All posts by Adam Aston

GreenBiz

Despite Boom in Renewables, Risks Could Hurt Further Growth | GreenBiz

“Alternative” energy is officially not so alternative anymore. Last year, for the first time ever, spending on projects to generate electricity from renewable sources eclipsed the amount spent to build conventional fossil fuel plants.

In 2010, renewable projects drew $187 billion in investment, 19 percent more than the $157 billion spent to build or augment conventional generating plants, fuelled by natural gas, oil and coal, according to analysis released by Bloomberg New Energy Finance for the Durban climate talks.

As the clean energy sector comes of age it must now reckon with the challenges of more mature industries. Namely, managing the risk posed by larger, more complex projects. According to “Managing the Risk in Renewable Energy,” a report released this week by the Economist Intelligence Unit and Swiss Re, minimizing financial risk is one of the most “acute” challenges facing the sector in the near term.

The renewable energy sector will face an even more uncertain future if it fails to manage the growing risks associated with larger, more complex projects, EIU found. The study was based on survey of 284 senior-level renewable energy executives.

The survey found that renewables have moved to center stage. Power companies increasingly view renewable energy as central to their business strategies, and are developing larger and more complex renewable energy projects. Billion dollar projects, once rare, have become regular.

Worry is rising among renewable energy investors that some of the other 100 or so governments supporting clean energy will cut public subsidies as part of austerity measures, the report found. Fiscal crisis in Europe and economic malaise in the U.S. suggest public support for renewable energy is more likely to shrink than grow in the near term. For example, solar feed-in tariffs are being slashed across Europe: lowered by 15 percent in Germany and up to 70 percent in the U.K.

As public funds dry up, the appetite for renewables remains strong, siginaling a shift to more private funding. “Risk management measures such as insurance will be key to encourage further private sector investment,” said Agostino Galvagni, Chief Executive Officer Swiss Re Corporate Solutions in a statement. “Additional investments into renewable energy are needed to achieve the transition to a low-carbon economy,” he added.

A major issue in renewable energy projects is their high up front costs. Projects are typically capital-intensive and highly leveraged, with up to up to three quarters financed through debt. As companies seek to scale up investments, overcoming financial risks is one of the biggest challenges, according to 76 percent of the survey respondents.

Among plant investors, owners and operators surveyed, other significant concerns included political and regulatory risk (62 percent) while weather-related volume risk comes in third for wind power producers (66 percent). These risks increase further as projects grow in scale and complexity.

The report revealed that while companies are sophisticated in using insurance elsewhere in their businesses, the dearth of risk-management tools in the renewables space has limited their use. About two-thirds of respondents already use insurance to transfer risks. But only half of respondents said they are currently transferring risk successfully, for example through insurance to hedge against the risk of weather-related reductions in output of a solar park or wind farm. Instead, because of the limited availability of suitable risk-transfer mechanism, many retain the risks related to renewable energy assets on their balance sheets due to.

The use of solutions such as weather-based financial derivatives is slowly picking up, even though only 4 percent of wind power producers apply them to their projects. Many solutions on the market today are unsuitable for small-scale projects. In the survey, executives say they would transfer more risk if suitable risk-transfer products become more widely available in the future, particularly more standardized and cost-effective products.

With the next round of global climate talks expected to founder in Durban, the need to develop more efficient private sector investment tools for technologies that mitigate climate change, such as renewables, is only growing. The toll for climate related damage is expected to continue to rise in coming years. In 2011, the U.S. eclipsed the prior worst-year record for extreme weather events, with 14 such events doing more than $1 billion in damage. In 2008, the prior record year, the tally was nine such events.

“New technologies and innovation in renewable energy will be the only possibilities left should a global policy regime to reduce carbon emission not materialize,” says Andreas Spiegel, Swiss Re’s Senior Climate Change Adviser in a statement.

As the reports sponsor, Swiss Re is eager to “better understand how insurance can mobilize financing for renewable energy projects and identify the most cost-effective ways to reduce risks,” Spiegel added. Insurance can help lower construction and operational risks, by covering losses in the case of accident or delay.

For deeper dive into the survey’s findings, check out the EIU’s summary analysis here [PDF]. Cribbed from that analysis, here are the reports key findings, as well, according to Aviva Freudmann, Research Director at EIU.

1. Renewable energy is growing in strategic significance in the power industry, and is the focus of ever-larger investments.2. As renewable energy projects grow in number, scale and complexity, the industry faces a growing range of risks — as well as significant challenges in managing them.

3. Plant financiers and operators consider financial risks the most significant, particularly in early project stages.

4. Industry players are becoming more cautious, taking a variety of measures to reduce their exposures and transfer the remaining ones. One emerging way to manage certain risks is to diversify by geography and by technology.

5. By a wide margin, the industry chooses insurance to transfer financial risks to third parties, followed by capital-market instruments such as catastrophe bonds.

6. For operational risks, industry players seem unsure whether to continue using current risk transfer mechanisms, which focus on insurance and capital-market instruments. Many transfer operational risks to hardware suppliers.

7. Confusion abounds on how best to manage weather-related volume risks. The industry calls for a broader range of risk transfer products to cover such risks.

Solar farm photo via Shutterstock.

GreenBiz

Method, Deutsche Bank, Bloomberg Among Firms Betting on WindMade | GreenBiz

Would knowing that more wind energy was used to manufacture a cell phone lure you to buy it instead of a similar model made with regular power?

The wind industry hopes so. It’s making a high visibility bet that most consumers will be swayed by a new WindMade label that will start appearing on products in the coming year.

The strategy has plenty of precedents. Remember the iconic “Intel Inside” branding campaign? In the course of a few years, by pasting a simple label on practically every PC, Intel transformed its brand image from just-another-chip-maker to that of an industry powerhouse.

The wind industry is hoping its new label — a circular blue swirl — will make visible wind’s growing, green impact on business and the economy. To that end, WindMade.org, a nonprofit debuted backed by WWF and the Global Wind Energy Council, last week unveiled its first class of companies that will use the mark.

At a press conference in New York, WindMade revealed that — led by the likes of Bloomberg, Deutsche Bank, LEGO and Motorola Mobility — more than a dozen companies had signed on to new logo. (Find the full list at the bottom of this post.)

Companies can qualify to use the mark by documenting that they source at least 25 percent of their power from wind energy. The wind power can come either from company-owned turbines, a long-term power purchase agreement, or by buying high quality Renewable Energy Certificates (RECs) approved by WindMade.

The label will show the precise percentage of the wind energy share in the product. And companies have the flexibility to certify global, regional or facility level operations, a distinction that will be also clearly displayed on the label.

Companies see the label’s potential to burnish their brand’s green reputations. The wind industry, meanwhile, is betting the allure of the mark will drive more companies to opt for wind, spurring demand for wind power, and leading to increased investment in new wind capacity.

“It is Motorola Mobility’s intent through our participation in the WindMade initiative to encourage greater use of renewable energy sources like wind and solar around the globe,” said Bill Olson, director office of sustainability and stewardship at Motorola Mobility in a statement.

WindMade has evidence that consumers will be drawn to the new symbol. In a survey of 31,000 consumers, two thirds “told us they would favor WindMade products, even at a premium,” said Morten Albæk in a statement. Albæk is senior vice president of global marketing at Vestas, the Danish wind turbine manufacturer spearheading the initiative.

Next page: Does the world really need another eco-label?

In the wilds of real-world retail environments, plenty can go awry with eco-labeling, however. There’s growing of confusion over the number of labels. According to Ecolabelindex, 426 labels circulate in 246 countries and 25 industries.

In the organic food space, for instance, a proliferation of standards and authenticating bodies — some independent, some industry backed, others from by government — has left many consumers confused and skeptical. In the UK, despite costly, complex efforts to track the CO2 footprint of select groceries, consumers proved only mildly interested, if at all, in the CO2 “nutrition lable”.

The precedent suggests that consumers may simply tune out from abstract numbers. A sample of the WindMade label a hypothetical product could earn is below.

windmade label

That said, wind energy looks less vulnerable to these sorts of confusion. It’s certainly easier to verify wind content than, say, how sustainably a given fish was caught. And wind energy is less abstract that CO2: windmills are widely recognized, and as an energy source have positive, broad public support.

There’s also plenty of precedent: a growing number of big companies have made renewable energy a public priority. Last year, for instance, Intel was the nation’s largest corporate buyer of renewables, with 1,493 gigawatt-hours of electricity, enough to meet about a third of its total worldwide needs — and equivalent to the annual demand of about 150,000 homes. Kohl’s food markets and Whole Foods stand out for meeting 100 percent of their electricity demand with renewable energy.

