A survey conducted last year by Boston Consulting Groups reveals that across the globe, the percent of consumers who believe that “green” products are of higher quality than the conventional alternatives outnumber the percent who think they are worse five to ten times over. That means that in the last year, we should see a surge in green purchasing, since the economy is slowly getting better and the majority people in Europe, the US and Asia think green means better. But this has not been the case.
A study by Proctor & Gamble shows that professionals that buy cleaning products, including those in the lodging and health care businesses, are very skeptical towards green cleaning products.  In general, they report that although they do feel sustainability and the environment is an important factor in business activity and growth, they put perceived effectiveness of a cleaning product over perceived “greenness.” This is all despite the fact that green products can clean just as well as those containing bleach and other harmful chemicals.
The Consumer Electronics Association’s recent study also illustrates the gap between their intentions and actions.  While 40% say they are likely to test drive an electric car, only 25% of potential buyers report that they are familiar with electric vehicles, which is a small proportion compared to the numbers of people who have great concerns for the car: 71% worry about running out of battery power on the road, 66% are afraid of not being able to recharge and 59% find limited mileage as a boundary to buying.
In short, consumers’ hearts are in the right place, but their wallets aren’t.

On Monday, the US government released environmental guidelines that could affect future deep and shallow water oil and natural gas drilling operations. 
Many oil companies have relied on “categorical exclusions,” or exemptions from environmental regulation, in order to start drilling. This includes BP’s Deep Horizon project that resulted in 4.9 million barrels of oil being released into the Gulf of Mexico. On top of that, BP’s categorical exclusion for the project was based on environmental exemptions dating back from the 1980’s and did not consider previous BP accidents that had occurred in non-American waters.
The current six-month moratorium on deep-sea drilling in the Gulf will not be extended; our economy needs the jobs and natural resource wealth that comes from offshore drilling. Instead, these federal guidelines, originating from a report by the Council of Environmental Quality, will require reviews of all categorical exclusions by the new Bureau of Ocean Energy Management, Enforcement and Regulation.  Additionally, shallow water drilling projects will be scrutinized more heavily than in the past.
These are necessary steps that our government must take in reaction to a huge environmental disaster. But the legislation and regulations to create safer drilling were already in place years ago.  While increased media coverage and new governing bodies may help to reduce the risk of a future oil-related catastrophe, we cannot forget that our government did have the power to prevent what happened this summer long ago.

If you read our blog on a regular basis you’ve seen us write about the “Carrot and the Stick” in relation to greenhouse gas (GHG) regulation from the government. We saw the demise of the senate bill to address GHGs through a cap-and-reduce (a.k.a., cap-and-trade or cap-and-tax) program, most recently known as the American Power Act. When it comes to difficult decisions, congress does not have the ability to lead. That is fine. As someone I know well says, “you have to lead, follow or get out of the way.” Congress just got out of the way. We predict they will follow next.

For the past several years while congress has failed to pass comprehensive legislation to combat climate change, the EPA has been pushing carbon reduction every step of the way. First, they had GHGs classified as pollutants under the Clean Air Act. At the start of 2010 they asked big emitters to start measuring their CO2e levels. Along the way the EPA has even withstood legal questions about their ability to regulate GHGs.  Now that lawmakers have failed to act do you think the EPA will sit back and do nothing?

The older members of congress remember that back in 1991 cap and trade was originally proposed by Republicans as a way to stop the EPA from directly regulating acid rain-producing SOx and NOx. (That first experiment in cap and reduce worked so well that the Europeans adopted a similar system to abide by the Kyoto Protocol.) History has a way of repeating it’s self and we predict that within the next six months the EPA will introduce a laundry list of GHG regulations that will have even the staunchest climate denier pleading for a cap-and-reduce bill.

So if you think cap-and-reduce legislation is dead, think again.  There is a sleeping giant that is about to wake up.

In the last year, the value of carbon credits and volume of trading has decreased.  This has mostly been due to the internationally-felt recession; as profits drop, most corporations would rather spend on traditional investments than become carbon neutral. European-based companies, such as CantorCO2e and Carbon Capital Markets, have had to lay off carbon brokers or shut down their carbon trading entirely because of low demand in the voluntary market.
However, the World Bank reports that despite these setbacks, the carbon market is maturing.  With the Kyoto Protocol expiring in 2012, many have said that carbon credit markets could dissolve then unless governments implement new trading systems.  But increases in corporate interest in the environment internationally, coupled with the popularity of Clean Development mechanisms, have experts saying that the markets will exist and even expand in the coming years. Many companies, faced with European laws limiting GHG emissions, have found offsetting to be a cheaper alternative than curbing emissions in-house. And with the price of carbon remaining consistent, the cost of offsetting will remain a clear and viable option. Hopefully the US, China and India – three of the largest CO2e emitters – will soon be able to set up limits on emissions through a mandatory and economically feasible system like carbon trading.

China, whose 1.34 billion population is over four times that of the United States’, recently passed the US as the country with the highest energy demand. A portion of this is due to the economic recession hitting the US harder than most other countries. As American CO2e emissions have experienced the largest drop since recording started in the 1950’s, demand for energy on a whole has decreased with economic hardship.
But even if US emissions and energy use begin to increase once the economy gets better, China is likely to hold onto its lead. This is because China’s average standard of living has improved by leaps and bounds.  Even though per capita energy demand and emissions are significantly less than other developed countries, the sheer magnitude of population increases – and growing percentage of the population who can access electricity and own cars – means that China will continue to have a huge impact on the energy market.
Luckily, the country is also one of the largest investors in alternative energy; China has some of the strictest regulations on technology standards and leads the world in wind turbine production.  Although China and almost every other country put economic stability before environmental protection, maybe China’s dedication to regulating GHG emissions as they improve technology can mitigate global warming, despite their climbing consumption of fossil fuels.

