. We actually don’t use cartons for a lot of our products, so for instance, a tube of moisturizer won’t be delivered in a box, packed into yet another container.

A challenge with programs such as Paper Promise is to induce change beyond your operations. How do you see Avon’s efforts in this respect?

We’ve learned that the impacts beyond us depend on our size, but also on our image. With paper, for instance, we are such a huge buyer globally that we are in strong position to influence supply trends. When we press for more FSC paper, suppliers see that demand and will alter their growing and purchasing habits in turn.

Palm oil is an environmental hot spot because tropical forests are being razed to plant palm plantations. How does this differ from the challenge you face with paper?

In some ways, paper is an easier problem to solve. In part, because we have more weight given how much we buy. But also because forests can be maintained sustainably, over decades, so that trees that are cut down can be replaced. And recycled paper offers another option. With palm, the conversion from forest to plantation cannot as easily be reversed.

The other difference is the degree of our influence. In palm oil, it’s almost the reverse: we have little buying power but enormous visibility. Food accounts for a far larger share of palm oil consumption — more than 80 percent — than cosmetics, so changes in that industry are the real driver of change. In truth, even if we stopped using palm oil tomorrow, there wouldn’t have a major impact on global palm markets. But lending our name to the issue raises it in the minds of many who wouldn’t otherwise know.

What we’ve done through the Avon Palm Oil Promise is to commit to buy only certified sustainable palm oil through the purchase of Green Palm certificates. This year we became the first major beauty company to hit the 100-percent goal.

So given Avon’s relatively small size as a palm oil user, how do the company’s actions influence other buyers?

We work with the Roundtable on Sustainable Palm Oil (RSPO) to help influence industry practices. There are those NGOs who criticize the Roundtable’s efforts precisely because it engages with companies, who feel that commercial buyers are the source of the problem. I see it differently: that you have to bring everybody — the planters, buyers, and environmentalists — to the table. RSPO is the one body right now that is trying to pull everyone together. We’re doing this through Green Palm certificates, where we buy “book and claim” certificates to support plantations that commit to grow palm in a sustainable, verifiable way.

Our goal is not just to do our purchasing sustainably, but also to help drive demand for sustainable palm oil and influence other bigger buyers. We can help by raising the awareness of sustainable palm oil, increasing the supply of it, and then, through that, reducing the pressure on forests and on the endangered species that live in these endangered forests.

Palm oil aside, critics have charged that the industry has a poor track record in terms of making ingredients transparent. In fact, the U.S. Congress is considering labeling rules to require fuller disclosure. How does Avon approach this issue?

The cosmetic and personal care industry has one of the longest safety records of any, and Avon is especially proud of our 125-year commitment to safety. As one example, in a recent report on breast cancer and environmental exposures by the Institute of Medicine, the findings did not support the risk of cosmetic ingredients as a cause of concern.

Avon adheres to all labeling requirements in the more than 100 countries in which we do business. Complete ingredient disclosure is found on product labels and avon.com according to the strict guidelines established by governing bodies, allowing consumers to make personal choices on products they select.

For many companies, health and environment are lightning-rod issues, attracting lots of outside attention. But studies show consumers, in aggregate, put such concerns further down their list. How do you reconcile this?

For better or worse, most customers of any brand don’t care too terribly much what’s coming out of the back end a factory in Guangzhou. We hope more will care, since we work to keep those waste flows in accord with the best global practices. But we know from marketing studies that most of what motivates the customers are the brochures, the samples, what they see in their hands. However, numerous studies show that customers — including Avon customers — increasingly consider environmental issues as a factor in brand choice, with some studies showing an 80 or even 90 percentile level of interest.

As a result, it may be hard to say clearly that sustainability policy X drove Y sales. But we also know that sustainability is a decision with very little downside –internally with our employees or externally with suppliers and customers. And there’s tremendous upside in terms of cost reduction, risk management, and employee engagement. And it is, quite simply, the right thing to do.

What’s an example of the cost reductions that you’ve found from these efforts?