Intel’s leadership in renewables begs the question: Someday, will all those Intel Inside labels on computers carry another label showing the chips are WindMade, too?

Until then, check out WindMade’s complete first class of corporate pioneers and founders:

Wind turbine photo via Shutterstock.

View and comment on the original post here: http://www.greenbiz.com/blog/2011/11/22/method-deutsche-bank-bloomberg-among-firms-betting-windmade

GreenBiz

Tiffany’s CEO: How to Keep a Supply Chain Sparkling | GreenBiz

Sitting in his sun-soaked office at Tiffany & Co.’s Manhattan headquarters, chairman and chief executive officer Michael J. Kowalski reminded me of Breakfast at Tiffany’s. In the 1962 classic, Audrey Hepburn coos over Tiffany’s 5th Avenue flagship store, “Nothing very bad could happen to you there.”

It’s a moment few CEOs could resist repeating. Kowalski mentioned it not just to remind me of Tiffany’s enduring image, but to make a point about sustainability. “That’s certainly the spirit our brand promises,” Kowalski said. “We believe in acting in a responsible manner across a range of issues.”

That Tiffany’s has not only survived but thrived in the 50 years since the movie was made was never a sure thing. In recent decades Tiffany and the broader jewelry industry have had to navigate through a series of environmental and human rights challenges that could have easily have proven fatal to their brands’ reputations.

Over the past 20 years — a period roughly coinciding with Kowalski’s career at Tiffany — the industry has faced blood diamonds, conflict gems and dirty gold. The scope of these challenges has been, arguably, tougher than at any time in the industry’s history.

And few, if any, were at first prepared to respond these crises, Kowalski reflected. Indeed, jewelry’s allure has almost always been unconnected to its origins: “For a long time, neither jewelers nor their customers knew or cared very much where or how these things came from,” Kowalski said.

That’s no longer the case, of course. Just how much this reality has been turned on its head in the 15 years since Kowalski was appointed president (he was promoted to CEO three years later) was evident when we caught up recently to discuss one the latest of the environmental challenges facing big jewelers: The simmering controversy over a proposal to extract copper, gold and other precious metals from an undeveloped site in coastal Alaska.

Even in resource-rich Alaska, the Pebble Mine, as the project is known, has become a lighting rod, pitting developers against local and far-off environmentalists. The site sits at the headwaters of Bristol Bay (home to Sarah Palin), and is part of the watershed that supports the world’s largest run of sockeye salmon, a renewable resource critics of the project say would be imperiled by mine runoff. The mine could potentially become North America’s largest open pit operation, given how big the find looks.

Mine developer the Pebble Partnership and other proponents of the project point to the financial gains and jobs growth promised by the venture. The Pebble site is estimated to hold many hundreds of billions of dollars worth of gold and other precious metals. The Pebble Partnership is a 50:50 joint venture between a subsidiary of Anglo American and Northern Dynasty Minerals.

While project approval is still being hotly contested, Tiffany is steering clear. Along with a growing roster of its peers, the company has signed the Bristol Bay pledge, vowing not to buy gold from the mine, were it built, and expressing “their opposition to the proposed mine, and [recognizing] the Bristol Bay watershed as an ecosystem of international significance.”

“We’re not geologists, but in our experience with mining over the past 20 years, we have reached the conclusion — as have many NGOs and local Alaska residents — that the risk is simply too great,” Kowalski told me. “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.”

Tiffany is also a signatory to the No Dirty Gold campaign, a broader industry-wide commitment requiring, among other things, that gold be mined with the consent of nearby communities, with humane labor practices, while protecting the environment.

The roots of Tiffany’s engagement on theses issues, stretches back to the early ’80s when, for purely commercial reasons, Tiffany broke with long-standing sourcing practice. At the time, most companies bought finished jewelry, polished gems and refined metals from middlemen, Kowalski explained.

Tiffany began to shift towards directly owning and managing more stages of its manufacturing process. The motivation wasn’t green, though. The company was growing quickly and faced challenges assuring the flow of top quality raw materials. “Our goal was to improve quality, manage the budget better, and capture more profits in the middle stages of the production chain,” said Kowalski.

The focus soon proved invaluable in other areas, as well, as concerns about blood diamonds, or conflict diamonds, began to flare in the early 1990s.

“Blood diamonds weren’t remotely on our radar screen — or the industry’s — when the stories first surfaced,” Kowalski recalled. “Starting in 1992, as we committed to cutting and polishing our own diamonds, we were buying directly at the mine head,” explained Kowalski, “So we could identify exactly where more of our diamonds were coming from, at a time when the public was rightly horrified by the atrocities going on in Sierra Leona and elsewhere.”

Today, quality and cost control remain top priorities for Tiffany’s supply chain operations. “We are without a doubt the most vertically integrated jeweler in the world,” said Kowalski. “That’s been a strong profit driver, but it’s also allowed us to exercise leadership on CSR issues.”

Reaching complete, 100 percent control over all the metal and gems moving through its factories and store is an elusive goal though. Even as the share of goods it can track back to raw materials grows every year, “There is never perfect certainty,” Kowalski said.

“We’re not all the way there, ” he said, “but we’re confident that over time, with respect to diamonds in particular, we can identify the mine of origin, and obviously therefore attest to the social and environmental conditions at those mine sites.” Tiffany abides by the Kimberley Process Certification Scheme, a multilateral agreement to curtail the trade in conflict gems.

Soon after the blood diamonds crisis, precious metals became the next hot spot on the company’s radar, and the next focus of supply chain improvements.

“Around 1995, we began receiving a fair amount of unsolicited mail asking us to take a position, to oppose the New World gold mine that was planned right outside of Yellowstone National Park,” said Kowalski. “As with diamonds before, at that point, we didn’t have any visibility to our gold or silver supply chain.”

Tiffany came out publicly in opposition of the New World bid, while also overhauling its supply chain for gold and other precious metals. In 2004, it opposed another proposed project, a gold mine in the Cabinet Mountain Wilderness in Montana.

Today, all of the gold and silver used in Tiffany’s U.S. operations come from a single mine: Bingham Canyon, owned by Rio Tinto, at a site not far from Salt Lake City. Ore from the mine is refined in New England, under Tiffany’s supervision.

For all the changes in environmental practice that Kowalski has overseen, Tiffany remains publicly shy about its green agenda. “We’ve been very cautious in this respect,” said Kowalski. “We believe it’s something that our customers expect of us: the knowledge that Tiffany has acted in a responsible way in the sourcing, in the processing, of what you buy from us.”

It’s an approach that, Kowalski hopes, means Tiffany’s signature robin-egg blue brand will never be tainted with charges of greenwashing.

Photo courtesy of Tiffany & Co.

NRDC OnEarth

Meet the Change Makers: PUMA’s Sustainable Track Record | OnEarth

The sportswear giant is first out of the starting block with an aggressive effort to track environmental performance

PUMA has a long history of winning in dramatic style. At Beijing’s 2008 Olympic Games, Jamaica’s Usain Bolt savored his world record-setting victories in two sprints by holding up his golden PUMA track shoes in a victorious archer’s pose. In 1970, Brazilian soccer legend Pele drew TV close-ups when he interrupted the opening whistle of the World Cup to bend down and tie his PUMA soccer shoes. For the exposure, PUMA reportedly paid $120,000. Decades earlier, some of the first-ever spiked track shoes helped Jesse Owens sprint to quadruple gold-medal success at the 1936 Berlin Olympics. The shoes came from PUMA’s forerunner, founded in Germany in 1924. All along, PUMA has remained a formidable contender in the devilishly competitive business of sporting gear. While continuing a tradition of high-profile athletic endorsements, a steady stream of alliances with leading designers — including Jill Sander, Philippe Starck and Alexander McQueen — has helped the German company resurrect its brand in the U.S.

The man credited for its resurgence, and for driving sales to $3.6 billion last year, is Jochen Zeitz. Appointed to run PUMA in 1993 at age 30 — at the time, this made him the youngest-ever chairman of a listed German company — Zeitz, a German native, has also distinguished the company as a sustainability pioneer, especially in the self-assessment and publication of its environmental impact. In 2008, he established a foundation to support innovative, sustainable solutions that balance conservation, community, culture and commerce. Last year, 48-year-old Zeitz worked with Anselm Grün, a Benedectine monk, to co-author Prayer, Profit & Principles – Monk and Manager, a book about how to confront pressing social and environmental issues.

