Chemical manufacturers can gain edge through greener supply chain management against foreign competition

Posted by akeenan | Posted in Uncategorized | Posted on 15-06-2011

Chemical manufacturing companies are faced with a challenge in the global market as China continues to build capacity and compete on lower price. In order to maintain market share, international as well as U.S. domestic players need to differentiate themselves by capitalizing on green supply chain management.

The chemical industry is a challenging space. Prices for raw materials and energy are constantly on the rise, leaving businesses with lower profit margins. While increasing direct costs leave little room for flexible pricing on the supplier’s side, customer demand for supply chain data and product specifications are making delivery more complex.

In recent years, The Chinese chemical sector has captured a big part of the global market by offering low price on its products. In fact, it experienced 10.2% growth in 2009 to reach a value of $648 billion . How can established companies compete under these circumstances? There is a limit to how much manufacturers can cut their costs and competing solely on price against China will not stand in the long-run. For this reason, chemical companies should explore alternative strategies around practicing green supply chain management. Here are three reasons why this can help drive profitability and growth:

Solidify customer loyalty
Market demand and regulatory pressure for sustainability are at their peaks and global industry leaders are responding more vocally than ever. Corporations such as Wal-Mart, IBM, Proctor and Gamble and UPS already have committed to reducing their environmental impact throughout their value chain. This means that customers are buying on cost as wells as seeking manufacturers that can meet their sustainability indexing. In order to establish themselves as a partner in their clients’ minds, manufacturers must be able to quickly and efficiently gather the data the clients need and then use them to drive measurements and process innovations.

Lead on product and operational development
By allowing visibility up the supply chain, chemical manufacturers will be able to identify their most polluting products and replace them with environmentally friendly alternatives. This data also reveal energy use which can drive more efficient operations and synergies between marketing, product development and supply chain. While this is an investment, the resulting ROI can supersede the initial front cost associated with the operational change. This strategy can help validate new product uses and become a differentiator in competing for purchasing contracts against foreign players.

Use data as a source of competitive advantage
Although Chinese government has come up with several new environmental regulations, they are not perceived as being proactive on enforcement. With economic growth often defining the country’s outlook, corporate social responsibility has not been as scrutinized in China as it has been in Europe or in the United States. By competing solely on price, other established manufacturers have the opportunity to leverage the environmental aspect of their business as a source of competitive advantage. It is critical to set an efficient supply chain, processes and infrastructure now as regulations are expected to become even tighter with recent information on world’s carbon emissions.

Conclusion
Many corporations have begun to require their suppliers to meet certain environmental standards through green supply chain management. Chemical manufacturers, who have been squeezed by foreign competition in the recent years, can utilize this opportunity to capture or sustain market share. By managing environmental impact through green supply chain management, chemical companies can increase customer loyalty, meet regulatory requisites, reach operational efficiency and compete on product innovation.

SACE 2010 Carbon Footprint Results

Posted by e.taub@tvcnp.com | Posted in Carbon Footprint, Carbon Neutral, Carbon Offsets, Uncategorized | Posted on 11-05-2011

[Re-posted with permission from SACE]

Southern Alliance for Clean Energy recently underwent a short stint of navel gazing by calculating its annual carbon footprint for the second time, and we took appropriate action to attain carbon neutral certification for 2010. While SACE can still make many improvements, we have taken steps to more accurately measure our carbon footprint than in years past, and are excited to share the results.

SACE’s carbon footprint in 2009 and 2010 was calculated based on Scope 1, 2 and 3 carbon emissions. This means we account for the carbon dioxide equivalent of greenhouse gases emitted from our direct energy consumption.

Examples of Scope 1, 2 and 3 GHG emissions. Source U.S. EPA

For SACE that consists of our biodiesel manufacturingoffices, transportation and accommodations for work-related events, waste, and staff commutes to the office. In 2009, our carbon footprint was 260 metric tons of carbon dioxide (CO2). Last year, in 2010, we had a carbon footprint of 200 metric tons of CO2, a significant reduction.

Becoming Carbon Neutral

In 2009 and 2010, SACE reduced our carbon footprint by participating in TVA’s Green Power Switch. Through this program, we purchased five 150 kWh blocks of green power each month.