We find that there’s real passion around these issues, and that leads to real change, and genuine improvements in operations. Take Brazil, our biggest market. As you can imagine, when you’ve got hundreds of thousands of sales representatives, delivering their orders can mean criss-crossing trucks.

As part of a program requesting green improvements from our employees, the team in Brazil mapped out all these routes to find and eliminate the overlap. It was a massive project, but the savings has been amazing–in man-hours, in fuel, in speed of delivery and, ultimately, the environmental impact. And this came from someone just saying, “You know what? We have to do this better.”

TRUTH SQUAD

Checking industry claims with NRDC’s sustainability experts

Few would think of Avon as a forestry expert. Yet palm plantations in tropical Asia provide plant oils for its cosmetics. And temperate North American forests are a source of paper for its catalogs. In both markets, harmful deforestation is an ongoing threat, one that Avon is countering using its buying power and influence. NRDC experts laud Avon’s efforts in these areas but would like to see the company take even tougher steps to lower its impact and help accelerate wider change.

For palm oil, Avon has pledged to buy enough GreenPalm Certificates to cover all of its global demand. The certificate system works by offering farmers a premium price for palm grown in ways that are certified as environmentally and socially responsible, that do not destroy primary forest, and where farmers have committed to continually improve their operations. The premium paid for certificates to qualified farms acts as an incentive to lure others to improve their growing practices.

The rub? By design, certificate buyers such as Avon generally don’t receive delivery of the actual sustainably-grown oil their certificates bought. Rather, because of the way palm oil is traded, the certified crop is comingled with conventional palm oil from other producers at each stage of distribution.

This approach is “a good first step,” since it spurs farmers to change practices and boosts the total harvest of more sustainable oil, all while working within existing market mechanisms, saysDebbie Hammel, an NRDC senior resource specialist based in San Francisco. Yet Avon and others can do better, she adds. “NRDC believes that companies should progressively work to clean up their supply chains,” by requiring physical delivery of the certified palm oil, says Hammel. “This is more challenging that buying certificates, but it would ensure that none of the oil used is resulting from the harmful impacts of conventional production.”

Likewise, in its paper purchases, Avon is doing good work now but could be doing better, saysDarby Hoover, a senior resource specialist in NRDC’s San Francisco office. She lauds Avon’s commitment to buy paper certified by the Forest Stewardship Council (FSC) yet would to see Avon commit to buy a larger share of its paper from recycled sources. Recycled is better than FSC paper because to no trees are felled when making new paper from old. Moreover, less energy and chemicals are consumed to transform old paper into to recycled stock, compared with converting wood pulp into virgin paper, says Hoover.

“Avon should set a public target of 10 percent post-consumer recycled content and work towards 30 percent.” Putting that goal in writing, says Hoover, will drive industry-wide change, giving paper makers a clear incentive to buy more waste paper to convert into more recycled paper. “I’m not discouraging the use of FSC-certified paper, but there’s a hierarchy and recycled in better,” she says. — Adam Aston

 
NRDC OnEarth

Book Review — High Voltage: The Fast Track to Plug In the Auto Industry | OnEarth

Jim Motavalli | Rodale Books, 272 pp., $24.99

When the Toyota Prius debuted in the United States a decade ago, reactions were polarized. Fans loved its tantalizing mileage; skeptics scoffed at its relatively high cost and smug eco-imaging. Today, with more than two million sold, the groundbreaking gas-electric hybrid is as uncontroversial as it is unsexy, its success a profitable reward for an early, risky bet on green technology.

In High Voltage, the longtime automotive journalist Jim Motavalli argues that we’re at the start of a similar arc with electric vehicles, or EVs. As these finally hit the streets, we’re still early in the fascination-versus-skepticism phase. Pundits fret over “range anxiety” — how far an EV can go on a charge — while consumers are drawn to the remarkable mileage, the equivalent of as much as 100 miles per gallon of gasoline.