Earlier this year, PUMA published the results of the first ever “environmental profit and loss” statement (EP&L) released by a major corporation. Building on the convention of corporate sustainability reporting, triple-bottom-line assessments, and more recently initiativesto report greenhouse gas (GHG) emissions, PUMA’s EP&L attempts to put a dollar value on environmental damage not typically captured by standard financial measures. For the exercise, PUMA assessed the cascade of impacts caused by producing shoes and sportswear: from raw material production, such as cotton farming and oil drilling, to raw material processing, involving leather tanneries, the chemical industry and oil refineries.

Working with accounting giantPricewaterhouseCoopers and data firmTrucost, in May PUMA pegged the ecological costs of its operations for GHG emissions and water use at $124 million for 2010. Of the total, $9.5 million is due to PUMA’s direct actions, and the remaining $115 million are incurred in the chain of suppliers that deliver finished goods to the company. The approach is controversial. Critics have argued the system is too abstract to trigger meaningful change. But by putting a dollar value on the environmental impact of its production process, Zeitz contends PUMA is playing a “catalytic role” in helping to shift the way companies measure and record their costs, and ultimately reduce them. OnEarthcontributor Adam Aston recently spoke with Zeitz, who now serves as chief sustainability officer of PUMA’s parent company, PPR Group, as CEO of its Sport & Lifestyle Group, as well Chairman of the Board of PUMA about how the EP&L can help improve sustainability.

The corporate sustainability report is, for most companies, the most detailed assessment of their environmental impact. At PUMA, you took the process considerably further. What’s the benefit?

We’re moving away from the traditional sustainability report. Such reports are fine for senior management to chart broad efforts. But from the perspective of designers or buyers trying to understand the impact of their decisions on the environment, that approach isn’t specific enough.

That’s where the EP&L comes in. Used across the entire supply chain, it offers a better tool to look at product development and design decisions, to understand the impact of what raw materials we use, how the materials are processed, where our products are made, how they’re shipped, how we package, stock and sell them, and how we dispose of or recycle them.

What variables did you measure in your first EP&L?

The first two we focused on were carbon and water. In the next phase, to be announced shortly, we aim to add other environmental indicators, such as the precursors of smog and acid rain, waste reduction and land use impacts. Eventually, our goal is to track about 90 percent of our environmental impact. Beyond that, the final 10 percent, I think, will just get too complicated.

In phase two, we plan to assess the social impacts in sustainability, such as changes in standard of living, security and health of the communities where we and our contractors have impact.

Finally, in phase three, we want to broaden the scope to look, holistically, at the economic positives of business. If we’re truly comprehensive in this effort, we shouldn’t just look at negative things. The fact is that companies also do good things — creating jobs, paying taxes, fuelling economic growth, increasing wealth and improving quality of life. That’s also something that we want to start valuing.

What surprised you in your evaluation?

The real eye opener was how much of our impact happens so early in the supply chain. That’s when most of the carbon emissions are created and most of the water is consumed.

We estimate that over half of our carbon emissions happen in the production and processing of raw materials, in the raising of cattle for leather and treating that leather, for example.

That means that the second you decide what raw materials to use in your product, you’ve set in stone the bulk of that products’ environmental impact, no matter what happens later.

How are you using the EP&L findings to alter the way you do business?

These numbers show you where you can start to turn your product development in a better direction, by looking for alternative materials, investigating how they’re made, where and by whom. So the findings are influencing product design and development day-to-day, as well as manufacturing, sourcing, even marketing to a point. We’ve begun to share these findings with our suppliers, to help them understand why we’re strict about certain materials or processes.

Are consumers starting to see these changes?

In some cases, yes. For example, to cut the amount of cardboard in our shoe boxes, we worked with Yves Behar to create Clever Little Bag. It’s a design that cleverly combines a reusable bag with a cardboard frame. The approach does away with about two-thirds of the paper used in regular boxes — this saves trees, of course, but also huge volumes of electricity and water, given how paper is made. And since it has a built in handle, the design also eliminates the need for an extra bag at checkout. That makes it more convenient for the consumer. The process of designing this required that we coordinate with our suppliers in Asia to ensure the new approach didn’t cause troubles with how our shoes are packaged at the plant, then shipped and distributed.

Given that you don’t own most of the factories that supply PUMA sportswear, is it a challenge to push through these kinds of sustainable design decisions?

While we don’t own the factories or suppliers, we are deciding who our manufacturers will be, who our raw material suppliers are, where we buy our raw materials from, and so on. We have the ability to tell a factory: “Stop buying from that supplier.”

But, of course, there are cost implications. The full costs that we identified in our EP&L exercise are borne by all of the participants in our supply chain. Though we’re at the end of that chain, PUMA doesn’t pay the full cost of that EP&L.

That’s a reason we’re working to educate our suppliers. If we identify that the footprint of cushioning in our shoes, for example, is predominantly with the chemical industry, we can say to that industry and its suppliers: “Okay, guys, what can you do to shrink your footprint?” It’s got to be a joint initiative.

Do you worry that these efforts will drive up prices, and that higher price tags could turn off consumers?

Look, very little that we buy today is truly sustainable, but this effort has to start somewhere. I believe that brands have significant power to change consumer behavior. Consumers are starting to understand that, ultimately, we’re living on one planet and we have to look after it. There’s a natural survival mode that kicks in, where we are starting to realize that things are broken and we’ve got to change it.

For PUMA, the key is that we don’t over promise, and are very transparent and true to what we do, with honest communication about what we’ve accomplished and what we haven’t. Communicating these efforts is important: we don’t want to lose our customers’ trust by getting it wrong. Nor do we want to sell a greener product that is ignored.

We’re trying to sell a solution that is desirable in many ways­ besides its environmental impact — its design, materials, and its style. This effort has to include the consumer. Otherwise it’s not going to change things.

What have been the greatest challenges in deploying this method?

It’s not totally black and white, for sure. Data collection is a challenge, given how many suppliers feed materials into our products. But it can be done if the rules are set, and everybody plays along.

Then, of course, is the question of valuation. For example, there is not just one method of measuring the value of water or the cost of carbon.

For us, this meant being on the cautious side when it came to valuing environmental costs, generally opting for the higher cost estimate. So, for carbon, we take its social cost, around $90 per metric ton, many times the cost of a ton of carbon offsets in EU markets. The higher social cost of carbon reflects estimates of the future costs of climate change. [For background on how this value is calculated, check PUMA’s Greenhouse Gas Emissions Valuation Model.]

Are you open to sharing these methods with your peers, to help them spread?

Yes, absolutely. For those that are serious and want to associate themselves with what we are doing in an open manner, we will also be open with them. We have already had a number of requests from the automotive, chemical and beverage industries, as well as from one of our competitors.

Sidebar – Truth Squad: A more environmental balance sheet

Why would a public company such as PUMA bother to report costs it isn’t required to? After all, tracking down water-use and carbon-emissions data for far-flung factories manufacturing countless products is a costly, complex effort, demanding time from top management at PUMA and its partners.

The goal is to turn transparency into a competitive advantage. In fact, while PUMA’s particular EP&L methodology is unique, it’s one of an emerging set of related standards for corporations to recognize, measure and report the non-financial impact of their activities. “Call it triple bottom line or sustainability accounting or CSR [for corporate sustainability reporting], dozens of standards are being developed that attempt to capture elements of companies’ environmental impact,” says Alisa Valderrama, a finance policy analyst at NRDC’s Center for Market Innovation. Some of the leading players in these efforts include Global Reporting Initiative (GRI), the Carbon Disclosure Project and CERES.

PUMA’s first effort, recording water and carbon costs on a profit and loss statement, may sound like a trivial bookkeeping shift, but the company is going a step further than most: Puma is not only disclosing impacts, but working to integrate what they learn into their bottom line. This means going beyond getting management to trim disproportionately high environmental costs. In the long term, such efforts can also help reduce the “material” risks to financial performance that companies are required to report. Energy shortages or toxic spills at a sub-contractor are examples of risks that could dent the annual returns of a company like PUMA. Lastly, share price could eventually benefit since some studies suggest that fuller disclosure of non-financial factors correlates with better investment returns.

“PUMA’s efforts sophisticated, a really holistic example,” Valderamma says. “This is costly, hard stuff: assessing your toll on the environment is not as easy as counting widgets coming of the assembly line.”

Yet she is frustrated with the broader state of reporting, because until such voluntary standards are incorporated into mainstream accounting and financial practices, their impact will be limited. “You want to get to the point where this is no longer rare and voluntary, but commonplace and expected, where Wall Street analysts are asking about EP&L in quarterly calls,” she says. “That will be the bellwether of real market change.” — Adam Aston

Global CCS Institute

From fighting coal plants to fighting for carbon capture and re-use: Q&A with Laura Miller (Part II of II) | Global CCS Institute

Yesterday we heard the start of Laura’s story, and the progression of the Texas Clean Energy Project. This is the second and final part of the Q&A with Laura.