This totaled 9000 kWh for the year, which offset about half of the electricity consumption from our Knoxville office. The remainder of our carbon emissions were accounted for by purchasing carbon dioxide offsets from the Chicago Climate Exchange Registry by Verus Carbon Neutral, the company that we chose to review our carbon footprint and provides us with our annual carbon neutral certification. The Chicago Climate Exchange Registry is a voluntary, for-profit greenhouse gas trading system. Verus Carbon Neutral purchased 100 metric tons of offsets from Wright’s Dairy Farm and 112 metric tons of offsets from Valley Wood Forestry to offset our carbon emissions.

As you can see in the chart below, we have some overlap in our carbon offsets. This is because we erred on the side of caution and purchased a few extra carbon offsets, making SACE a bit carbon negative this year! We also did not count our recycling credit granted by Verus Carbon Neutral, that credit is not shown in the chart below.

This chart shows the actions SACE took to become carbon neutral in 2010.

Based on these actions, Verus Carbon Neutral was able to certify SACE as carbon neutral company in 2010.

Managing our Footprint

As the old adage goes, you can’t manage what you don’t measure. The first step SACE took in managing its carbon footprint was simply to begin tracking it. While our CO2 emissions from 2009 to 2010 were reduced, the components of our footprint also changed.

This chart compares SACE's carbon emissions from 2009 and 2010

This chart compares SACE’s carbon emissions from 2009 and 2010

As shown in the accompanying chart, our travel emissions were about 50% less in 2010 than in 2009, and our transportation emissions went up by about 50%. This was due to a few different reasons. Our transportation emissions are from the diesel consumed in trucks used in our biodiesel operations. These emissions changed from 2009 to 2010 because we drove our trucks more miles, and we also used different biodiesel/diesel blend levels. Our travel emissions – emissions from transportation and accommodations for work-related events – were reduced partly because of a shift in programmatic priorities, as well as a conscious effort to reduce our carbon dioxide emissions from flying.

Moving forward, we plan to more proactively manage our carbon footprint – now that we have an idea of the amount, and how we are consuming carbon. For context, 200 metric tons of carbon dioxide is the equivalent of the emissions from the annual electricity use of about 22 homes in the United States.

Recently, SACE purchased an office building in Knoxville, which presents many opportunities for reducing our energy consumption (and resulting carbon dioxide emissions) on site. Retrofits on our building to save energy are already underway, including foaming our external walls, installing Solatubes, and upgrading our lighting system. This week, Pioneer Heating and Air Conditioning is beginning to install a vertical loop geothermal system that we anticipate will reduce our cooling and heating electricity consumption by 70%.

We are also looking for ways to improve our data tracking, which may result in a lower carbon footprint simply because we have better information. For example, Verus uses a model that estimates building electricity consumption based on location and building type. The building model assumption for our Knoxville office is 60% higher than our actual energy usage.

Similarly, employees usually attempt to rent fuel-efficient vehicles for work related travel. However, we did not record the miles per gallon, or make of the vehicles, so, to be conservative we used the 2010 vehicle MPG average (27 MPG). This year, we have encouraged employees to record the make and model of their rental vehicles so we can more precisely track gallons of fuel consumed. We hope that by elevating employee’s awareness of how we are consuming carbon, we will also encourage creative solutions to reducing our emissions.

We also have learned that calculating a carbon footprint is still a bit of an art, particularly when you are getting started. We encourage anyone that is tracking their carbon footprint, on their own or with a consultant, to verify the assumptions being made and double-check the final output – as you would with any analysis. Half of the value of calculating a carbon footprint is understanding how and where you consume carbon. We will keep you posted on how we do in 2011!

What Does a Metric Ton of CO2 Look Like?

Posted by akeenan | Posted in Carbon Emissions, Carbon Footprint, Uncategorized | Posted on 24-03-2011

We all see sustainability reports and environmental claims with statements such as: “it’s like taking X cars off the road” or “it’s like saving Y trees.”  Equivalents like these are designed to help us understand what CO2 looks like.  Let’s take a look behind the curtain…

Metric Tons of CO2 per year

Whether you’re offsetting the emissions or preventing them from occurring altogether, the most common metric is mass of GHG per year, usually in metric tons of CO2 annually.

But what does a metric ton of CO2 look like? If you were to build a cube to represent one metric ton of CO2, it would measure 27’ on all sides. Keep that in mind as we look at the other measures of emissions.

Number of Passenger Cars

This is probably the most common equivalency that people use. In order to accurately use it, you have to make a few generalizations first. We will assume that gasoline is only considered, the average fuel economy of a passenger vehicle is 20.3 MPG (this includes a weighted average of cars and light trucks), and the average vehicle is driven 12,000 miles per year. Again, these are all averages that must be made for this equivalency to be used.