High Voltage: The Fast Track to Plug in the auto industry Riding shotgun with Motavalli, readers get a sense of how this technology may not only electrify most new cars (either partially or completely) but also remake the auto industry, rewire our electrical grid, and redefine how and where we refuel — all while lowering oil consumption and cutting greenhouse gas emissions.

For the lay reader, Motavalli breaks down the basics of the technology, untangling the often confusing taxonomy of subspecies. There are the now-familiar gas-electric hybrids, such as the Prius, which are never plugged in. There are plug-in hybrids, such as the Volt, which recharge from an outlet but also have a gas engine for extended range. And there are the truest EVs, such as Nissan’s Leaf, which use no gasoline, drawing all their energy from a supersize battery pack.

If you think the $40,000-plus Volt is too costly, Motavalli writes, blame the battery. Higher-capacity batteries may spell the difference between success and failure, which explains, he says, why “battery companies have become the rock stars of the EV business.”

How and where EVs recharge is shaping up to be a monumental technology shift in its own right. From developing a safe, standard design for EV plugs to transforming the grid to handle the EV era, the effort has pulled in some big newcomers to the auto biz. There’s Southern California Edison, which is working out the kinks to install at-home and public charging points. Then there’s GE, which is fortifying the grid for EVs and rolling out “smart grid” technologies, including curbside gizmos that will allow even garageless city dwellers to recharge.

China, already the world’s largest auto market, looms as the EV industry’s game changer. China’s top battery maker, BYD (which is one-tenth owned by Warren Buffett), is targeting the U.S. market with both battery and plug-in hybrid models, the latter priced just south of $30,000, about $10,000 less than the Volt. They’re still crude, and safety is a question, Motavalli reports, but the same was said of the first Japanese imports in the 1960s, and those turned out to be harbingers of a sea change in design and efficiency.

Motavalli concedes that “because of high cost, range issues, relatively low fuel prices, and a scarcity of federal incentives,” EVs may yet hit one of the potholes that has crashed past runs. The odds are with them, though. High long-term oil prices are driving the shift, as are moves toward higher fuel-efficiency standards. Without some measure of electrification, Motavalli contends, few manufacturers will be able to sell in tomorrow’s car markets.

A decade from now, EVs may be just one more kind of vehicle stuck in traffic. That would be exactly the sort of humdrum success EV players hope for. And it would be great for the environment, too.

View and comment on the original story at http://www.onearth.org/article/high-voltage-the-fast-track-to-plug-in-the-auto-industry.

GreenBiz

Avon’s CSR Report Gives Its Paper, Water & Energy Use a Makeover | GreenBiz

Avon's CSR Report Gives Its Paper, Water & Energy Use a Makeover

Makeup is sometimes used to conceal embarrassing flaws. Today, with the release of its latest corporate responsibility report, cosmetics giant Avon opted to reveal more about its sustainability and philanthropic work than in the past. Titled “The Beauty of Doing Good” and available online-only atresponsibility.avoncompany.com, the self-assessment covers 2009-2010 and is the third such evaluation in the company’s 125 year history.

Avon wanted to increase transparency across the “three pillars” of its corporate responsibility missions: empowering women, sustainability and philanthropy. “Presenting the report online, in an interactive format, saves paper, but also lets us update the data more frequently,” said Susan Arnot Heaney, Avon’s Global Director of Corporate Responsibility. She added that Avon plans to publish a full report every odd year, with continuous updates of new developments, performance data, news and achievements as they happen.

Produced in accordance with the Global Reporting Initiative (GRI) G3 Sustainability Reporting Guidelines, Avon’s corporate responsibility report aims for GRI Level B standards, a notch higher than the Level C achieved in Avon’s last self-assessment. The update includes a GRI Content Index listing of all standard disclosures covered in the report.

As with all such efforts, the details tell all the good stuff. Little familiar with Avon’s sustainability story until now, I was expecting to find a focus on organically sourced beauty care products. That’s in here, in the form of Avon’s policy to promote sustainable palm oil practices. I also anticipated an update on Avon’s support of breast cancer research (about to celebrate its 20th anniversary), and prevention of violence against women (founded 2004), both of which are touched on here too.