You have a competitor that’s following a similar technology path?

Yes, that’s Hydrogen Energy California (HECA). They’ve gone through a complete transformation. One of the original backers, BP, dropped out after the Gulf spill.

Like us, HECA also got Department of Energy (DOE) money as part of the Clean Coal Power Initiative. They got $408 million, we got $450 million. They’re also at 90 per cent capture. Their original design, I think, was using petcoke, rather than Wyoming coal.

When the project nearly died, in an effort to keep it alive, DOE went out and solicited other companies to come in and take it over. SCS Energy, in Concord, Massachusetts took over HECA in September.

I joked when I called the head of HECA because they have the same tax problem that we have right now in congress. I called the man who was negotiating to buy the project, the chairman of the company, and I said, “Hey, I hear that the project now is modelled after our project, that we have the same configuration,” and he said, “Yep. We like to tell everyone we meet that we taught you guys everything that we know.”

Is there sufficient demand for urea and CO2 to repeat this model in other facilities?

Right now, the United States imports about five million tons a year of urea and the US domestic production is 3.5 million. When we go online, we’ll be boosting urea domestic production by 20 per cent.

There’s obviously a finite amount of urea that can be produced worldwide, but the beauty of the syngas is that it makes lots of other products. You can make methane out of it, you can make ammonia out of it, you can make gasoline out of it. The Germans used coal gasification to fuel their entire war effort during World War II.

We picked urea because we did a very thorough look at the different markets for various products that could be made from a syngas and decided that urea was a profitable strong market because of this imbalance between domestic output and international production.

The plant has taken longer than you anticipated. What have been the delays?

We’ve had some shifts in the ownership of the project. Summit always builds for owners – so far, gas, solar and wind projects, never coal. We contract to do a turnkey power project, we build it, we hand over the keys, they give us a success fee, we move on to the next power project.

In this case, we developed the project and then Babcock & Brown became the owner of the project in 2008. But they had to give the project back to us because in the economic downturn, they went bankrupt and couldn’t afford to build it.

That was, obviously, a big setback and we kept the project going even though if we’d have been a gas plant, we just would have stopped working on it and moved onto the next project until we found a new owner and the economy improved.

But we have a strong philosophical belief that if coal’s going to be used in this country for power production in the future, it’s going to have to be done this way – in an incredibly clean way – and the time is now while the world is trying to find ways to reduce carbon emissions We decided it was worth holding onto the project because we thought we had a good business model and that if any of these projects was going to succeed, ours had a good chance to succeed.

Are you bearing the full development cost of the project now?

We added one key investor in the project, and it’s Clayton Williams out of West Texas. Had he not entered the project, we probably would not have been able to continue. He came in at a really critical time just before we got the DOE award, putting in money along with Summit.

Williams is a very colourful oil man in West Texas—a real character and a sweet man. He just turned 80, and he ran for governor against Ann Richards some years back.

Knowing oil, he immediately saw the value of the CO2. He understood how we put this together and how it could work and how it could be attractive to investors and so he became a minority owner.

Since then, we’ve talked to other investors, who will need to put up about $1 billion for financial closing. We have a checklist of things that these investors need to see in order to make their final decision and we’ve been, one by one by one, checking off all those milestones. Now we’re down to just a handful of things that need to be completed.

What’s done, and what remains to be completed?

Here are the milestones we’ve already passed.

We kicked off the front-end engineering and designing in June of 2010 and we finished it in July 2011. We got our air permit in December of 2010 with no opposition. That was a very big milestone for us.

We got our record of decision from the Department of Energy, which puts us in compliance with the National Environmental Policy Act. We have pre-sold all of the urea, CO2 and sulfuric acid. And we are about to sign our interconnection agreement that will connect our project to the state’s electricity grid.

What about the electricity?

Ah yes. Last but not least, we have sold all of the electricity to the city of San Antonio.

CPS Energy in San Antonio is the largest municipally-owned utility in the country, led by a CEO named Doyle Beneby. He’s been incredibly visionary in terms of where he wants the utility to go. He is shutting down one of his old coal plants early and buying all of our power, and building solar farms and wind projects.

Working with the mayor of San Antonio — who notably is the youngest mayor of a big city in the country, by the name of Julian Castro – they have joined up, so that every single power deal that they’re making is for green power, and includes an economic development component requiring companies they do business with to create jobs in San Antonio.

We, as an example, are opening an office in San Antonio for customer relations, and for media. And we’re forming a carbon management advisory board with environmentalists, industry experts and scientists on it, to be on the inside of our construction process so that they learn how the gasification process and carbon capture work. Then they can go out and tell people that clean coal with carbon capture does exist.

You’ve gone from fighting coal to selling a very complex coal project, and have been successful at both. How have you been able to sell others on the vision of this plant?

It can be difficult. It’s so funny. I was at a dinner party and someone asked me what I’m doing since I left being mayor, and I said, “Oh. I’m building a carbon capture power project that uses the carbon for enhanced oil recovery in the Permian Basin.”

The guy literally closed his eyes. And he said, “Oh. Wow. Huh.” and then he turned to a person on the other side of him to find more interesting conversation.

Whenever that happens, I always say, “But, I want you to know, I’m going to save the polar bears and make the planet safe for your grandchildren.” Sometimes that gets their attention.

The irony is that I’ve always been a communicator who used my communication skills to win journalism awards and get elected mayor of Dallas, but you start talking about gasification and compressed CO2 and everyone just goes to sleep on you.

It can be too abstract for the public to connect with. How do you get around that?

When I was fighting TXU’s big coal plant proposal, I kept losing in all these debates with them because they’d bring their engineers in to talk about how coal gasification didn’t work, and carbon capture didn’t work.

The most important thing I did at that time was to go to Tampa, Florida, where I had been told there was an advanced IGCC – gasification — plant operating. I had to fly there to go touch the plant, to be able to come back to Dallas, and stand up to them in the debates and say, “You are not being truthful. Gasification works, and it’s working in Tampa, Florida, and I saw it.”

They said, “Well, but that plant has a history of problems. And they use a very specific high-quality Appalachian coal. It’s the only kind of coal that can be used in gasification, and otherwise it just doesn’t work.”

So I said to them, “Really? Well, look at this,” and I opened my hand in the debate to show what looked like a shiny, black rock. I said, “Since you keep telling me this, the first question I asked the plant manager in Tampa is what kind of high-quality Appalachian coal do you use? He said, ‘We use pet coke from Houston”.

Then, I turned to the audience, and I said, “That’s basically sludge off refineries in our own backyard.”

So then the debates turned because then people said, “Oh my God, they haven’t been telling us the truth about what’s technologically available.”

My point is that offering real-world examples – when people can go and see and touch the cleanest coal plant in the world, which ours will be – it will really move the debate. Until then, it’s just conversation.”

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http://www.globalccsinstitute.com/community/blogs/authors/adamaston/2011/11/04/fighting-coal-plants-fighting-carbon-capture-and-re-use

Global CCS Institute

From fighting coal plants to fighting for carbon capture and re-use: Q&A with Laura Miller (Part I of II) | Global CCS Institute

Laura Miller seems an unlikely champion for a project that’s on track to become the first financially self-sufficient carbon capture and sequestration project in the United States.

After all, it was only five years ago that Miller, then Mayor of Dallas, emerged triumphant in a David-vs-Goliath showdown with energy developer TXU to block the construction of 11 new coal plants in Texas.

Once Miller learned about the proposal that, along with seven others proposed, would double the number of coal plants in Texas, she cobbled together a coalition of three dozen cities, counties and school districts to block the deal. Following a marathon process, Miller’s coalition was instrumental in getting TXU to retreat from its plan. Embattled by critics, TXU became a buyout target as its stock dropped, and the new owners negotiated with national environmental groups to build eight of the 11 coal plants.

After her term, Miller was asked by a variety of environmental groups to carry the anti-coal flag. Convinced that simply obstructing new coal plants wasn’t a solution to the climate challenge, Miller instead went on a mission to learn about alternative technologies.

Her odyssey ended at Summit Power Group, a Seattle, Washington based developer that’s developing a carbon capturing, coal gasification power plant with a new kind of business model. Summit’s so-called ‘poly-gen’ plant will make money by selling CO2 and other by-products for multiple uses.

It will sell CO2 to the oil patch for enhanced oil recovery. And the plant will convert some of the extra syngas it produces into valuable chemicals. Taken together, Summit believes it can build and operate a coal plant with 90 per cent capture that makes money, without a price on carbon.

