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RMI - Rocky Mountain Institute

It’s the IRA’s First Birthday. Here Are Five Areas Where Progress Is Piling Up.

The Inflation Reduction Act promised an unprecedented wave of clean energy investment. One year in, here’s where we’re seeing progress.

Originally published on August 16, 2023 at RMI.org: https://rmi.org/its-the-iras-first-birthday-here-are-five-areas-where-progress-is-piling-up/

By  Hannah Perkins,  Adam Aston,  Vindhya Tripathi

“Unprecedented.”  “A landmark.” “The Super Bowl of clean energy.”

Those are just a few of the superlatives that hit the headlines when the Inflation Reduction Act (IRA) was signed into law on August 16, 2022.

The act’s passage came as a surprise both politically — emphasizing lower energy costs helped the bill clear years of oppositional brinksmanship — and for its unprecedented scale. Toward the goal of shifting the US grid to 80 percent clean electricity and cutting climate pollution by 40 percent by 2030, the act mobilized an estimated $370 billion in federal incentives.

A year in, the early fanfare has resolved into unprecedented progress. Twelve months after passage, the IRA’s impact — in industrial investment, new jobs, and other economic activity — already exceeds early estimates. To date, we have seen:

  • $278 billion announced in new private clean energy investments.
  • Projects announced accounting for 170,000 new jobs.
  • The availability of $70 billion was announced in grants, rebates, and other non-loan funding.

And while politics could yet alter its trajectory, the impact to date has been weighted towards traditionally Republican-leaning regions, a bias which may ensure its longevity in years to come. Given the rapid uptake, Goldman Sachs earlier this year upped their estimate of public IRA investment over the next decade to more than $1 trillion, with private sector spending potentially a multiple of that.

By design, incentives are drawing this investment widely across the United States, with a focus on disadvantaged, low-income, and energy communities. RMI estimates that, if they take full advantage of the IRA and adopt clean energy at the pace and scale needed to meet national climate targets, by 2030, each state could see:

  • Cumulative investment of from $1 billion (for smaller states) up to $130 billion (for the largest beneficiaries).
  • Per capita new investment of $1,500 to $12,000.
  • The creation of 2,000 to 100,000 new jobs.
  • Lower healthcare costs and impacts by avoiding 4,000 to 300,000 negative health outcomes avoided.

On the ground, IRA incentives have already translated into a rush of announcements and projects spanning regions and industries, including both legacy and cleantech sectors. On the advent of the IRA’s first birthday, here’s a rundown highlighting the breadth of this progress.

Manufacturing boom

Nourished by the IRA, manufacturing announcements have mushroomed across the country. While heavy on electric vehicles (EVs) and batteries, the greenfield factories and upgrades also include wind and solar sites, along with semiconductors, electronics, and others. The new capacity promises to boost US energy security and independence by reshoring key supply chains and strengthening US competitiveness as global leader in clean energy technologies. To date, 272 new clean energy projects have been announced, including:

  • 91 new battery manufacturing sites.
  • 65 new or expanded EV manufacturing facilities.
  • 84 wind and solar manufacturing announcements.
Electrifying transportation

Globally, sales of internal combustion vehicles peaked in 2017, and are now in long-term decline, according to Bloomberg NEF. As older cars and trucks are retired, the world’s combustion vehicle fleet will start to shrink after 2025. In the United States, the IRA is supercharging this shift, with incentives that span from electric school buses to battery factories and new charging infrastructure:

  • For consumers, the IRA offers rebates on new and used electric vehicles, peaking at $7,500. Juiced by this incentive, US sales of new EV passenger cars are expected to surge by 50 percent in 2023 to over 1.5 million, the White House estimates. The incentives will help heavier vehicle classes electrify more quickly too. By 2032, RMI estimates that the share of EV sales using IRA credits will be close to 100 percent for Class 1–3 commercial fleets, and 84 percent for medium- and heavy-duty trucks.
  • To supply incentive-amped demand, global automakers such as GM and Ford and their battery partners are leveraging the act’s $45-per-kilowatt battery production tax credit to turbocharge construction of new plants across a “battery belt,” stretching from Michigan to Georgia (see map, in above section). Increased output of US-made batteries is, in turn, helping carmakers boost output of popular EVs, such as Ford’s F-150 Lighting electric pickup (image, top of page).
  • IRA also provides funding for the federal government to lead by example. The US Postal Service(USPS) received $3 billion for clean vehicles. And starting in 2026 the post office will buy only EVs.
  • RMI analysis shows IRA credits will help electric passenger cars and light-duty trucks achieve total cost of ownership (TCO) parity with ICE vehicles between 2023 and 2025. Without the IRA credits, EVs would have reached TCO parity with ICE vehicles between 2024 and 2027.
Total Cost of Ownership parity for EVs and ICE passenger cars chart
Greening buildings

Buildings account for around a third of US emissions, making it one of our largest, most complex sectors to decarbonize given the age, diversity, and costs to retrofit America’s stock of millions of buildings. The IRA is tackling this challenge on multiple fronts:

  • Guidance on funding for the Home Energy Rebate programs is being rolled out and has generous carve-outs for low-income households. States are currently designing programs based on this guidance to help consumers save money and live more comfortably. The first state programs could be rolled out as early as the end of this year.
  • Appliance efficiency standard programs like CEE and ENERGY STAR, which some IRA incentive programs rely upon, continue to align with decarbonization efforts that ensure the most efficient HVAC systems and appliances are installed in homes across the country.
  • New HUD programs prioritize healthy, efficient, electrified retrofits for affordable housing HVAC and appliances; more than $800 million is available and funding from these programs can’t go towards in-unit fossil fuel appliances.
  • The General Services Administration (GSA) — which oversees the federal government’s vast portfolio of buildings and properties — is using $1 billion of IRA funding to shift federal facilities towards electrification, with near-term plans to electrify over 100 buildings, including one of their largest, the Ronald Reagan Building in DC.
Decarbonizing electricity

Clean electricity is essential to decarbonize the wider US economy, whether to charge EVs and power greening buildings (see above), or to decarbonize industry (below). The shift is advancing steadily. In the first five months of 2023, wind and solar produced more power than coal, a first for the US. The IRA is continuing this shift:

  • Commercial solar is on pace to grow by 12 percent in 2023, and over the next seven years, we expect twice as much wind, solar, and battery deployment as there would have been absent the IRA.
  • The IRA-linked credits reinforce renewable powers’ long-standing price edge over gas- and coal-fired generation, an advantage which endures despite some demand-led inflation in the price for new solar and wind.
  • With IRA funding, USDA is making the largest investment in rural electrification since the New Deal — nearly $11 billion for rural electric co-ops. In particular, the Empowering Rural America (New ERA) program gives rural electric cooperatives an unprecedented opportunity to modernize aging grid infrastructure to maintain reliability, lowering costs for members and reduce emissions.
  • Michigan’s largest investor-owned utility, DTE, filed the first resource plan in the country that attempts to demonstrate the IRA’s intended changes to the economics of clean energy, projecting $500 million in savings for customers over 20 years. The proposal includes building 15 gigawatts (GW) of new solar and wind, improving DTE’s exploration of battery pilots, and moving up the retirement of the Monroe Power Plant – the fourth largest coal plant in the US.
  • Energy Infrastructure Reinvestment announced funding for solar and storage in Puerto Rico, replacing a retired coal power plant.
Transforming industry

Steel, cement, petrochemicals, and other hard-to-abate heavy industries pose a special challenge to decarbonize. For now, many rely on raw materials and/or high temperatures that only fossil fuels can affordably deliver at scale. The IRA aims to scale up affordable alternatives — such as hydrogen which, if implemented cleanly, offers a clean alternative — along with greener raw materials and recycling options:

  • Incentives for industry and hydrogen have had a big impact on economic analyses. Many projects have been announced, focused on advancing US global competitiveness. Policies are meant to drive applications and interest in first-of-a-kind projects and hubs demonstrating industrial decarbonization opportunities.
  • From the IRA and Bipartisan Infrastructure Law, the Office of Clean Energy Demonstrations (OCED) has been allocated $6.3 billion for Industrial Demo Grants. OCED funds will de-risk technologies that are not yet demonstrated on a commercial scale.
  • A range of tax credits is being clarified that will spark investment. For hydrogen, guidance on the Hydrogen Production Tax Credit (45V) is forthcoming. And the  Advanced Manufacturing Production Credit (45X) will unlock a major buildout of the lithium-ion battery supply chain, stationary storage manufacturing, and solar and wind supply chains.
  • Likewise, guidance has been released and the first round of applications reviewed for the Advanced Energy Project Credit (48C), which offers $4 billion for projects that expand clean energy manufacturing and recycling, expand critical minerals refining, processing, and recycling, and reduce emissions at industrial facilities. The U.S. Energy Department’s roster of funding opportunities, among other things, prioritizes heat pump manufacturing, signaling a clear shift towards supporting beneficial electrification.
Finance

The act has also unlocked financing via the reform of tax credits and innovative financing that prioritizes climate-friendly investment in historically disadvantaged communities:

  • For the first time, the IRA widens access to investment and production tax credits (ITCs and PTCs) for non-taxable entities, such as states, local governments, coops, and non-profits that in the past had little or no way to use the credits to finance new renewables. Historically, constrained demand for tax credits has limited the scale of ITC and PTC financing. For instance, RMI analysis of 2019 financial disclosures found that US investor-owned utilities had aggregate tax liabilities sufficient to build less than 4 GW of new solar and storage per year, barely enough capacity to replace one or two coal plants. Later this year, Treasury will release final guidance for organizations to tap into these direct pay and transferability options.
  • The Notices of Funding Opportunity (NOFOR) for the Greenhouse Gas Reduction Fund’s three grant competitions are now live, with deadlines in September and October. These grants will be disbursed in 2024, capitalizing a national network of clean energy financiers who will be focused on mobilizing private capital at scale to fund emissions-reducing projects, especially in low-income and historically disadvantaged communities.
Looking ahead

The IRA is not only the most ambitious climate bill in US history. It is one of the most ambitious and complex efforts at economic and industrial reinvestment ever. By these standards, the progress the act has already made is enormous, but years of work — and meaningful obstacles — remain to fully deploy the IRA at the pace and scale needed to reach climate targets.

Chief among these obstacles is permitting. As project timelines stretch into the years — whether to connect renewables projects onto the grid, or site new critical mining and industrial facilities — streamlining the thicket of overlapping regulatory and administrative approvals is emerging as a make-or-break challenge for the US energy transition.

Despite challenges in implementation, the hundreds of announced projects and hundreds of billions of dollars in investment show the energy transition is out of the starting gate and gaining speed.

The challenge is increasingly shifting to subnational players — such as states and cities as well as businesses and non-profits — to mobilize the funding the IRA has unlocked. Ultimately, the IRA’s full potential will be limited only by our own ambition to realize a clean energy future.

Corporate Knights

Policing Toy Factories to Avoid Worker Harm: International Council of Toy Industries | Corporate Knights

Mortally dangerous conditions remain a grim reality for workers at factories around the world.

In September 2012, some 300 workers died in a garment factory fire in Pakistan, many because they were trapped behind locked emergency exits. Six months later, another 1,100 seamstresses were crushed to death when an eight-storey building collapsed in Bangladesh, despite warnings it was unsafe.

As the multi-trillion-dollar textile industry struggled to respond to these tragedies, the much smaller global toy industry was able to call on a resource no other consumer product industry can match.In short order, big toy brands and retail members of the International Council of Toy Industries (ICTI) were able to tap into a one-of-a-kind database they have built over the past decade known as the ICTI CARE (Caring, Awareness, Responsible, Ethical) Process (ICP).

The trove of data, which includes wage rates, hours worked, worker age and 200 or so other metrics at thousands of toy factories, allowed big toy buyers to rapidly identify manufacturers located in the areas affected by the recent labour disasters for focused follow-up. Within weeks, industry executives started to develop and roll out tougher rules to all of the factories in the ICP network, guiding inspectors to enforce stricter requirements for fire escapes and building integrity.

The quick response was made possible by a combination of ICP’s carefully cultivated industry collaboration together with a recent decision to port its unique database onto a web-based platform provided by Enablon, a supply-chain software service provider founded in 2000.

“Not long ago, this sort of information was considered proprietary. A single factory might have two dozen clients, but they didn’t want to talk to one another, for fear of competitive disclosure” says Philippe Tesler, co-founder and CEO of Enablon North America.

A combination of factors has rewritten these habits. There’s a growing recognition that risks can be lowered and costs minimized through collaboration. “Reporting has gone from a defensive response to a more proactive process,” says Tesler.

Back in 2002, the toy industry was facing a series of relatively small-scale labour mishaps at overseas factories. “Pressure was building from retailers, from consumers, NGOs [non-governmental organizations] and investors to boost regulation,” recalls Christian Ewert, president and CEO of the ICTI CARE Foundation, which oversees the supply chain program.

Instead, the industry group pushed for self-regulation and established the ICP, a framework in which toymakers would share and compare information towards the end of “ensuring safe and humane workplace environments for toy factory workers worldwide,” says Ewert.

Notably, the ICP was established as a standalone not-for-profit, overseen by a board that includes NGO and civil-sector experts, and on which active toy industry executives are in a minority.