What surprised me is how much Avon has in common with the Fords and Fedexes of the world: Like big manufacturing and distribution companies, Avon is trying to drive up its energy efficiency, improve resource optimization, and chop down its waste. On those topics, here are a handful of achievements highlighted by Heaney when we chatted:

• Paper. By volume, Avon’s paper consumption leaves a larger footprint on the planet than do its cosmetics ingredients, Heaney explained. Surprised? Turns out that Avon is one of the largest commercial printers in North America. Famous for a direct-sales model embodied by “the Avon lady,” Avon has no retail outlets. Instead the company relies on “brochures” that agents pass on directly to customers every two weeks.

For instance, the current holiday edition of the North American version of this small-sized catalog was bigger than usual, but suggests the huge amount of printing Avon does: The publication numbered over 200 pages, with upwards of 15 million copies printed.

To formalize its effort to cut the impact of this river of ink and paper, Avon last year launched Hello Green Tomorrow, a broader green agenda that included the Avon Paper Promise: a comprehensive policy for promoting responsible use and protection of forest resources, and developed with input from World Wildlife Fund (WWF) and several other environmental NGOs. In October 2010, Avon joined (by invitation) the Global Forest & Trade Network (GFTN), WWF’s initiative to eliminate illegal logging and drive improvements in the world’s most valuable and threatened forests.

As part of this pledge, Avon has set a target to buy 100 percent of its paper from certified and/or post-consumer recycled content sources by 2020 with a certification preference of Forest Stewardship Council (FSC). As of 2011, 74 percent of Avon’s brochure paper met the Avon Paper Promise commitments, and approximately 25 percent of paper used in Avon’s product brochures is sourced from FSC certified forests.

• Reforestation. In 2010, as part of Hello Green Tomorrow, Avon contributed $2.1 million to a Nature Conservancy Program to help restore 5,000 acres in the Atlantic Rainforest in South America. Latin America is increasingly important to Avon, accounting for $4.6 billion of Avon’s $10.9 billion in 2010, making it Avon’s largest global market. In 2011, Hello Green Tomorrow expanded its support for reforestation efforts to Indonesia.

• Green buildings. Avon launched its Green Building Promise worldwide in 2010 as well, formalizing a long-held commitment to design and build all new major buildings and renovations in accordance with LEED (or local equivalent) certification standards.

The company achieved Gold in Zanesville, Ohio (U.S.), Sao Paolo, Brazil, and Guarne, Colombia; Platinum certification in Shanghai, China; BREEAM Very Good in Northampton, U.K. At its new U.S. Headquarters in New York City, Avon is aiming for LEED Gold for Interiors, awaiting final certification.

• GHG emissions reductions. At its manufacturing operations, Avon exceeded their initial goal of 25 percent GHG emissions reduction, on a 2002 base, four years early with a 31% reduction reached by 2008. The company has committed to a further 20 percent reduction by 2020. Overall, this would cut GHG emissions by 40 percent from 2002 levels.

• Material use & waste reduction. In 2010, Avon increased by seven percentage points to 76 percent the share of waste that was reused at its global manufacturing sites. In its distribution centers, the rate rose to 80 percent.

• Water use reduction. In 2010, Avon reduced overall water usage by 10 percent in manufacturing operations, both in absolute and per unit terms, and by 23 percent throughout administrative facilities and distribution centers in absolute terms. Avon’s long-term goal is to reduce water intensity by 40 percent by 2020.

There’s plenty more in the report. And if you simply must read it in print, you can build your own version of the report and generate a custom PDF through their site.