Miller has spent the past four years pushing plans to build the 400-megawatt Texas Clean Energy Project in Odessa, not far from the New Mexico border. When completed, TCEP will be the cleanest coal-fueled power plant in Texas.

In an era where cancellations of CCS projects in the US are outnumbering successful start-ups, TCEP has come a long way. Despite the bitterly polarised politics around energy, Summit’s $2.4-billion project won bi-partisan support in Texas’ state-house.

Its secret? Summit’s process offers something to supporters of both green energy and fossil fuels. It captures and reuses CO2 emissions, which pleases the Greens, and it sells the CO2 to the oil industry, which boosts oil recovery from ageing wells. In December, TCEP was granted an air permit with no opposition.

In September, Miller and I met in New York. She was in town for ClimateWeek, where she took part in a roundtable discussion hosted by the Global CCS Institute. More recently, we caught up for a longer talk about her project. What follows is Part 1 of our conversation. Part 2 will be published tomorrow.

Would you characterise your personal transition as one of being anti coal to pro coal within certain conditions?

When I left being mayor, the environmental community asked me to go out and teach other mayors how to fight dirty coal. And I said, “You know, I think it would be more worth our while to go out and build the cleanest possible coal-fuelled plant in the world and then raise the bar”.

So for four years, all I have done is work on what we believe and what a lot of the environmentalists believe is going to be the cleanest coal plant: 90 per cent carbon capture, extremely low emissions on all the other pollutants.

Given recent cancellations of CCS projects in the US and Europe, your project is a stand out. What’s holding things back?

There’s a lot of uncertainty around where these projects fit in, which makes it harder for the private sector to move forward. Even some Greens are luke warm in their support for CCS, wanting to spend more time on promoting renewables. And a lack of popular conviction on climate issues means it’s safe for politicians to go slow.

In the face of this indecision, our saviour is really enhanced oil recovery. There’s a growing appetite for the CO2 in Texas and other oil-producing states, regardless of climate discussions, or a price on CO2.

We have the ability to take all this CO2 that we can capture off the industrial projects and sell it to bring more oil out of the ground out of wells that already exist.

Summit was awarded $450 million from the DOE to scale up this process, and one of the reasons we got the award was because of our financial model to sell CO2 and other products.

Are you vulnerable to the backlash against renewables energy funding simmering in the US Congress?

Four years ago, when we proposed this project, we had no plans and no need to ask for any federal money because we had a good business plan. Not only will we sell electricity, we’ll also get revenue from the CO2 we sell for enhanced oil recovery. And lastly, we also make a whole lot of urea fertiliser. We’re planning more than just a power project. We call it a poly-gen plant.

The focus of the renewable controversy right now is on a large government loan that was made to a company that took the money when it was financially troubled and subsequently declared bankruptcy. We, on the other hand, have a cost-share agreement for the $450 million in which we only get the money as a 50 per cent cost reimbursement after we spend private funds during construction.

And construction won’t begin in 2012 until all of the private money is committed up front. So there is no risk like there is with the loan guarantees. And at $2.5 billion in capital costs, the $450 million federal award only accounts for 18 per cent of the total cost of our project.

How long do you expect the project to take?

Back when I started I was optimistic that we could start construction within a year, by end 2008, or maybe 18 months at the most – but then, I knew nothing about the power plant construction business. Well, it’s four years later, and we really are close to being ready to break ground, but I’ve learned that things work more slowly in the power sector than elsewhere.

And there’s an irony here. Erle Nye, the former chairman of TXU — but who wasn’t responsible for the coal build-out I was fighting, that was his successor John Wilder — as soon as Erle heard that I was involved with this project, he said, “Babe…” — because he’s old school — “Babe, you’re a very impatient woman, and you’re going to be frustrated because building a power project takes a lot of patience, takes a lot of time.” And I said, “Oh, no, no. We’re going to get this done right away”.

So here I am, four years later. Erle occasionally sends me an email and congratulates me when we get another milestone for our project.

What are the roots of this project and of Summit Power?

Let me start with Summit. The brilliance of this project comes from Don Hodel and Earl Gjelde, who founded Summit Power Group. Don was Energy Secretary for Reagan, and Earl was his number two. Then Don became Interior Secretary and Earl was his number two there again. In time, they left Washington DC and started this company. Previously, they’ve built natural gas plants and solar and wind.

They were interested in figuring out a way to use coal for national security reasons. They knew, because they have built a lot of plants, that you couldn’t finance a power plant with very low emissions that also captures carbon. That’s been the weak link for other CCS projects, I think: they were proposed with the confidence that there would be a price on carbon, which would help CCS become financially viable.

But Earl and Don did not favour cap and trade or a price on carbon. Because they’re political conservatives, and from the start, they thought that you’d need to put together a business plan that is financially viable without that kind of safety net.

So the genius of this project, in my opinion, is that they came up with a financial plan that made this power plant more than just a provider of electricity. They wanted other revenue streams to make it more profitable.

They wanted to create multiple by-products that would bring the project maximum revenue.

How does the process work?

You take the coal, you make a syngas. Then, with the gas, you make multiple products. You burn the gas to make electricity, but you also take quite a bit of the syngas and make urea fertiliser. So you have a separate manufacturing facility on the site next to your power generation.

The process also removes almost all of the bad sulphur. And we’re using a low sulphur coal to start with. We capture more than 99 per cent of the sulphur and put that into a separate manufacturing facility on the site to make sulphuric acid, which is also sold. Sulphuric acid is used in the farming community and by industry.

Finally, we capture 90 per cent of the CO2 off the syngas, compress it into a liquid form and put that in a pipeline and move it to oil producers, who send it down into wells to drive out more oil.

How do the economics break down?

Originally, we modelled that the project would generate a third of its sales from power, a third from urea, and a third from CO2. But because the economy isn’t getting much better, and construction prices aren’t getting any lower, we’ve decided that we’d make a little bit less electricity and make more urea, to improve the financials of the project.

The shift means that we’ll boost urea output to 720,000 tons per year, up from 500,000. That will drive urea to over 40 per cent of our total sales.

The irony of all this, and the reason why it’s so hard to build a power plant that captures carbon, is because the least profitable revenue stream we have is from electricity. You get much better returns on your CO2 and your urea than you do on your electricity.

But the point of building this project is to show the world that you can build a power plant that captures this carbon. Hopefully, after these first few get built and people see that it’s possible to do a privately owned and funded project like this, you’ll see improvements in efficiency as you do with any new product, and this super-clean model will become the standard, and it won’t need any government assistance to be replicated worldwide. That’s the dream, and we are close to helping it become a reality.

Thank you Laura. We’ll pause here for now and return tomorrow with Part 2 of this Q&A.

Read part 2 of this interview here.

* Fighting Goliath: Texas Coal Wars is a film, narrated by Robert Redford, that documents the efforts by Miller and others to block TXU’s project. You can learn more about the documentary at FightingGoliathFilm.com, or view the full film here.

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NRDC OnEarth

Meet the Change Makers: How Verizon is dialing in efficiency | OnEarth

Greening fleets, mining copper cables and tweaking data centers at Verizon

Verizon can trace its technological roots back to the 1880s, when Alexander Graham Bell’s invention first relayed voices between Manhattan and Boston. Now, as then, the New York-based company still connects old-fashioned phone calls. But these days, digital business services are emerging as big telco’s main focus, from tending corporations’ high-speed networks to building advanced mobile cell services that keep us connected everywhere.

As demand for these digital services grows, Verizon finds itself in a tight race for the top spot in the U.S. telecom market. With $107 billion in revenues last year, it trails only AT&T, which posted $113 billion in sales.

Verizon’s first chief sustainability officer, as well as vice president of supply chain, James “Jim” Gowen believes that focusing on green technology will offer Verizon a way to close the gap with its rival. The company’s efforts, Gowen points out, are already improving Verizon’s efficiency and reducing its environmental impact. In time, he says, they’ll open up new markets, too.

Verizon’s commitment to sustainability is still in its early stages. It was just two years ago that the company formally wove together a variety of ongoing eco efforts that were happening across its far-flung operations. Gowen, who is a long-time veteran of Verizon’s supply-chain operations, was promoted to his post in September 2009. Outside the office, he sits on the sustainability council at Penn State University’s school of business.

One of the biggest challenges to scaling up green efforts, Gowen admits, is Verizon’s enormous size. But that also means the impact of Verizon’s choices is proportionally large, he says.

OnEarth contributor Adam Aston recently spoke with Gowen to learn what lessons Verizon can offer other corporations greening their operations on a large scale.