The result is that a passenger vehicle emits about 5.5 metric tons of CO2 per year.

Number of Trees

Carbon sequestration through trees is another popular means to quantify green claims. Of course, carbon sequestration rates vary by tree species, soil type, regional climate, topography and management practice. According to American Forests, sequestering one metric ton of CO2 equals about 3.6 trees planted per year.

This means a single tree sequesters about .277 metric tons of CO2 over 40 years.

Area of Cropland

Carbon dioxide is not the only GHG; below is an example of the relative greenhouse gas impact of N2O and methane compared to CO2. N2O emissions originate largely from soil in cropland.

1.1 acres of cropland emit our normalized metric ton of CO2-e, so a typical average per acre emission rate is .91 metric tons of CO2e.

Area of Ocean Cover

At the upper layers of the ocean, photosynthesis occurs and enables the sequestration of carbon dioxide. According NASA, much of the world’s ocean area absorbs about .25kgC per square meter per year. This amounts to…

1091m2 of ocean cover to sequester a metric ton of CO2.

Amount of Coal Burned

Looking at EPA data, if you were to burn a single metric ton of coal, you would release 2.1 metric tons of CO2. If you extrapolate this to something relatable, like a railcar full of coal, you would release about 191.5 metric tons of CO2.

2.1 metric tons of CO2 is released by a metric ton of burned coal.

Household Energy Use

Given average household energy use, an American releases roughly 12.9 metric tons of CO2. This, of course, is a broad generalization. Each state uses a different mix of fossil fuels and renewables to generate electricity, which affects its carbon footprint.  For example:

  • Indiana is 24 metric tons of CO2.
  • New York is 6.8 metric tons of CO2.
  • Californian is 3.4 metric tons of CO2.

Comparison Guide

  • A metric ton of CO2 is like a 27’ cube
  • A passenger vehicle emits 5.5
  • A tree sequesters .277
  • An acre of crops emits .91
  • A metric ton of coal releases 2.1

Equivalences

2 cars ~ 5-6 metric tons of coal ~ 12 acres ~ 40 trees

Reports of My Demise Have Been Greatly Exaggerated

Posted by e.taub@tvcnp.com | Posted in Uncategorized | Posted on 08-03-2011

On May 3, 2010 the Intercontinental Exchange (”ICE”) announced the acquisition of Climate Exchange (”CLE”), the parent of the Chicago Climate Exchange (”CCX”).[i] The deal closed in July 2010. ICE operates three futures exchanges, which hosts trading in half of the world’s crude and refined oil futures contracts traded each day. ICE is a component of S&P 500 index and is headquartered in Atlanta.[ii] As with most (if not all) acquisitions, ICE has taken the business of CLE under its direction.

This means in the case of CLE, the European emissions trading is done under the ICE name. Further, the CCX is no longer trading in the way it has before. ICE has maintained a registry for offset projects under the same protocols as the CCX. These offsets can trade through ICE and the transactions are viewable. It will operate a new Offsets Registry Program in 2011 and 2012.

However, ICE decided not to extend the program, whereby emitters work under a voluntary cap-and-trade system to reduce their carbon footprint.  The members including AEP, IBM, Ford and others are no longer under a voluntary and legally-binding program to reduce their emissions as they had been since 2004.  The offsets created through “energy efficiency,” as these reductions were called, are no longer of use.

What does this mean?

Of course the CCX has always been an exchange but part of its business was to perform the work of a government.  It took on the responsibility to monitor and affirm emissions reductions for its members. Typically, a process like this is done by the government or, more specifically in the US, the EPA.

The CCX (or ICE) still trades emissions reductions, including: Regional Greenhouse Gas Initiative (”RGGI”) credits, offset projects, California Climate Action Registry (CCAR) credits, and Renewable Energy Credits.  The piece of the business that will not continue is the part that pertains to managing a cap-and-trade system.

What is next?

For businesses and individuals who want to support effective offset projects, nothing has changed.  The CCX Registry will continue to verify and register projects.  The unequivocal need for emissions reductions obviously does not go away.  Verus will continue to help business reduce and/or offset their emissions in the hope of alleviating the effects of greenhouse gases on our environment.