Streamlining inspection efforts has been a central priority from the beginning. When Ewert started in the toy industry in the 1990s, he worked with a manufacturer that faced 64 audits per year, each asking for similar information. “I’d much rather have seen those auditors inspecting 64 different factories, rather than the same factory 64 times,” he says.

The move to Enablon’s platform has helped transform this process from a cumbersome paper chase into a more scalable, easier to use and fast-evolving technology. On a factory floor in China, auditors and factories can input data wirelessly. On the other side of the planet, ICP members can log in and tweak standards on the fly, and do deep data analysis across the factories they are working with.

Today, the system tracks data on roughly 2,500 factories that employ some one million workers. Most are based in China, home to a vast majority of the world’s toymakers. Just 1,600 factories are currently certified as meeting ICP’s criteria. New factories join each year, but year to year about 13 per cent lose their approved status.

The most frequent causes for such a loss? A lack of transparency about whether workers are paid correctly or companies are demanding too many hours of work, says Ewert. Picking up such malpractice early can nip bigger problems in the bud, lowering the risk to corporate reputation.

“Companies don’t want to be named and shamed,” says David Metcalfe, CEO of Verdantix, an independent analyst firm focused on energy, environment and sustainability issues.

Over time, Metcalfe adds, the best employee health and safety plans can evolve to do more than protect workers. They can also proactively improve supply chain operations by identifying potential trouble spots, focusing corrective responses and avoiding the cost and hassle of switching factories following a crisis.

ICP, for example, goes beyond simply tracking auditors’ reports. It reaches out to workers directly. Factories are required to post a hotline to which workers can anonymously phone in problems. The organization receives up to 350 such calls per month. When the software detects a spike in calls from a given factory, ICTI CARE can increase its training efforts with both staff and management, before a crisis breaks.

And if early action doesn’t work, the threat of being de-certified is a potent motivator, says Ewert. After all, it’s not a single buyer pulling out, but the entire ICP network. Ewert is confident the transparency will continue to grow as technology advances.

“Workers can call us today,” he says. “In time, they’ll be able to send pictures of dangerous conditions too,” as smart phones emerge as another tool to help the industry identify and repair risks before they become tragedies.

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The Guardian

Can new supply chain approaches prevent another Rana Plaza? | The Guardian

Tougher factory and supply chain standards won’t be enough to prevent disasters like the Bangladesh factory collapse. Can development tactics succeed where conventional approaches have failed?

Foxconn factory workers in China's Guangdong province

Foxconn workers in a Chinese factory. Can new industry tactics prevent supply chain disasters? Photograph: Bobby Yip/Reuters

Ideally, tragedy begets reform.

That’s the tale we’ve learned from past industrial disasters, including the 1911 inferno at the Triangle Shirtwaist Co. in Manhattan, which killed 146 and marked the dawn of a fundamental shift in US workplace standards.

The changes took decades, to be sure, but the tragedy spurred the development of fire and building regulations, the creation of labor and women’s unions and a culture of real regulatory enforcement.

What, then, do we to make of reactions to the collapse of the Rana Plaza factory six months ago?

The deaths of some 1,130 garment workers in the Dhaka, Bangladesh, sweatshops drew a storm of public outcry. But in supply-chain circles, the tragedy has revealed more about the limits of our potential to “fix” global supply chains that, in some cases, have grown too big and too complex to avoid human-rights failures.

Facing this reality, a new generation of supply-chain experiments are borrowing tactics from conventional development efforts. These look beyond conventional rules- and business-transaction based approaches to address the root causes of many factory malpractices. In general, they’re working to improve education, health and community conditions in ways that benefit both workers and their employers.

Initial Rana reaction

When Rana Plaza collapsed, the response – among top-tier corporate brands – was rapid. Within a month, a cadre of mostly European fashionchains, including H&M, Zara, C&A, Tesco and Primark, signed a legally binding agreement to help fund and enforce safety improvements in Bangladeshi factories.

US and Canadian retailers took a different path.

Under the umbrella of the National Retail Federation (NRF), key brands backed an alternate agreement reaffirming ongoing efforts to take a ground-up approach, training workers, factory owners, officials and foreign brands in parallel.

The split response led to an unseemly tit-for-tat round of criticism.

The heads of IndustriALL, a global union supporting the European effort, called the rival plan a “pale imitation.” The NRF effort also drew criticism for not requiring its suppliers to allow workers to organize.

The head of the NRF volleyed back, in The Wall Street Journal: “The IndustriALL plan seeks major funding by private business without providing accountability for how funds are spent, as well as binding retailers to specific resourcing requirements without taking into account the impracticality of such a requirement.”

Distracting as it is, the infighting reveals the spectrum of current possibilities – from the EU’s conventional approach to NRF’s ground-up agenda – and many of the limits that circumscribe supply chain efforts circa 2013.

Limits of good intentions

However earnest, corporate efforts to improve supply chain operations have not kept pace with the compounding complexity of globalized supply chains. Links have grown too numerous; buyers’ influence dissipates too rapidly.

Eric Olson, BSR’s senior vice president, walked me through the vexing math facing would-be supply-chain trackers. A typical Fortune 500 company will have hundreds or thousands of first-tier suppliers. But supply chains can easily extend to 15 layers or more.

“There’s almost no company on the planet that has figured out how to cascade their supply chain efforts into the second tier,” Olson said, “let alone the third, fourth and so on, even though 80% of the impacts are happening further out in the chain.”

Meanwhile, a recent survey of some 1,700 UN Global Compact corporate members highlights another limitation. While most companies set goals for their suppliers, only 18% actually help their suppliers set and review goals their own goals – and only 9% take steps to verify the efforts, according to Global Corporate Sustainability Report 2013.

“While companies are making progress in terms of thinking about supplier sustainability and setting expectations, the supporting actions that will drive adherence have shown little or no increase over the past few years,” according to the report.

Wider scope, deeper reach

If conventional supply chain practices are running up against inherent limits, what next?

In some of the world’s least-developed markets, a new generation of more holistic experiments is showing promise.

These experiments stem from the recognition that mandating standards to a factory manager often ignores developing-world realities, such as poorly educated workers, degraded public health, economic insecurity and antagonistic worker-manager dynamics.

If these factors can be improved, the potential to advance more ethical, productive factory ecosystems would rise overall.

As an example, Olson points to HERProject. The program, acollaboration between BSR and 22 multinational companies, is delivering curricula focused on health and financial topics to some 200,000 women workers in 200 factories and farms in Asia and Africa.

Early findings show that when offered to women through their workplaces, the factories benefit via reduced absenteeism and turnover. Greater work-place trust, in turn, is helping managers collaborate with workers on setting conditions. A Levi Strauss & Co. supplier in Egypt reported a four-fold return from the program

There’s no denying this approach is more difficult. Yet it’s clear that, if supply networks continue to stretch and globalize, conventional supply-chain tactics are ill-suited to less developed markets.