Wind turbines are popping up in some unlikely places. There has been a battle over the pros and cons of offshore wind farms for years; are they an eyesore interfering with whale and fish migration or a smart alternative energy source with minimal impacts? But some people are putting turbines in their backyards, literally.  A couple in Crisfield, Maryland has installed a wind turbine on their farm for $18,000.  The system is expected to eliminate electricity bills for the property with the possibility of selling energy back to the grid.  The local government of Crisfield is also considering investing in a wind farm to supply power to everyone.  The town spends $20,000 a month at the current electricity plant; a $4.18 million grant from the state of Maryland could allow Crisfield to build two or three large wind turbines.  If implemented, the turbines could become a tourist attraction (as they have in Atlantic City) and the money previously dedicated to electricity generation could be spend elsewhere, stimulating the economy.
Crisfield is one of many sites around the nation with aspirations for building small-scale wind systems.  No matter the reason behind the surge in demand for turbines – the shock of the oil spill in the Gulf, new availability of grant money for alternative energy, hopes of stimulating local economy – the mentalities of these small towns are helping to turn our nation away from the “business as usual” mentality towards energy consumption.

A recent report from Sandbag, a non-profit climate change organization, uncovered misconceptions among industry leaders in the EU, particularly in the cement, steel and iron industries.
Companies have argued against stricter caps on CO2e emissions because these regulations would act as a tax, forcing businesses to operate in cheaper developing countries. However, the current structure of the EU carbon market allows companies that buy extra certified emissions reductions (CERs) from abroad and stockpile assigned credits to make a profit.  This strategy in effect subsidizes the EU company’s competitors; the majority of CERs are created by emissions-reducing technology used by steel, iron and cement corporations in China and India. In reality, EU companies are avoiding emissions reductions strategies that are “low-hanging fruit” in favor of short-term profits that sacrifice long-term competitiveness.
So what is the solution? Sandbag reports that if the government implements stricter Carbon emissions standards on these industries, companies will make necessary reductions in-house, which allows domestic operations to be a long-term option. Also, these changes would prevent “carbon leakage,” or the possibility of CO2e emissions rising in one country because of reduced emissions in another.

Although it emits over 20% of the world’s greenhouse gases, the United States has no formal legal controls on GHG emissions. However, in the wake of climate change science, state legislation, and expectations of federal regulation in the future, many individuals and businesses participate in voluntary carbon markets. These markets can be in the form of “over-the-counter” trades or a legally-binding cap-and-trade system under the Chicago Climate Exchange.
Both markets have been experiencing drops in prices and participation.  The over the counter market fell from $7.30 to $6.50 per metric ton in the last year, while the CCX – which deals with almost half of US carbon trading – reported volume of carbon trades dropped 27%. These losses have been attributed to the poor economy; as profit margins narrow, companies often find little left over for investment in non-essential (a.k.a. not legally required or immediately producing a return) items.  Fortunately, even though the Kyoto Protocol expires in 2012, most businesses in the US expect there to be legislation concerning climate change and GHG emissions in the near future and have started to plan for it, either by using the CCX or reporting emissions in sustainability reports.
Even with this dip, the voluntary carbon market was a $387 million industry in 2009. Even though businesses are not necessarily making the monetary commitment to the environment now, carbon trading will most probably be a promising and growing industry in the future.

Recently, the federal government has provided incentives for individuals to go green: for example, the tax rebate for energy efficient appliances or the 30% tax credit on private home installation of solar panels. But given the  economy, there have been portions of both federal and state budgets dedicated to helping make businesses greener, too.
For example, the EPA provides rewards to small companies that provide cutting-edge R&D and runs the Energy Star for Small Businesses program, which facilitates remodeling and maximization of energy and cost savings. The federal government also provides tax deductions for energy savings by real estate developers and business owners who invest in smart energy grid equipment.
Additionally, non-profit organizations like Georgia Green Loans and the majority of state energy departments provide loans or grants to allow for the greening of local businesses. So despite some dissenting voices saying that the environment should take a back seat to the economy right now, the government is providing the means for businesses to take care of the earth and their bottom line.

The California Assembly Bill 32, or the Global Warming Solutions Act, is one of the most progressive movements in climate change legislation. Signed in 2006, it creates a comprehensive early action and reduction plan to limit statewide CO2 emissions to 427 million metric tons by 2020. Its main objectives include retroactive emissions crediting for voluntary corporations, regulations affecting landfills, cars and ports enforceable by the beginning of this year, and an approved scoping plan to dictate how this return to estimated 1990 emissions levels can be achieved.

However, thousands of Californians have signed a petition that would limit the effectiveness of the Global Warming Solutions Act. This potential ballot item, if passed in November, would mandate that the Act could only stand if the state’s unemployment rate dropped below 5.5% for four consecutive quarters – a situation that has not occurred since 2007. Governor Schwarzenegger says that this reluctance comes mostly from oil companies, but 800,000 signatures reportedly represent a whole variety of residents who want to put the economy before the environment. While some argue that incorporating environmental externalities is an unfair burden on business, most experts state that the short term costs of considering the environment can lead to boosts in business performance. Higher profits typically translate into more jobs and higher tax revenues, which would indicate that California’s Global Warming Solutions Act could help the state emerge from under its high unemployment rate and over $68 billion budget deficit.