NRDC OnEarth

Meet the Change Makers: Tiffany’s Diamonds and Gold Get Greenish Sparkle With Stance Against Pebble Mine | OnEarth

Most businesses hungrily pursue new sources of vital raw materials. Tiffany & Co., by contrast, has begun to forge a different path. In the last several years, the company has taken an increasingly public and vocal stand against an enormous gold mine that has been proposed at the headwaters of Bristol Bay, Alaska. Pebble Mine, as the project is known, is estimated to hold more than $300 billion worth of gold ore and other precious metals.

Publicly listed Tiffany & Co. traces its roots back to 1837, when Charles Lewis Tiffany and John Young set up a “stationery and fancy goods emporium” in New York City. Today, with $3.1 billion in sales last year, the storied jeweler has a very big appetite for gold, diamonds, and similar earth-borne treasures. Yet Tiffany CEO and chairman Michael J. Kowalski sees the near-term costs of squelching a new gold supply as far outweighed by Pebble Mine’s potential risk to the environmental, and in turn, to Tiffany’s brand.

The proposed mine lies within a 40,000-square-mile watershed, filigreed by dozens of pristine rivers and tributaries, that is home to beavers, moose, and caribou, which feed off summertime plant growth. A huge population of bears, as well as the native Yupik people, relies on the annual return of spawning sockeye salmon, a flood of wild fish that ranks among of the world’s largest such runs. Opponents argue the fishery — worth hundreds of millions of dollars a year — and the broader ecosystem could be imperiled by mine construction and runoff of acids and dissolved metals. “I can’t think of a mine that threatens more ecological value in North America than Pebble,” Kowalski said.

Tiffany’s take on mining issues has evolved over a two-decade span that roughly coincides with Kowalski’s tenure, during which time the company has faced the overlapping crises of blood diamonds and conflict gold. Mining practices in strife- and famine-torn regions have led to grievous human rights abuses, as warring factions fight for access to mineral wealth, as well as environmental damage, such as mercury pollution from small-scale gold-mining operations. Today, the company states flatly that, with respect to mining: “We recognize that some public lands are simply not suitable for mining, and that their value for recreation and conservation is far greater than their value as a source of minerals.”

Michael J. Kowalski

Tiffany’s increasingly visible commitment to sustainability is documented in its first corporate sustainability report, released last month. In addition to advocating for responsible mining, the company has also focused on its retail operations — manufacturing its iconic blue boxes and bags, for instance, exclusively from materials certified by the Forest Stewardship Council. Efficiency upgrades and solar panels in its stores have lowered greenhouse gas emissions by more than nine percent per square foot since 2006.

OnEarth contributor Adam Aston recently discussed Tiffany’s evolving approach to sustainability with Kowalski at his office — decorated with photographs of family travels to national parks in the United States and overseas — at the company’s Fifth Avenue headquarters in midtown Manhattan.

Tiffany & Co. depends on mining, yet mining is destructive by nature. How do you decide one proposed project is promising, but another, like Pebble, is not?

It’s difficult for us to make definitive statements about what constitutes responsible mining today. But in a simplistic sense, we’re clear that it’s better to extract minerals from a legacy mine than to threaten a pristine ecosystem. That led us to Rio Tinto’s Bingham Canyon Mineoutside of Salt Lake City. The precious metals used in our U.S. manufacturing come from there as well as from recycled sources.

The mine has been there for 100 years. There are legacy issues, certainly, but today the mine is being managed responsibly. I know Mr. Redford would disagree [Ed. note: Writing for OnEarth’s Community Blog, NRDC Trustee Robert Redford has compared the threat of the proposed Pebble Mine to the environmental damage done by Bingham Canyon Mine]. But it is a worthwhile debate.

Look, we all may not be pleased with the standard of U.S. environmental regulations for mining, but they are pretty good in a global context. The greater concern is mines in less-regulated areas. Isn’t the more positive thing to source from a nearby mine that is monitored than from one that is far away, where we have no influence, and regulations are practically nonexistent, such as in, say, Papua New Guinea?

For those reasons, some have suggested that Pebble Mine would operate using the world’s best practices, including regulation and monitoring.