If high street brands can cultivate common cause with development goals, a smarter approach to supply chain management will be a welcome byproduct.

~

Corporate Knights

Ford Motor Company looks high and low to save water | Corporate Knights

In the race to go green, it’s fair to say that Ford has looked high and low – literally – to help its automotive plants cut their impact on the environment.

One of Ford’s highest profile eco-efforts can best be seen by looking down on the roof of its River Rouge factory in Dearborn, Michigan. Originally constructed starting in 1917 by Henry Ford, the complex debuted as an industrial pioneer, among the first fully-integrated industrial complexes, where steel mills, glass works and chemical plants were built side by side to speed the flow of raw materials into Ford’s burgeoning Model T plants.

It was there in 2000 that company chairman William Clay “Bill” Ford Jr., the founder’s great-grandson, unveiled another pioneering effort, of a greener hue. He announced plans to build the largest “living” roof ever installed on an industrial building, comprising 10 acres of hearty, green sedum plants.

Green roofs have since become a favourite of building designers. But at the time, Ford’s plan, part of a broader $2-billion site renovation, ran counter to energy-guzzling conventions in the auto biz. U.S. auto sales hit an all-time high that same year, buoyed by record sales of high-margin SUVs and sub-$2 per gallon gas.

Against this backdrop, and even though the roof was estimated to cost about the same as a conventional design, critics carped that Ford was risking money on greenwashing efforts. Yet when the roof was completed in 2002, Bill Ford stood firm. “This is not environmental philanthropy,” he said at the time. “It is sound business.”

Since then, much has changed. Gas prices have nearly doubled, endangering SUVs, and Ford’s green roof gamble continues to pay back by passively lowering the factory’s energy use for cooling, displacing electric illumination with skylights and reducing costs to filter stormwater runoff.

Elsewhere throughout Ford’s global operations, eco-roof features pioneered at River Rouge – such as day-lighting, rain water capture and cool-white materials that reflect sunlight – have become standard design features. Though the most visible, the River Rouge roof wasn’t the only water-focused effort Ford rolled out in 2002. That same year, the company began a long process to radically reduce the amount of water, energy and other resources used in its manufacturing operations.

From the start, metal-cutting machines were a top target. These computer-controlled devices shape hunks of steel and aluminum into precision auto parts, everything from big engine blocks to fine-toothed gears.

The problem? “It can be a messy process,” explains Sue Rokosz, principal environmental engineer at Ford.

Flood machining, as the conventional process is known, uses a steady stream of oil and water to cool cutting tools. This slurps up huge inflows of fresh water, requiring a lot of energy and plumbing infrastructure to keep flowing. And at the back end, it yields a slurry of oil, water and metal particles that are costly to dispose of and difficult to recycle.

As a fix, Ford turned to a process known as near-dry machining, or minimum quantity lubrication (MQL). The process replaces the stream of oily water with micro-spritzes of atomized oil delivered via articulated arms or hollow drill bits to precisely the point of contact where friction and heat build up.

It’s a small improvement that delivers outsized benefits. By making the switch, a typical manufacturing line – capable of machining roughly half a million parts every year – can lower annual water use by about 280,000 gallons and avoid the consumption of more than 28,000 gallons of lubricants.

What’s more, oily wastewater is all but eliminated and the metal shavings are relatively dry and clean, ensuring a higher share is recycled. Line workers benefit too, with drier, safer work areas, says Rokosz.

Though dry-machining systems cost slightly more upfront, their overall lifetime costs pencil out at 17 per cent less than old-style wet machines, according to Ford data.

While the technology has become Ford’s de facto standard, it can be set up only as fast as new manufacturing lines are built or old ones are replaced. So far, it’s been installed in more than a third of Ford’s 28 powertrain plants, with more on deck to make the switch.

Drop by drop, Ford’s water-savings efforts are adding up. According to its sustainability report, Ford has cut water consumption, per vehicle produced, by about half in the past decade. It is on track to cut per-vehicle consumption to around 900 gallons by 2015, compared with over 2,500 gallons in 2000. That’s roughly equivalent to taking 100 fewer five-minutes showers.

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Check out the original story online, here:
http://www.corporateknights.com/article/tech-savvy-ford-motor-company

 

Corporate Knights

How recovering water from fresh potatoes helps a PepsiCo chips factory turn off the taps | Corporate Knights

For PepsiCo, one of the world’s biggest makers of potato chips, the key to producing the crispiest chips possible is all about driving moisture out of raw potatoes. Paradoxically, though, potatoes are made up mostly of water.

At a Walkers Crisps factory in Leicester, England, PepsiCo is turning this soggy challenge into a water-saving innovation. The goal: to extract so much water from inbound spuds that the factory can go “off grid,” drawing little or no water from public taps. Doing so, PepsiCo hopes, will help save the plant roughly $1 million a year in avoided water costs.

“The idea for taking factories off the water grid came from a simple observation by our front-line teams that potatoes are 80 per cent water,” says Martyn Seal, PepsiCo’s European director of sustainability.

PepsiCo’s efforts to turn off the taps at its Walkers plant in the U.K. is one sliver of a bigger batch of initiatives to make its global operations run with less water. In 2010, the food-and-drink giant, which turned over $66.5 billion (U.S.) in sales last year, released its first comprehensive water report. The effort, similar to initiatives out of rival Coca-Cola, set out details of its water consumption alongside plans on how to use that water more productively.

One of its headline goals is to improve the efficiency of water use – measured by water consumed per unit of production – by 20 per cent by 2015, using 2006 as a baseline. PepsiCo hit this target last year, four years ahead of schedule. Another goal is to strive for “positive water balance” in water-distressed areas. This means for every unit of water PepsiCo uses, it strives to restore, replenish or prevent loss of the same amount or more in the same region. It also aims to provide access to safe water for three million people in developing countries before 2016.

Early on, potato-chip plants emerged as a juicy target for these goals. Making chips is surprisingly water intensive. In a normal year, some 350,000 metric tons of fresh tubers is shipped to the Leicester factory – the equivalent of some 13,000 tractor-trailer loads.

In the plant, potatoes are washed, peeled and sliced. A steady flow of H2O is used at each of these steps. In Leicester, this process demands roughly 700 million litres of water annually, the equivalent of roughly 280 Olympic-sized pools. Yet as crucial as water is while preparing the raw spuds, it’s an unwanted troublemaker thereafter. The thin slices are plunged for a few minutes into oversized fryers filled with oil boiling at 190°C (375°F). Water trapped in the potato slices vapourizes instantly, turning the otherwise inedible starch into an addictively crunchy treat.