What’s the scale of your global operations?

Verizon is bigger and broader than many folks realize. We have more than 190,000 employees globally, and have followed our customers overseas, so we’re doing business in more than 150 countries, with more than 90 million retail customers.

In terms of facilities, we have approximately 30,000, ranging from remote equipment sheds to very large data centers. To keep our cellular network humming, we operate approximately 40,000 cell towers.

Only a few dozen U.S. companies listed on the stock exchange, out of more than 7,000, have appointed chief sustainability officers. What led Verizon to take that step?

It was a long time in coming but was really formalized in 2009, when we surveyed green efforts across the company. Verizon was already doing a lot of work in sustainability, but our efforts were separate and often unaware of related work elsewhere in the company.

When we looked at our two big divisions — wireless and conventional wire-line services — it was amazing to me how much was going on. But it hadn’t been brought together yet. So the decision was made to create an office of sustainability, led by a new chief sustainability officer.

The next decision had to do with what the main focus of this role would be: more operational or more policy and marketing? And that affected where the new sustainability office would be based. Some companies opt for Washington, D.C., which implies more of a policy focus. We chose to emphasize operations, so the role was put into the supply chain area, under my watch, at our operations center in Basking Ridge, New Jersey.

Why now?

The pressure was coming from both outside and inside. From our corporate customers, the number of requests to document our sustainability practices as part of quotes for new business was growing steadily. Some of our partners are documenting their carbon footprints, for example, and need us to be able to estimate the impact of the services we provide to them.

Internal pressure was rising, too. There was a groundswell of employees eager to see change move faster. I was getting very frank calls, with folks telling me things like, “I work in Tampa and we don’t recycle.” That caught my attention right away. Green practices are becoming more and more important to attracting and keeping top people.

You mentioned that Verizon operates a huge fleet of vehicles. Is it a target for your green efforts?

The fleet is a major focus. On the road, we operate the third-largest private fleet in the United States, with more than 39,000 vans, trucks, and cars. Keeping them running requires 56 million gallons of fuel every year. Right now, about six percent of our fleet runs on alternative fuels. We’re aiming to boost that figure to 15 percent by 2015.

In 2010, for instance, Verizon added 1,600 alternative-energy vehicles, including specialized vehicles, such as our aerial trucks, which use a hydraulic arm to lift up a worker in a bucket and access overhead wires, as well as hybrid pickup trucks and sedans. As fuel supplies become more reliable, we’re boosting our use of biodiesel and ethanol as well.

It can be simple stuff, too. By discouraging idling by our fleet drivers, we estimate that we saved 1.7 million gallons of fuel in 2009 — roughly the same amount used by 2,800 average cars over a year.

We’re also working with other big fleet operators. In April 2011, Verizon was among five charter members of a new National Clean Fleet Program initiative by President Obama. Some of the other participants are our day-to-day competitors, but by working together, if we go to the auto industry to request greener features, its more likely those changes will happen.

How are you improving the environmental performance of your network and data centers?

Verizon is continuously upgrading our network of cables. The oldest parts of our network were built more than a century ago. There are many wires and switches that date back decades, all of which are being replaced with lighter, smaller, more energy-efficient digital systems. For example, in recent years, we’ve been replacing miles and miles of aging copper cables — some of the older ones are enormous, as thick as an arm — with fiber optics. Given the high value of copper lately, recycling this copper has been a significant source of revenue. It’s like mining our own cable network. These upgrades all deliver improvements in energy use.

Replacing conventional networks with fiber optics can deliver big savings. At a lab in Columbia, Md., Verizon is developing ways to use optical fiber in local area networks, to and from buildings on a campus or to homes in a neighborhood. To date, these have used conventional, older cable technology. Making a switch cuts the amount of power needed to send data between buildings by up to 75 percent and can deliver signals as far as 12 miles without the need to amplify them.

And within our data centers, we’re pursuing ways to lower energy use. We’ve set energy-efficiency standards for the gear we buy from suppliers of network equipment. These standards have saved some 90 million kWh of power consumption and avoided approximately 115 million pounds of CO2 emissions.

Speaking of greenhouse gas emissions, many companies have announced targets they’re working toward. Verizon hasn’t done that. How are you approaching this problem?

We are looking to lower emissions, but our focus has been on what we call an Environmentally Neutral Engineering Policy: for every kWh of demand we add to the network, we aim to remove one or more somewhere else. This has helped us cut emissions. We focus on the energy consumed by our network because electricity accounts for about 90 percent of Verizon’s overall carbon footprint. Of the remainder, about seven percent comes from fuelling our fleet, and most of the balance from operating our buildings.

Company-wide, the push to cut carbon really began in 2009. By the following year, we had lowered our CO2 emissions by a bit more than two percent. That reduction came despite double-digit growth in our network: the volume of data we moved grew by about 16 percent, to nearly 79 million terabytes. Measured this way, our “carbon intensity” efficiency improved substantially: we produced about 16 percent less CO2 for each unit of data we handled. In April, we announced our commitment to reduce our carbon intensity by another 15 percent and I’m happy to tell you that as of the third quarter we are on track.

Even as electronic gizmos become more efficient, they seem to be multiplying at our homes and offices. What is Verizon doing about its customers’ environmental impact?

In April of last year, Verizon launched two new energy efficient set-top boxes, which reduced energy usage by about a third for our customers. Then in January, we were certified as an Energy Star Service Provider for set-top boxes, and we’re now installing four different Energy Star models.

Beyond energy we realize that there are many other “green” opportunities with consumer devices. We’re working to reduce packaging and suspected toxins in our electronics. Working with cell phone makers, we’ve rolled out handsets with greener features.

Motorola’s Citrus, for example, is free of polyvinyl chloride (PVC) and brominated flame retardants (BFRs), chemicals that are believed to pose health hazards. The handset is manufactured from 25 percent post-consumer recycled plastic. Likewise, the packaging is four-fifths recycled, and the user manual is made from 100 percent recycled paper. And as a whole, the cell phone is certified CarbonFree through a deal with Carbonfund.org.

Verizon has played a big role in the Internet revolution, a shift that has on one hand lowered paper use and travel, but on the other has spurred the spread of power-hungry electronics. What’s that next big transformation that will affect energy trends?

The smart grid and electric vehicles are just beginning to emerge. We expect that in the long term they will significantly cut the use of fuel for transportation. Verizon is positioned to play a big role in this shift, by developing information technology, security, and communications services to help the utility sector speed the rollout of the smart grid.

For example, our Internet Protocol and wireless networks are a good match for the sorts of billing, tracking, and management challenges that utilities and car owners will face in re-charging electric vehicles at home and while traveling. By the end of last year, we had contracted with more then 20 utilities to wirelessly connect more than one million meters back to the smart grid.

Sidebar: Truth squad

NRDC’s Samir Succar on the prospects for telcos to pave the way for a smarter grid 

In the realm of sustainability, it’s common for companies to point to future green goals, whether reduced emissions or planned product lines. This can make assessing their eco-progress more of an art than a science.

Consider Verizon’s big green bet on the smart grid, the next frontier in telcos’ efforts to shape the energy impact of their customers. The need to wirelessly link digital power meters and smart appliances to the grid promises huge energy savings. Verizon, like its peers, is tackling this opportunity, but it stands out with ambitious goals to operate smart grid applications on behalf of utilities, relying on its deep expertise with data centers and complex wireless transactions.

“Digitizing the grid holds enormous opportunity,” says NRDC’s smart grid expert Samir Succar, “but it remains to be seen if Verizon will be just a neutral party relaying information to the utility, or if it can really play a role shaping customers’ habits.”

To deliver savings, Verizon and other network operators will have to alter their emphasis on performance over efficiency. Consider a recent NRDC study that revealed that by not enabling energy-savings settings on set-top boxes, cable, satellite, and data providers were costing consumers $2 billion per year in wasted energy. Verizon and the others have responded to those criticisms by rolling out lower-energy devices. 

It’s tough to gauge who’s winning in the telcos’ race for sustainability. Both AT&T and Verizon appointed chief sustainability officers in 2009, but the third-place carrier, Sprint Nextel, beat its peers in a recent green ranking of U.S. companies. Sprint was first out of the gate with four environmentally responsible cell phones. It has also committed to a 90 percent rate of collecting discarded phones, taken steps to lower its junk mail output, and is targeting cuts of 15 percent to its overall emissions by 2017. 

–Adam Aston

URL for original story: http://www.onearth.org/article/meet-the-change-makers-verizon

GreenBiz

What’s Next for PUMA’s Groundbreaking Sustainability Plans? | GreenBiz

Jochen Zeitz has had a busy year. I recently caught up with the long-serving Chairman and CEO of PUMA, the sports gear company where Zeitz blended an evangelical commitment to sustainability with smart branding to return the nearly defunct brand to the top tier of global sports fashion.