[i] http://www.gsjournal.com/2010/05/intercontinentalexchange-announces-acquisition-of-climate-exchange/

[ii] https://www.theice.com/about.jhtml

The Green Catwalk

Posted by e.taub@tvcnp.com | Posted in Uncategorized | Posted on 22-02-2010

Over the past few years, the fashion industry has been dipping its elegant toes into
the waters of sustainability. The luxurious and extravagant nature of fashion has
kept many from coming out about their environmental efforts, for fear of scorn about
what they don’t do. On the other side, however, those wanting to talk-the-talk don’t
have specific standards for walking-the-walk. There lacks, in fashion, a clear set
of guidelines and certifications around different aspects of ethical, ecological, or
system-wide sustainability.

This has lead to much confusion about what sustainability really means when speaking
about fashion
, as well as raised the issue of truthfulness versus the fantasy that
is customarily bundled into the marketing of luxury items. However, even in the
fashion industry-the center of the world of fads, ecologically-sound fabrication is
not fashion, not a fad: it is the new center from which sustainable business
necessarily operates. Though fashion is fantasy, clothing and accessories are a
consumer good that will be held to the same accountability for verification and
clear definitions as other products making sustainability claims.

As consumers we are daily more inclined to buy what is seen as sustainable, and
mechanisms for environmental accountability are being put in place across industries
and government to help us make these choices. So, despite the predominance of
cutting-edge, “out with the old, in with the new” attitudes that drive fashion,
there is a shift happening to gather the pieces of the sustainability picture
together. It is a big picture. There are many choices made at all levels of the
life-span of these items that can dramatically shift the footprint. Beyond sourcing,
production, and distribution-things like laundering needs and the marketing of
constantly changing fads affect consumers’ behavior. This is how even more ethereal
concepts like “timelessness design” have come to form the basis of some designer’s
definition of “sustainable fashion.”

Though this new focus on sustainability in an industry built on perpetual change is
often being spoken about as a trend, these are actually the first steps toward
defining, expanding, and standardizing best practices in fashion. A WWF report
entitled Deeper Luxury
, outlined the significance in the public shift in perception
and the impact it would have on luxury items. “The definition of success - and the
way it is perceived by others - is changing. Many successful people now want the
brands they use to reflect their concerns and aspirations for a better world.”

Moving forward, conspicuous consumption is out, ethical luxury is in.

Some exciting things are happening on this front, a couple of note:

This is the first year that New York Fashion Week is carbon neutral, marking a
shift in the industry’s willingness to bring sustainability to the forefront. They
also made other efforts at the event, like providing water to reduce the use of
plastic bottles.

Patagonia has made life-cycle information available on-line for of some styles,
and there are a number of designers that are incorporating a broad range of
production choices meant to decrease impact
.

2010 is continuing a several year shift toward emphasizing less expensive
accessories over whole garments, so the clothing stays and what you put over it
rotates.
This type of marketing trend that would serve to extend the lifetime of
garments that may otherwise be retired.

In a world where “flawless” is the standard, it is promising to see those with the
courage to dress-up and cat-walk toward sustainability, even if the runway looks
more like a balance beam.


Biodigesters—Tipping Waste into Energy

Posted by akeenan | Posted in Uncategorized | Posted on 18-12-2009

There has been a lot of news lately on the problems of waste generated by dairy farms. We were discussing why there are so few biodigesters being used to help solve the problem. I thought of the tipping point. When an idea is clear, why is it not commonplace?

Biodigesters convert organic wastes into a nutrient-rich liquid fertilizer and biogas fuel. The biogas a.k.a., methane, can easily be converted into a source of electrical and heat energy. The heat energy can be used to change water temperature for the use on the farm. Further, the animal waste is disposed of, reducing the need for cleaning/carting it off. Other feedstock includes crop stalks or waste water. I recently found out that glycerin, a byproduct of biodiesel creation, is also a good feedstock. One drawback is that glycerin does not work well in colder weather.

In Georgia, there is only one large scale biodigester–the Wright Family Dairy, which is one of our featured offset projects. The Wright Family made a large investment when they purchased their biodigester. Fortunately, they are getting a quicker return due to the offsets and electricity generated. Ironically, biodigesters are more common in developing countries, particularly India, Nepal, China and Vietnam. It is clear that those places have less developed electricity grids making the biodigester more necessary for day-to-day use.

From a greenhouse gas perspective, biodigesters significantly reduce emissions and make for strong offset projects. From a quality of life basis, it is an obvious winner, with fewer odors, fewer pathogens and a reduction in surface water contamination.