In a conventional set-up, the cloud of steam that rises from these vats is vented out into the air. PepsiCo engineers recognized that the vapour represents a huge waste of both water and energy. To recover these wisps of moisture, PepsiCo fit a contraption onto the plant’s exhaust towers. Inside, the hot steam passes over a network of thin, cooled tubes. Moisture from the potato vapour condenses on the cooler tubes for easy collection. The process also recaptures traces of cooking oil from the exhaust. Both the oil and water can be reused. About four-fifths of the moisture that is normally lost is recovered.

Together with systems that recycle about two-thirds of the plant’s wastewater, the steam-recapture project is on track to supply enough water to hit PepsiCo’s goal of drawing zero freshwater in Leicester. The company is already testing the technology at similar sites in Holland and Belgium, part of a plan to extend these practices to other large European operations and, later, worldwide.

A successful pilot in the Leicester plant “will provide us with a technology suite that we will be able to reapply at other PepsiCo plants, particularly in areas of severe water scarcity,” Seal says. “This is an opportunity to realize meaningful cost savings while reducing our impact on the environment.”

Combined with other projects across PepsiCo’s operations, the steam-recapture efforts contributed to savings of $45 million in water and related energy costs last year, compared with the 2006 base when the company began these efforts. By volume, in 2011 it used 16 billion fewer litres of water, compared with 2006.

As much as PepsiCo execs crow about the bottom-line impact of these efforts, they point to strategic benefits too: The company must plan for operating risks that droughts pose to future operations. By 2030, global demand for freshwater could exceed supplies by 40 per cent, explains Dan Bena, PepsiCo’s senior director of sustainable development.

“If this gap is not closed, there will be no business as we know it today,” he says.

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See the original story here: http://www.corporateknights.com/article/tech-savvy-pepsico

GreenBiz

Dan Hendrix: The Future of Interface is Bright & Greener than Ever | GreenBiz

Dan Hendrix: The Future of Interface is Bright & Greener than Ever

Because of the enduring green epiphany of its charismatic founder, Ray Anderson, the influence of Interface has always been outsized in the world of sustainability.

In the wake of Anderson’s death last autumn at age 77, following a nearly two-year battle with cancer, the focus has shifted to Daniel Hendrix, Interface’s CEO and president. Yesterday, at theGreenBiz Forum 12 in New York City, senior writerMarc Gunther caught up with Hendrix to see how the billion-dollar carpet maker is moving ahead with its founder’s eco-vision.

At Interface, sustainability continues to evolve from an operations focus into tool for innovation and market development, Hendrix reported. One example of this shift will soon be found up in the air.

After a four-year development process, the company’s carpet tiles were okayed for use on commercial jets. Developing the product required reducing the weight of the tiles by nearly half, while meeting stringent fire and toxicity standards as well as passing Boeing’s grueling performance tests.

Southwest Airlines will be among the first to start using the tiles as part of its Green Plane initiative, a project to outfit a Boeing 737 cabin with green products. “It’s a big win for us, and for the airline industry,” said Hendrix.

Promoted to his post in 2001, Hendrix has been running Interface’s day-to-day business for over a decade. Hendrix, who will celebrate his 30th anniversary with the company next year, worked closely with Anderson through an acquisitive period in the 1980s to scale-up the business. A decade later, when Anderson had his green epiphany and declared this intention to transform how the company would make tiles, Hendrix recounted that he was a disbeliever: “I thought Ray had lost his mind.”

It didn’t take long for Anderson to convert Hendrix, or the rest of the company. To aid his effort, Anderson turned to a green “dream team” to make the case to his colleagues. A veritable who’s-who of sustainable manufacturing, the team included Paul Hawken, Bill McDonough, and Amory Lovins, among others. The case altered the thinking of Interface’s leadership, and re-set the company’s course towards a goal of making carpets using less oil, water, and other inputs, with less waste overall.

The company has tracked these metrics steadily since 1996. Since then, the company has lowered the oil intensity of its products to 60 percent from 90 percent, Hendrix reported. Roughly 40 percent of its carpet are produced from post-consumer recycled materials, remade from used carpet tiles where fiber is shaved off for reuse, and the heavy backing is re-melted to recapture its embodied energy. “We’ve seen an 82 percent reduction in water use, and a similar improvement in waste sent to landfill,” Hendrix said.

One of the latest efforts to deepen Interface’s green practices is a program to develop environmental product declarations, or EPDs, a sort of successor to a life cycle assessment (LCA). “It creates transparency,” said Hendrix, as a kind of environmental nutritional label for each product, showing key content such as carbon footprint, toxicity data, and water usage.

“It’s like an LCA but with more detail. It takes a lot of the mystery out of what impact this product has on the environment,” said Hendrix. “It’s far from being standardized. And we’re one of the first to pursue it in the U.S.”

After nearly 20 years of sustainability efforts, the process of extending green practices within the organization, born with Anderson, continues today. “Ray gave Interface a wonderful gift: There’s a tremendous emotional capital that continues to motivate our people to get up everyday and think there’s a higher purpose than just a paycheck,” Hendrix said.

Interface is looking to its employees for guidance on how and where to innovate. “We call the exercise ‘appreciative inquiry,'” said Hendrix. “We interviewed employees and a few customers, to help push towards a goal of zero emissions.” A lesson that emerged from this exercise was to cross-pollinate staff between offices, sending high performers from Bangkok to Europe, or from the U.S. to Australia, to learn and to exchange innovative ideas.

For more on Anderson’s legacy, check out Joel Makower’s memorial to the ” iconic and iconoclastic industrialist“. And in the first of an ongoing series called “Radical Industrialists” here at GreenBiz.com, read an essay contributed by Interface’s Lindsay James and Mikhail Davis, “Mind the Void: Interface after Ray.”

Photo by Sophia Wallace.

Check out the original story here: http://www.greenbiz.com/blog/2012/01/25/dan-hendrix-future-interface-bright-greener-ever 

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

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

NRDC OnEarth

Meet the Change Makers: Steering Ford Toward Sustainability | OnEarth

A focus on efficiency helps Ford pull away from the Detroit pack. Executive Sue Cischke explains how.

In the long history of U.S. automakers, green strategy and profitability have rarely gone hand in hand –until, that is, Henry Ford’s great-grandson made them a centerpiece of his tenure as the company’s president and CEO. But by 2006, in the face of larger woes in the U.S. auto sector, Bill Ford had to step down from day-to-day management of the company (he now holds the title of executive chairman). Just two years later, in 2006, Bill Ford’s green vision looked cannily prescient. With gas prices spiraling skyward that summer, U.S. drivers stampeded away from gas-guzzlers. Soon after, the financial crisis leveled the economy, and car sales collapsed. Unlike its Motown rivals, Ford was able to steer clear of bankruptcy, thanks in large part to savvy financial moves by Bill Ford’s successor, Alan Mulally.