The argument has been made: “Well, if you really care about responsible mining, you should be a supporter of Pebble because it will be the most responsibly built and managed mine in the history of mining, and it is unfair to tar Pebble with the abuses of past mining practices.” In fairness to the Pebble Partnership (a joint venture between a subsidiary of Anglo Americanand Northern Dynasty Minerals), I want to make this clear: We have no doubt that they would do everything possible to develop that mine as responsibly as they possibly can. And I’m going to presume that the state of Alaska will do everything possible to make certain that happens if the mine goes forward.

That said, we have reached the conclusion — as have many non-governmental organizations (NGOs) and local Alaska residents — that the risk is simply too great. Despite the best of intentions, the location of this mine is so inherently problematic that it is simply not worth the risk of a catastrophic event. Other jewelers have come to the same conclusion and, like us, signed The Bristol Bay Protection pledge.

Is this is first such position you’ve taken on gold mining?

No. Starting back around 1994, we began receiving a fair amount of unsolicited mail asking us to oppose the New World gold mine that was planned right outside of Yellowstone National Park. At that point, we didn’t have the ability to see into our gold or silver supply chain, nor had our company policy on these issues been developed.

We began making inquiries, and as we learned more we thought, “If the New World mine is built, and there’s a catastrophic failure of the tailings dam, the flood would destroy a good part of Yellowstone National Park. That’s not a good thing for the jewelry industry.” It was that simple. We drew the conclusion that, as leaders of the jewelry industry — not necessarily by size but certainly by reputation — it was appropriate for us to speak out in opposition.

When did you begin to formalize your mining policies?

About 10 years ago, we began to see concerns about gold mining enter the mainstream media. So around 2001, we started making inquiries to the NGO community, saying, “We’re very interested in responsibly mined metals, but what should we do?” The response shocked us because, back then, a lot of NGOs said, “There are no standards of responsible mining yet. We really can’t tell you where to go.”

In 2002, we began working with NGOs like Earthworks to move forward on this issue. Today we abide by a set of core principles around responsible development and operation of large-scale mines.

Tiffany is synonymous with diamonds. How did the crisis of blood diamonds influence your position on mining?

Our experience with blood diamonds certainly raised our awareness about the environmental and human rights risks connected to metal mining. They weren’t remotely on our radar screen when the stories first surfaced. That’s because, back in in the early ’80s, we did not manufacture the majority of our jewelry. We bought it from manufacturers around the world, primarily from Europe, and some from the U.S. We would also buy polished diamonds — not rough unfinished diamonds — from diamantaires* in historic diamond centers such as New York, Tel Aviv, or Antwerp. Because of this arrangement, we had little insight into the supply chain beyond those levels, and quite frankly, little incentive to make needed improvements to our supply practices. [*Ed. note: Diamantaire is an industry term, describing buyers, traders, and artisans who work in the middle layer of the supply chain. Diamantaires buy, cut and polish raw diamonds before they’re set into jewelry to sell to larger wholesalers or retail jewelers.]

So dependency on diamantaires left you with little control over the origin of the gems?

Yes. Then, in essence, we became our own diamantaires. We had also undertaken a separate effort to vertically integrate our supply chain, beginning some years before the blood diamond problem first surfaced. The company was growing rapidly, and we needed to assure the flow of supply of manufactured goods, and later raw materials. We committed to cutting and polishing our own diamonds so that we could buy rough diamonds at the mine head. That gave us better knowledge of where a particular diamond came from.

The horrors of Sierra Leone crystallized this part of the strategy. We knew we absolutely had to be able to identify the country of origin and, ultimately, the mine of origin of as much of our raw materials as we could.

It’s an ongoing process. We’re not all the way there, even today. But we’re confident that over time, for diamonds, we can identify the mine of origin, and attest to the social and environmental conditions at those mine sites.

Many industries have abandoned such vertical integration, arguing that high-volume specialists can be more efficient. How has taking control over your manufacturing process affected your bottom line?