As a business story, Zeitz’s success is nearly legendary: he pulled PUMA out of the basement and up to a podium position in the global sportswear market, while boosting share price by 4,000 percent.

Among sustainability watchers, Zeitz has won plaudits for his commitment to develop an environmental profit and loss (EP&L) statement. By estimating a dollar figure on the value of its use of ecosystem services — any resource provided by nature, from clean water, to crop production, wildlife habitat, storm surge protection and so on — PUMA is expanding on the precedent set by carbon footprinting efforts and other self-assessment techniques.

The tool can identify where in its supply chain these costs are highest, and help PUMA develop responses to address these hot spots.

The first results of PUMA’s effort were unveiled last May, when PUMA announced a price tag of $133 million for its toll from water use and greenhouse gas emissions.

As the company outsources the bulk of its manufacturing, it follows that PUMA’s direct operations accounted for about only $10 million of this total. Its supply chain made up the balance. By impact, greenhouse gases (GHGs) and water were split evenly. The top culprits: Cotton farming, cattle ranching for leather, and rubber production accounted for more than half of water use, and about a third of GHG emissions.

Shortly before PUMA released these landmark results, Zeitz revealed he was moving up at PUMA’s parent company. In March, after 18 years of service Zeitzpassed the mantle on to a 32-year-old successor, Franz Koch. Notably, Zeitz was even younger — just 30 in 1993 — when he took over PUMA’s top spot. The move made him the youngest-ever corporate chairman of a listed German company.

Now 48, Zeitz’s new post will let him focus on sustainability more broadly. Zeitz’s new joint role at PUMA’s owner, PPR SA, straddles two titles: He is both chief sustainability officer as well as head of the company’s sport & lifestyle group. PPR, a $19.4-billion apparel empire, includes a variety of luxury fashion brands such as Bottega, Gucci and Yves Saint Laurent.

As Zeitz’s focus shifts to a broader set of brands, his immediate challenge is whether he can repeat his successes at PUMA in developing sustainability practices and metrics. Developing the framework and practices for the EP&L at PUMA spanned a decade or so. “We wanted to get it right internally first before going public,” Zeitz told me. PUMA worked with PricewaterhouseCoopers and Trucost to develop the first version of the EP&L assessment.

Zeitz told me the challenges PUMA faced in developing its EP&L measurement were internal and external. Behind company walls, the process involved incremental, disciplined reinforcement of sustainability as a value.

“It needs to be clear that it’s must be a part of the everyday decision-making process,” Zeitz said. When people are accustomed to established practices, changes in workflow, remuneration, priorities and so on can be difficult, and can’t be rushed.

External aspects of the projects are complicated by a lack of direct control over trading partners and suppliers. To collect critical data from PUMA’s network of external suppliers, the exercise demanded similar shifts of business cultural and practices among PUMA’s partners. “Data collection is a challenge,” Zeitz says. Difficulties surfaced in terms of different standards in different markets, difficulty in securing cooperation from second and third tier suppliers.

With that foundation built, the next stages may come more quickly. Where the first EP&L measured water use and greenhouse gas emissions through PUMA’s supply chain, the next phase — due in 2012 — will include dollar assessments of social impacts as well as broader environmental measures.

In the third phase, sometime after that, “we want to look holistically, at the positives of business,” Zeitz said. Business brings benefits that aren’t well measured either, he added, such as improving health, education and quality of life. “That’s something we want to start valuing,” Zeitz says. “At the end of the day, we have a new method of accounting, really, that looks at the world more holistically.”

Zeitz concedes the process will take time. After all, it’s taken a half-century or so to evolve today’s accounting standards. “This may go quicker, with modern technology,” Zeitz said, but until then, this is one tool among many to help develop greener solutions.

Meanwhile, Zeitz is open to sharing the intellectual property — the methods, standards, and processes — behind PUMA’s EP&L with other companies, including other sports gear players. “Yes, absolutely. For those who are serious and want to associate themselves with what we are doing in an open manner, we will be open with this process,” he said. “We have already had a number of requests from the automotive, chemical and beverage industries, as well as from one of our competitors.”

Eco-initiatives are gaining momentum in the sports apparel biz. In September, Adidas joined PUMA and Nike in a commitment to “detox” its supply chain and production processes by 2020. BusinessGreen reported that Adidas has been negotiating with suppliers, rivals and peers to create an inter-industry standard for toxicity reduction, following Greenpeace’s “Dirty Laundry” report, which revealed the use of and pollution from hazardous chemicals in textile production.

Photo courtesy of PUMA.

Global CCS Institute

Wedges reaffirmed: Robert Socolow updates his ‘wedges’ analysis of emissions reductions | Global CCS Institute

Remember ‘wedges’? For the broader public first learning about climate change – and even many energy industry insiders — back in the early 2000s, a single chart visualizing how the growth of global warming emissions could be reversed in ‘wedges’, helped to clarify the daunting complexity and scale of climate change.

That chart was created by two Princeton University scientists, Robert Socolow and Stephen Pacala, back in 2004 when they co-authored a paper in Science. The power of their interpretation — however simplifying — helped push forward the discussion of climate change into wider public circles.

Seven years later, Socolow has written an update to the analysis, reaffirming and intensifying the duo’s original message: that available-today technologies, including broadly-applied carbon capture and storage (CCS) have the capacity to reverse emissions growth. Socolow was stirred to re-visit his analysis because “[Our] core messages are as valid today as seven years ago, but they have not led to action”.

For CCS watchers, Socolow’s update is worth digging into for a couple of reasons. First, the exercise offers a grim reminder of how quickly the climate challenge is worsening. Where his 2004 estimate called for seven gigatonne-scale wedges of emissions reductions, Socolow’s update predicts we’ll need nine, if we started today, and it will take longer.

And, second, the muted response to Pacala’s ominous update is a worrying sign that the data is having less impact at a time when it should be attracting more attention. Pacala address why this is so, and how to respond.

To help illuminate both points, let me step back to review the content and context of the first paper. When the first wedges analysis was published in 2004, officials in the Bush White House were resisting climate change policy, making the argument that, even if the science is valid, there was no available technology to fix the problem.

Against this backdrop, the two Princeton scientists’ succinct paper, including the cannily clear ‘wedges’ analysis, made the case that, “humanity already possesses the fundamental scientific, technical and industrial know-how to solve the carbon and climate problem for the next half-century,” as Socolow recently recounted.

Here’s his description of their methodology:

“In a widely reproduced figure, we identified a ‘Stabilization Triangle,’ bounded by two 50-year paths. Along the upper path, the world ignores climate change for 50 years and the global emissions rate for greenhouse gases doubles. Along the lower path, with extremely hard work, the rate remains constant. We reported that starting along the flat emissions path in 2004 was consistent with ‘beating doubling,’ i.e., capping the atmospheric carbon dioxide (CO2) concentration at below twice its ‘pre-industrial’ concentration (the concentration a few centuries ago).

The paper is probably best known for having introduced the ‘stabilization wedges,’ a quantitative way to measure the level of effort associated with a mitigation strategy: a wedge of vehicle fuel efficiency, a wedge of wind power, and a wedge of avoided deforestation have the same effect on the carbon dioxide in the atmosphere. Filling the stabilization triangle required seven wedges.”

Among some 15 or so other wedges that Socolow and Pascala mapped out, three looked to CCS for reductions on the order of one gigatonne per year, to capture CO2 at present and future plants generating baseload power plants, H2 and/or coal-to-synfuel.

To be sure, the graph had its critics. Charles Petit at the Knight Science Journalism Tracker reminds us why it was also so catalytic, so much so that it perhaps encouraged false hope about the ease of fixing this problem:

“It was oversimplified, but for goodness’s sake, that’s what your typical members of Congress and White House senior staffers require. Wedges, for a while, were the currency of climate mitigation conversation. Yet since then emissions have gone on shooting up. Some critics said the Princeton pair so simplified that task, however abstractly, that it got translated subconsciously as an easy job. And easy jobs don’t get emergency attention. Thus for mapping a route away from climate peril Socolow and co-author Pacala got pinned, by some, as a reason policy makers lost their fear and, without it, did hardly anything.”

(To wit, earlier this year, Socolow was drawn into a brouhaha when a blogger reported he actually regreted writing the first wedges paper. Socolow responded to the contrary immediately and repeatedly since, and does so again in this publication.)