Today, with auto sales looking up again, Sue Cischke (pronounced SIS-key) believes that extending Ford’s commitment to green corporate practices and energy-efficient vehicles will help it outpace global rivals. Cischke entered the auto biz as a mechanical engineer at Chrysler in 1976, in the aftermath of the Arab oil embargo and as high-mileage Japanese imports began to fundamentally reshape the business. These days, she is Ford’s senior-most executive focused on environmental strategy, reporting to CEO Mulally as group vice president, sustainability, environment and safety engineering. One of her top responsibilities is steering Ford’s long-term vehicle development, a vital part of helping the company meet its commitment, unique among its peers, to cut the greenhouse gas emissions of all new Ford vehicles by 30 percent by 2020 (based on a 2006 baseline).

OnEarth contributor Adam Aston recently caught up with Cischke in Detroit to hear how Ford’s green push is unfolding.

Discussions about automakers going green tend to focus on vehicles. But Ford’s been pushing sustainability in its internal operations, too. How do you measure that?

We recognize that our manufacturing operations, in terms of energy use and the materials we consume, have an environmental impact. So our strategy includes increased energy efficiency in both our products and our manufacturing.

Since 2003, we’ve seen energy consumption at Ford’s factories around the globe fall by 29 percent. We’ve won a series of Energy Star awards from the EPA recognizing these efforts. We’ve undertaken countless steps, from small to big, to make these savings. On our assembly lines, for example, thepneumatic tools used to assemble cars have been made smarter, so that they power down quickly when not in use. We’ve also upgraded factory heating and lighting systems. And at some of our paint shops, we’re also converting fumes into fuel to make electricity.

Water is another concern. From 2000 to 2008, we have reduced our water usage by 56 percent. At our Cleveland plant, for example, a program to lower the amount of water used in the casting process, together with efforts to filter and reuse water thoroughly, cut fresh water use by 35 percent in 2009, on top of a 27 percent reduction the prior year. Each year, that’s saving the plant more than $1.2 million in city water costs alone. Worldwide, those kinds of efforts have saved more than 9.5 billion gallons of water at our factories. And we work aggressively to recycle the water in our plants for reuse in manufacturing.

And what about your vehicles?

Ford’s largest environmental impact comes from our products, which is why we have made the commitment to increase fuel efficiency and cut CO2 emissions in every new vehicle we produce. Ford now offers 12 cars, trucks and utility vehicles that lead their segments in fuel economy, including four with certified ratings of 40 mpg or more.

At the 2010 Detroit Auto Show, Ford announced an ambitious range of electrified vehicles. What green technology do you see as having the greatest impact?

In a car, to eke out mileage improvements, it’s about much more than the engine. It’s looking at every component as well as overall design, looking for ways to improve efficiencies. We call it paying attention in exquisite detail. It’s like going on a diet: to lose weight, you can’t just cut down on desserts. You’ve got to exercise more. The change needs to be comprehensive to last.

In the near term, I think Ford’s EcoBoost technology will have the biggest impact because it is an affordable fuel-economy technology that we will offer across most of our lineup. The centerpiece is a four-cylinder engine that delivers the power of a six-cylinder design, boosting gas mileage by up to 20 percent and reducing CO2 by as much as 15 percent. We use turbochargers and direct injection of the gasoline at higher pressures to help achieve these gains.

The approach makes other improvements possible, too. A smaller engine is lighter, so we can downsize other parts on the car — smaller brakes, lighter power-steering motors, and less rugged transmissions, for example — without sacrificing performance.

You’ve said that improving the efficiency of Ford’s entire product line with steps like EcoBoost — rather than the development of a particular advanced hybrid or electric technology — will be the company’s biggest impact. Why?

Because we developed EcoBoost and related design enhancements at a time when the industry was throwing out attention-getting, high-tech prototypes like EVs and plug-in hybrids. Those are important technologies, but will sell in small numbers for some while. We wanted a solution that was more holistic and mainstream.

It doesn’t have the same pizzazz, but because this [EcoBoost] technology will make its way into nine out of 10 of our models within a few years, most of the cars we sell will have the option to be up to 20 percent more fuel-efficient. We are adding more EVs and hybrids too.

In the near term, selling larger numbers of more efficient, affordable gasoline engines will have a bigger impact in reducing CO2 than the much smaller volume of electric vehicles.

In July, President Obama announced a landmark agreement with the auto industry to boost average fuel efficiency to 54.5 miles per gallon, for the model year 2025. In talks with lawmakers, car manufacturers have long fought to stop, delay or reduce such an increase, as they did during recent negotiations. For all the talk about greening cars, why has it been so hard for industry to change its tactics?

We look at affordability and higher mileage goals and realize we can’t just force certain technology onto consumers. When we started the first serious push for fuel economy back in the ’70s, consumers were disappointed with cars that were so underpowered they could barely get out of their own way.

That said, much has changed. In the past, the government would throw out a new mileage number and the industry would say, “No,” and the relationship was much more adversarial.

Today, we recognize efficiency as a strong reason for consumers to buy a Ford. It’s a competitive advantage for us. We are committed to improving the fuel efficiency of every new product we bring to market, but in terms of regulations, we still believe the agencies setting standards need to understand there is not a single technology solution, and that the technology advances we employ must remain affordable for car buyers.

In your role, how do you make sure that the company isn’t just paying lip service to sustainability but is getting actual, measurable results?

The thing is, the company that figures this all out is going to be the most successful. That’s a powerful incentive to get the strategy right. It’s easy for a company to project a vision and talk about the future. We’ve found it more useful to do what we need to do, and then talk about it.

Frankly, with all the noise out there about the financial troubles in the auto sector in recent years, it’s been hard for our green offerings to get the attention I think they deserve.

Our momentum is building. We’ve had a highly successful launch of our EcoBoost technology. The Escape Hybrid SUV has been on the market since 2004. The Fusion Hybrid joined the line up in 2008. And we recently announced we are bringing a new hybrid, a plug-in hybrid, and two all-electric vehicles to market within the next two years.

What does the future hold for Ford’s lineup — will it be all-electric?

It’s important to recognize that there is room for an entire range of technologies, but in terms of electrified vehicles (EVs), we see a stronger future for hybrids and plug-in hybrids. A plug-in hybrid can be charged overnight and run on batteries until they’re depleted, before switching over to a gas engine.

If I look into a crystal ball, we’re looking for two breakthroughs: battery costs have to come down as more EVs are sold, and we’re looking for new, better battery technology that will help increase driving range. Without both of those, I’m not certain whether drivers’ concerns about running out of battery power can be overcome for EVs that don’t have a traditional engine as a backup.

That’s why we’ve also focused on charging infrastructure, improving both charging speed and encouraging the development of more sites where drivers can re-charge outside their homes. We expect most people will charge at home, but we also believe consumers will become more comfortable with the concept of electric vehicles when there are a lot more places to plug them in.