By streamlining the supply chain, we have been able to capture a greater share of the profits typically taken at each step, from mine to trader, from trader to polisher, and so on. The vertical integration has been a strong profit-driver, and it’s also allowed us to try to exercise some leadership on corporate social responsibility issues around the supply chain. For example, we have invested heavily in places like Botswana and Namibia to train diamond setters and polishers. By investing in those communities, we’ve helped create industries that deliver more income than the simple extraction of gems could alone.

We’re probably rather unique, I think, for a retailer. We are without a doubt the most vertically integrated retail jeweler in the world. We make about 65 percent of all our jewelry at facilities here in the U.S., at a site in Westchester County, New York, and another in Providence, Rhode Island. This includes the jewelry we sell around the world — in fact, we’re a net exporter, even to China.

Other industries have established standards — I’m thinking of industry-created definitions of “organic” in the food business. Tiffany has been outspoken about the need for third-party standards for responsible mining. What progress are you making?

We very much believe that if there are to be standards for human rights and environmental practices in the jewelry industry, there must be genuine third-party certification, where NGOs and other stakeholders participate in the establishment of those standards. You saw this with blood diamonds. I think the industry rallied dramatically to correct the problem by creating theKimberley Process [to certify rough diamonds as conflict-free], which I think has largely been a success.

We have every control in place to be certain that diamonds from Tiffany only have Kimberley certificates. Can I make a 100 percent affirmative claim that nothing here has every come through? No one can. And that is, I think, where some of the biggest challenges are, in trying to assure supply chain integrity.

Does this position create tension with the mining industry?

We take great umbrage at criticisms we’ve faced. Some of the pro-mining folks have said of our efforts, “This is all about public relations.” In response, I say, “Hold on. We’ve been concerned about this for almost 20 years. This is not about greenwashing. This is something we’ve been committed to. It’s what our customers want. It’s about the business imperative.”

In fact, we’re pro-responsible mining because we think that’s what is essential for the growth and long-term economic health of the jewelry industry.

TRUTH SQUAD — Checking industry claims with NRDC’s sustainability experts

The prestige of Tiffany’s brand means there is real force behind the company’s efforts to reshape the way jewelry retailers and the broader mining industry are approaching sustainability, says Joel Reynolds of the Natural Resources Defense Council, who directs its urban west program and the marine mammal protection and Southern California ecosystem projects. He also leads the Save Bristol Bay campaign, bringing together a broad coalition of interests opposing the proposed Pebble Mine in Bristol Bay, Alaska. In particular, he says, “Tiffany has a unique ability to draw attention to [Pebble Mine].”

As Tiffany turned up the volume on the issue, other major retailers such as Walmart and Target — which sell high volumes of lower-cost gems, gold and other jewelry — have taken notice, says Reynolds. This is leading to a process that he believes will improve industry practices and lead other major jewelry retailers to sign on to the The Bristol Bay Protection pledge, as Tiffany has done. At the core of the issue, Reynolds said, is the question of whether the mine can be built and operated without significant risk. “Under comparable hydrological circumstances, 93 percent of similar mines in the U.S. have failed to meet the standards they commit to in their original environmental impact assessments,” he notes, pointing to a 2006 study of water-quality problems at hard-rock mines.

Key state and federal deadlines for Pebble’s developers to submit permit applications for the mine were originally set for this year, but have been pushed back to 2012 and 2013. This suggests opposition to the project is getting traction, Reynolds says. Outside Alaska, the mining reform organization EarthWorks has successfully lobbied more than 60 jewelers to take the “No Dirty Gold” pledge, which would apply to the Pebble Mine. Tiffany & Co. is a long-time signatory. Target is the most recent retailer to sign on, in March of this year.

By taking this voluntary pledge, jewelers agree to abide by The Golden Rules of responsible mining: to ensure that toxins, such as sulfuric acid, don’t contaminate the land, water, and air, and that workers rights and labor standards are respected. Still, critics charge that until a third-party certification system for gold mining exists, efforts to clean up the industry will remain piecemeal and difficult to verify. — Adam Aston

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