The update, while more alarming, has made less of a splash. The formal publication of Wedges II, if you will, was published simultaneously in two sites: the formal research paper appeared as ‘Wedges Reaffirmed’, in the Bulletin of the Atomic Scientists; a more shorter adaptation can be found at the Climate Central website.

Following both versions, there’s a fascinating trail of comments filed by high-level climate experts and global warming pundits such as the likes of Nicholas Stern (Chairman of the London School of Economics Grantham Research Institute on Climate Change and the Environment and member of the Global CCS Institute’s

International Advisory Panel), Natural Resource Defense Council’s director of climate programs David Hawkins, and even physicist Freeman Dyson, a climate change ‘heretic’.

Further afield, however, very few media outlets have paid attention to this update, as Petit points out. This is partly due, to be sure, to the recession and global anxiety, but it also reflects the ways in which climate messaging has backfired. Even Socolow, in the less formal write-up of his research at Climate Central, acknowledges that the first wave of climate analysis made mistakes:

“I submit, advocates for prompt action, of whom I am one, also bear responsibility for the poor quality of the discussion and the lack of momentum. Over the past seven years, I wish we had been more forthcoming with three messages: we should have conceded, prominently, that the news about climate change is unwelcome, that today’s climate science is incomplete, and that every ‘solution’ carries risk. I don’t know for sure that such candor would have produced a less polarized public discourse. But I bet it would have. Our audiences would have been reassured that we and they are on the same team – that we are not holding anything back and have the same hopes and fears.”

It is not too late to bring these messages forward.

He concludes with an assessment that many in this carbon policy and energy fields have likewise come to — that changing public opinion about climate policy will take more than science: “To motivate prompt action today, seven years later, our wedges paper needs supplements: insights from psychology and history about how unwelcome news is received, probing reports about the limitations of current climate science, and sober assessments of unsafe braking”.

Important as his revised analysis of the ‘wedges’ is, Socolow’s ruminations on the challenge of how to frame and communicate about the solutions is sage advice to help guide thinking about the CCS policy agenda as well.

Additional resources related to the stabilization wedges are available online at Princeton University.

Read or comment on the original post here:
http://www.globalccsinstitute.com/community/blogs/authors/adamaston/2011/11/03/fighting-coal-plants-fighting-carbon-capture-and-re-use 

GreenBiz

Building Efficiency, Batteries Drive Johnson Controls’ Record Growth | Global CCS Institute

Green is proving to be a good bet for Johnson Controls, Inc. Despite the anemic condition of its two key markets — automotive and construction — JCI recently announced record sales and profits for 2011. And the record run will continue next year, too, company executives predicted at an analysts meeting in New York this week, with green technologies providing much of the lift.

With overall GDP growth inching along at close to one percent and talk of a double dip recession echoing widely, Johnson’s rapid resurgence and bullish guidance came as a surprise. Based on preliminary figures, JCI’s revenues hit a record $40.7 billion, growing by 19 percent as net income climbed by 24 percent, to $1.7 billion, in its 2011 fiscal year ending Sept. 30.

Looking out to next year CEO Steve Roell predicted revenue would expand by another nine percent to $44 billion, while earnings per share would surge by some 20 percent. Long term, Roell anticipates 10 to 15 percent annual sales growth, a pace that if realized, could double JCI’s size in five years.

How is JCI growing so quickly when the overall economy is stuck in neutral? There’s a hint in the breakdown of where JCI expects growth next year.

Sales will expand by about 10 percent next year in its Building Efficiency unit, spurred by accelerating spending on retrofits and efficiency upgrades. Likely to expand faster still is the Power Solutions unit, where revenues will rise by around 12 percent, stoked in part by rising demand for batteries for hybrids and electric vehicles.

The company’s largest unit, Automotive Experience, will grow by 6 percent, supplying interior components and subsystems to auto makers — think seats, dashboards and doors.

Roell made the case that while broad pessimism was probably overstated — there’s a risk that the market will “talk itself” back into a recession, he said — JCI’s green focus is part of the reason it’s well positioned to grow in emerging markets and to grab share in slower-growth developed markets.

“Our market strength, product technology, and global distribution make us uniquely positioned to take advantage of the global mega-trends of energy efficiency and sustainability, and growth in emerging markets,” said Roell.

The green tint to these rosy results stems from JCI’s growing bets on building efficiency and electric vehicles. While VC-backed start-ups, and exotic new technology tend to attract the spotlight in discussions about the potential of clean tech, JCI’s outlook offers evidence of how methodically developed green offerings, coupled with strong execution, can mine huge growth from both established and emerging markets.

Panoptix and Bending Company Culture to the Cloud

Consider JCI’s last building efficiency initiative. Long a market leader in building control hardware, earlier this month JCI announced plans to push into the software services space. At Greenbuild, on Oct. 4 JCI unveiled Panoptix, a suite of cloud-hosted applications that promise to improve the collection and management of building performance data.

Building management software is complex challenge that has attracted, and spat out, quite a few players, such as Cisco, as I was reminded by Dave Myers, JCI’s president of building efficiency after the meeting. It’s a tricky space for pure IT experts to understand, so while they may “get” the challenge of connecting varied building systems, they often lack a deep fluency in the insular world of building control technology and practices, a world where Johnson Controls is a 125-year veteran.

“We have the presence in the market, the intelligence to operate buildings, and our gap was more of the connectivity,” Myers said.

To fill that gap, Johnson Controls built an in-house software development lab, importing coders from outside the building industry, specifically to cultivate a very open sensibility about standards. Doing so also meant bending corporate culture that the system must be open to communicate with competitors’ offerings. “It’s essential that Panoptix be able to talk with building control systems, including our competitors,” said Myers.

JCI’s entry into this space comes at a time when building owners are pressing harder for verification that investments in green technologies and retrofits deliver a payback. As critics of the USGBC’s LEED green building standard have emphasized, design standards don’t guarantee more efficient performance.

Better building performance data, Myers added, will not only spur programs like LEED, but should make it easier to finance retrofits too, by giving lenders clear data about improved operating costs.

The second green growth area that JCI emphasized was batteries — but not, to my surprise, the lithium-ion type that rule the roost in most advanced electric vehicles (EVs). Rather JCI sees big promise in old-school lead acid batteries, the sort cars have relied on for a century or so to start, for lighting and ongoing ignition.

In an era of space-age EVs packed with thousands of exotic li-ion power packs, where do lead-acid batteries fit in? JCI’s answer: start-stop systems for conventional cars.

While maybe not as sexy as Chevy’s Volt or Nissan’s Leaf, these lower-cost systems can stop a car’s engine when at idle, then fire it back up when the gas is pressed. At a premium that pays for itself in a year or 18 months, car makers can deliver 5 percent to 7 percent fuel savings.

Those mileage gains may be modest, but Alex Molinaroli, JCI’s president of power solutions explains, given its affordability, start-stop systems will have a deeper impact on the industry, and overall mileage, far sooner than advanced EVs. In the coming decade, Molinaroli said, advanced electrified vehicles — from plug-in hybrids to pure battery EVs — will make up only a few percent of sales. In the interim, the true “mass market” approach to EVs will come from start-stop systems added to conventional cars.

“It’s the math. Let’s say EVs mean 5 percent of cars improve their mileage by 100 percent,” said Molinaroli. “You have more impact improving the mileage of 100 percent of cars by 5 or 10 percent.” Already widely adopted in Europe, start-stop systems will make their way into the majority of U.S. models in coming years, Molinaroli added, as automakers begin the push to hit new federal 54.5 mpg standards by 2025.

In parallel, li-ion batteries will grow continue to grow, as well, and JCI rationalized its control of its advanced battery operations. On Sept. 30, JCI completed the $145-million buyout of its joint venture with France’s Saft, gaining ownership of Li-ion battery technology, rights to licenses and a recently completed plant in Holland, Mich.

JCI currently supplies Li-ion batteries to Azure (which makes electric trucks for FedEx and others), BMW, Daimler, Ford, China’s Geely, Jaguar/Land Rover, Odyne (another truck maker) and VW.

Lead acid batteries were recently at the center of a dust-up at JCI’s plant near Shanghai. Built by and acquired from Delco, JCI had to shutter its lead-acid battery plant in Pudong New Area last month when authorities requested the factory halt operations after exceeding its quota of lead emissions.

Molinaroli said the closing came despite the fact, in the past, JCI has been solicited by Chinese authorities to transfer practices to help local plants lower their lead emissions. The Shanghai plant, Molinaroli emphasized, operates at the same standard as JCI’s facilities in Europe and the Americas. JCI has the right to resume operations at the plant on Jan. 1, and is developing four additional facilities elsewhere in China.