In a company with some 160,000 employees around the world, simply delivering the message that sustainability is a priority seems daunting. How has Ford done that?

Our CEO Alan Mulally saw my background and appointed me to head up sustainability. Given that I started out as an engineer, his decision reinforced that the sustainability factors are woven into the earliest stages of our design process all the way through manufacturing.

Day to day, one of the ways we keep the organization’s many moving parts in sync is via a sustainability mobility governance group, which includes senior executives in charge of developing new products, R&D, marketers and others. The issues we evaluate and prioritize there help guide Ford’s highest, board-level discussions of automotive strategy.

Sidebar: Truth Squad

Checking industry claims with NRDC’s sustainability experts

Alone among its Motown rivals, Ford outran bankruptcy during the fiscal crisis. For this and for developing a genuinely greener lineup of hybrids, electric vehicles and higher mileage cars, Ford deserves praise, said Roland Hwang, NRDC’s transportation program director in San Francisco. For example, under CEO Alan Mulally, Ford has re-geared its product offering to emphasize fuel-saving options across more of its offerings. In mid-September, it ended production of the Crown Victoria sedan, a fuel-economy laggard that averaged just 16 mpg in the city.

The broad shift has proven Ford can make money selling more efficient, in some cases smaller, vehicles, said Hwang. “Ford’s return to profitably this year has been impressive,” he said, and unlike past years, “earnings weren’t driven by pickups or SUVs.” Yet this fiscal resilience cast the company in a peculiar role: as de facto leader of the automotive industry’s opposition to the White House’s push for higher mileage standards. With the federal government holding about one-third of GM stock, and nearly a tenth of Chrysler’s, Ford emerged as the industry’s flag carrier.

In May, Mulally personally lobbied Washington lawmakers to bar California from setting higher standards independent from federal rules. And behind the scenes, Ford’s top lobbyists led a push to soften the new standard, known as Corporate Average Fuel Economy (CAFE). “These lobbying efforts run counter to its progress with greener vehicles,” said Hwang. In early July, the auto industry and the Obama Administration settled on a figure of 54.5 mpg by 2025, up from around 30 mpg today. A month later, Ford responded to the tougher rules with a plan to join forces with Toyota, its top international rival, to co-develop gas-electric hybrid systems for SUVs, pickups and other light trucks. Under past mileage rules, this so-called light truck category has been granted loopholes that tighten under the new standard.

There are competitive reasons for the tie-up too. The world’s other two top auto markets — China and Europe — are pushing towards mileage standards more stringent than proposed U.S. rules.  Adds Hwang: “Ford knows there’s a solid business reason to be ready sooner than later with high mileage solutions.” — Adam Aston

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

NRDC OnEarth

Meet the Change Makers: The New Pepsi Challenge | OnEarth


Can a company making sugary drinks and salty snacks for more than a century modernize for an era when health and sustainability matter? Image by Tom Kelley

Bringing sustainability to the soda and snack food aisles

Editor’s note: This is the first in a series of OnEarth Q&As with business leaders who are transforming their industries.

Since the days when Pepsi challenged Coke to a long-running public taste-off, the cola wars have receded to a quaint memory. PepsiCo has since grown to nearly twice the size of Coke, selling a more diverse line of products. The company based in Purchase, New York, posted sales of $57.8 billion in 2010, but just half of its revenue comes from beverages: Pepsi Cola, Mountain Dew, and Gatorade are its top-sellers. The rest? Those salty snack foods common at picnics and lunch tables, including Lay’s potato chips, Doritos tortilla chips, and Fritos corn chips.

In recent years, PepsiCo has also worked to distinguish itself from its archrival with a more prominent focus on corporate sustainability. Under CEO Indra K. Nooyi, the company has defined its five-year mission, dubbed Performance with Purpose, as “delivering sustainable growth by investing in a healthier future for people and our planet.” On the ground, this has translated into investments in renewable energy, packaging reductions, and company-wide efforts to cut the use of energy, food commodities, and water. Those initiatives have already saved nearly 20 billion liters of water since 2006, according to PepsiCo’s most recent assessment. Pumping and treating less water has helped trim energy use substantially, too, because moving less water means using less electricity and fuel to power factories. While PepsiCo won’t reveal a dollar value on these savings, they run into the hundreds of millions.

The successes haven’t insulated PepsiCo from environmental controversy, however. The trash flow from billions of plastic bottles and the private sale of public water resources ignited public ire a few years ago and continues today. In March, PepsiCo unveiled the first fully recyclable disposable beverage bottle made from plant-based materials that don’t compete with food crops. The news won praise from green groups, including NRDC. It came just a few months after the company’s Aquafina brand was given a “D” for transparency by the Environmental Working Group in its Bottled Water Scorecard.

OnEarth contributor Adam Aston recently spoke to Dan Bena, senior director of sustainable development at PepsiCo. A 27-year veteran of the company, he is active in international water issues, having worked with the United Nations CEO Water Mandate and the World Economic Forum, among others, to chart a course toward worldwide water sustainability and security. He opened up about the environmental challenges the snack food giant faces.

Daniel Bena

You’re trying to curb water use across the company. How is PepsiCo changing the way it operates to meet that goal?

In 2009 PepsiCo became one of the first large companies to publish public guidelines recognizing water as a human right. This was just before the United Nations General Assembly did likewise. We’ve gotten a lot of positive feedback, even from non-governmental organizations that wouldn’t have had much time for PepsiCo before then, praising that step as an important line in the sand to draw.

 

The challenge we face now is to embed those values in our day-to-day operations, and to push them out to our suppliers and customers. To do so, we set out a few specific goals focused on water. Within our own beverage and food factories, we aim to improve our water-use efficiency by 20 percent by 2015, from a 2006 baseline. In fact, we’re already at 19 percent, so we hope to hit that goal very soon, four years early.

Second, we’re aiming to have positive water balance in water-distressed areas. Last month during World Water Week, an annual global summit of water experts in Stockholm, we published a joint report with The Nature Conservancy assessing the benefits of watershed preservation and restoration in five global communities, to help us and others learn better practices for protecting watersheds.

Lastly, we set a goal to provide three million people in water-distressed areas with access to safe water, also by 2015.

How do you define and improve “water-use efficiency?”

It’s a measure of the total water used to make a single unit of our product. For example, as a rough global average, it takes PepsiCo about 2.5 liters of water to produce a liter of beverage. It’s really variable though. At our best plants, it’s probably half that, and a few facilities use twice that amount. That’s the opportunity we face: to lower water use at our least efficient plants.