The downside, as it was explained to me, is that biodigesters require a big investment and a lot of maintenance. The waste needs to be ground up and the effluent needs to be removed. Many farmers found the digester going into disrepair after a year or so because their expertise was running a farm not a biodigester. On the flip side there were farmers that were great a keeping digesters in good repair but had difficulty running a farm.

Seems like there might be an opportunity for a business to service large dairy farms that want to realize the benefits of a biodigester but don’t want to have to maintain them. If you already have an existing service, we’d like to hear from you and help spread the word. We are way past the tipping point—let’s make biodigesters the rule not the exception.

An Inconvertible Truth

Posted by e.taub@tvcnp.com | Posted in Uncategorized | Posted on 16-12-2009

As time goes by we are seeing many skeptics move to acceptance of Climate Change. There was a good blog post from the National Post that discusses the rationale (or irrational) reasons why people inherently don’t want to accept Climate Change. The article basically asserts that it’s too much trouble to do anything now and therefore we are inclined to ignore.

This led to a good post/article from Scientific American that discusses the research that would bring a person to the natural conclusion that Climate Change is real. Lastly, the initial blog led to this great article which sources the answers to climate myths.

No major news organization will include comments from Climate Change Deniers anymore. So why does the story continue? Why are there people who refute the science and evidence. Well, simply put, there is a lot of money behind the scenes that is vested heavily in maintaining a Carbon intensive world.

The Politics of Delay

Posted by e.taub@tvcnp.com | Posted in Uncategorized | Posted on 14-12-2009

We have practically ignored “climategate” and now we feel pretty good about it. The AP did a story breaking down the truth about the e-mails. According to the AP, “E-mails stolen from climate scientists show they stonewalled skeptics and discussed hiding data - but the messages don’t support claims that the science of global warming was faked, according to an exhaustive review by The Associated Press.”

Their findings are not surprising; if you take a group of scientists, academics, politicians or almost anyone, there are going to be questions and disagreements. Privately, uncomfortable issues are going to be raised-otherwise something’s wrong with the process. That’s how any organization works; it’s called “frank and healthy” discussion.  Organization’s can’t function if there is fear that conversations are going to be taken out of context and released to the general public-especially when trying to solve a complicated scientific concept like anthropogenic climate change.

It’s obvious that climate change deniers are satisfied with playing the delay game by starting fires (pun intended) to distract us from the important work that needs to be done.

Our Mission

Posted by akeenan | Posted in Uncategorized | Posted on 11-12-2009

Since the holiday season it a time to reflect, we thought it was appropriate to publish our Mission Statement:

“Our purpose is to enable businesses to understand and control the life cycle greenhouse gas emissions generated from their products and services through the creation of an integrated strategy. We focus on our clients’ unique priorities, as well as evolving regulatory, legislative and market conditions.

Our goal is to create value and reduce greenhouse gas emissions.”

We welcome your comments.

The Future’s So Bright, I Gotta Wear Shades

Posted by e.taub@tvcnp.com | Posted in Uncategorized | Posted on 09-12-2009

As a member of the Chicago Climate Exchange (”CCX”), we receive the mCCX market report each month. It’s a great update for how the carbon markets are doing. First, we should point out that the current phase of CCX voluntary offset protocol is coming to a close. Second, the CCX represents effectively 100% of the exchange-traded market, but there is also a robust over-the-counter (OTC) market that does not trade on the exchange. These factors have led to low offset prices on the exchange and lower volumes in the Cash market. However, the volume still remains strong.

The numbers show that from January 1st 2009 to November 30th 2009 - 43.7 million Metric Tons of CO2e have been traded for current delivery.  The volume is down 36% versus January 1st 2008 to November 30th 2008 volume. Where the volume has grown is in the RGGI, CCAR, and CFI futures markets. If we look at the US CO2e markets in all forms (Cash, RGGI, CCAR, CFI futures) 2009 Year-to-date volume is up 1,207% compared to 2008. So far in 2009, 74.4 million tons of CO2e have been traded and there is over 6 million tons in open interest.

This means that the market is focused on the future and not on the present. This makes sense in light of the fact that the US does not have a mandatory market in place. It tells us that the market expects that there will be one in the future.  The future price of CO2e for 2011 is $9.59 a metric ton, 2012 in $10.09 a metric ton, up to $11.84 per metric ton for 2015. This is a price that can be locked in today. So, the market accepts that CO2 caps will be mandated by 2011.

It also tells me that if you will be under this mandatory cap - it will not get less expensive to offset in the future. So the sale is now - the premium comes in the future.