We track our internal water use for drinks by liters per liter of beverage, or for snacks as liters per kilogram of food. Using an analytical method we developed in house, called Resource Conservation, or ReCon for short, our plants around the world have gone through and meticulously mapped streams of water use.

When you do this, you see how water costs add up. Incoming fresh water is expensive to bring into a factory. On top of that, every liter that enters a factory must be treated, processed, and discharged. Each of these steps carries costs. So by reducing the amount of water entering a plant, you reduce those extra steps, too, and the savings compound. Factory managers used to the idea that “water is cheap” suddenly start paying attention. There’s no better way to get their attention than saying: “This can save you money.”

Since its launch in 2009, ReCon water has prevented the use of 2.2 billion liters of water, with a corresponding cost savings of nearly $2.7 million. We’ve also begun extending ReCon water-saving practices to our key suppliers. So far, those partners have scored a collective 22 percent improvement in water-use efficiency, compared with a 2007 baseline.

What else is water used for in the factories other than the actual beverages and food?

Believe it or not, in a beverage plant, one of the largest users of water is the room where the water is filtered. There, frequent backwashing of filters and advanced membranes consume really high volumes of water. Another of the biggest users is what we call “clean in place” or “sanitize in place,” where water is used to douse conveyers, equipment, floors, and rooms, ensuring they’re sanitary before producing beverage. Sometimes, it’s even used as a lubricant to keep conveyor belts flowing.

Are similar water-saving steps underway at PepsiCo’s food plants?

Yes. Few people realize this but producing food is also highly water-intensive. Making potato chips uses as much water as making beverages. There’s a lot of rinsing as potatoes are processed: to remove dirt when they’re peeled; to take off an outer layer of starch so they fry better. Companies talk about taking factories or buildings off the electric grid, but no one talks about taking plants off the water grid. That’s something we’re exploring at our Walkers potato chip plants in the United Kingdom.

As they arrive from the farm, potatoes are 80 percent water. Frying drives out most of that moisture as steam. The Walkers team is developing a process to capture that steam before it goes out a stack and bring it back into the process. It’s enough water, we think, that the plant could operate without taking fresh water from public supplies.

These efficiencies improve PepsiCo’s internal water usage. But what steps are you taking to help the communities you operate in where water is scarce?

I mentioned before that we’re aiming to achieve a “positive water balance” in water-stressed regions. An example can help explain our approach. One of the easiest areas in which to achieve big water savings is agriculture. Globally, farming accounts for about three-quarters of water use. In India, it’s more — about 85 percent. We make a variety of beverages there, and water supplies are widely at risk. To help lower farms’ water use, PepsiCo developed and patented a relatively simple piece of equipment that automates the direct seeding of rice.

Conventionally, rice is planted in a flooded field, where young shoots sit in three or four inches of water for up to six months. Direct seeding shortens this period and cuts water use by about one-third. We estimate that developing and promoting direct seeding lets us give back 5.5 billion liters of fresh water each year that would have otherwise been drawn from wells or surface streams and lakes.

Critics have cried foul over the idea of selling bottled water in low-income countries. You’ve argued that they’re missing the point — that water is sold anyhow, often at unfair rates in those markets.

There’s a misconception that poor people cannot and should not pay for water. The reality is that in many cases they do pay for water: the trouble is they often pay high prices for poor-quality water. Delivering safe, clean water at a fair price is something that can help close the health and poverty gap between consumers at the “base of the pyramid” — the poorest half of the world’s population — and the developed world.

This relates to PepsiCo’s third goal I mentioned: improving access to fresh water for three million people by 2015. To hit this goal, we’re working with Columbia University’s Earth Institute and Water.org — which is the merger of Water Partners International and Matt Damon’s H2OAfrica.

The PepsiCo Foundation provides funding to assist a variety of Water.org projects. Under the WaterCredit Program, the money is distributed in microloans, on the order of $120 per loan, and used to build household sanitary facilities or to improve access to fresh water. The loans go almost entirely to women, and repayment has been close to 100 percent. Any global bank would be envious of those kinds of returns.

Earlier this year, we became the first private sector donor to the Inter-American Development Bank’s Aquafund. With our $5 million donation, the plan is to “lift and shift” the WaterCredit model from India to Latin America, and to deliver safe water to 500,000 people there by 2015.

Our third partner is the Safe Water Network, a not-for-profit that PepsiCo founded with Paul Newman’s charity and others who saw the need to bring people safe water. This work is focused on Ghana, India, and Kenya.

Some argue that the nature of the water crisis — its very scale and stubbornness — make it a poor match for corporate efforts. How do you reconcile PepsiCo’s reach with the scope of the challenge?

It’s true that water crises are enormous — so much so that no single entity can solve them alone. That’s why all the key players — governments, NGOs, academia, individuals and, yes, industry — must collaborate on the solutions. Recognition is the start of a long journey to help improve the situation. Commitments are the next step.

At PepsiCo our challenge now is to formalize those efforts, test their success and nurture the best of those practices across our business units around the world. It is a daunting process. But our efforts together with those of others — I think of it as a divide-and-conquer approach — can help achieve steady, small steps.

So, do companies have a role in protecting water? Not just a role, but an absolute obligation.

Sidebar: TRUTH SQUAD

Checking industry claims with NRDC’s sustainability experts

PepsiCo has been in the middle of more environmental and health controversies over the past decade than at any time in the century since it patented the recipe for Pepsi-Cola. In recent years, its Aquafina brand of bottled water came under fire. Today, the waste caused by the beverage industry, as well as questions about the commoditization of a public resource, persist as lighting-rod issues. Health is another knotty challenge. Concerns continue to mount over the role of sugary drinks as childhood obesity and diabetes rates skyrocket.

While some companies have shied away from acknowledging such problems, PepsiCo has responded with a range of industry-leading efforts. “Does one praise a company making an unsustainable product such as bottled water? I don’t know,” says Jonathan Kaplan, an NRDC senior policy specialist in San Francisco. “But there’s no question that they’re forward thinking on these issues relative to their competitors.”

For example, in 2009, the company conducted a life-cycle assessment  to gauge the environmental impact of its Tropicana orange juice line and published the results in the New York Times. “Many companies spend time doing LCAs, but they rarely make the findings public,” says Kaplan. Likewise, its public focus on developing plant-based plastic bottles, recycling, and greener operations boost the pressure on its competitors to follow suit, Kaplan adds.

Water use is another area where PepsiCo is leading its peers, Kaplan says. “Food manufacturers, in general, are closer to recognizing that we’re headed toward a future with finite resources, where water, grain, and other inputs are less available and more expensive.” By this measure, the company’s efforts to curb water use at its plants gives it an edge — and just might drive competitors to do likewise. “Companies that figure out how to become part of the solution will have an advantage.” — Adam Aston

URL for the original story: http://www.onearth.org/article/change-makers-new-pepsi-challenge