The Department of Defense (”DoD”) represents 80% of the government’s energy usage. Seventy five percent of which is liquid fuels that power aircraft, ships, combat vehicles and forward-deployed generators, thereby consuming more than 300,000 barrels of oil a day (or 54 million metric tons of CO2 annually).  The other 25 percent of DoD’s total energy consumption is in the form of electricity to run facilities and bases. The department operates almost 600,000 buildings, which use more than 3.8 billion kilowatt-hours of electricity on average per year.

They DoD recognizes the need to move away from foreign energy sources. Additionally, they are strongly focused on climate change and the need to move into low carbon answers to their energy needs.

Besides setting goals the DoD has taken some large-scale actions including:

• Building a 500-megawatt solar power generation plant at Fort Irwin, Calif., that will help power the base and reduce the facility’s vulnerability.
• A transition to the use of 4,000 electric vehicles during the next three years—giving the Army one of the world’s largest electric fleets. This will help avoid emitting more than 100,000 tons of carbon dioxide and cut the use of liquid fossil fuels by more than 11 million gallons
• Six pilot projects to demonstrate biomass conversion for fuel use.
• Developing a 30-megawatt geothermal project at Hawthorne Army Depot, Nev.

I am thrilled by the actions but wonder what it says that the government is way ahead of the private sector. But just like the internet, maybe they can develop the infrastructure to make alternative energy sources more affordable.

On April 8, 2010 the PET Resin Association (PETRA) commissioned a Cradle-to-Grave Life Cycle Inventory of PET plastic beverage bottles compared to Aluminum cans and glass bottles. The results were focused on energy, greenhouse gas, and waste. The results showed greenhouse gas emissions for the PET bottles were 59% less than aluminum and 77% less than glass. PET bottles create 1,125 lb of CO2 equivalents per 100,000 oz of soft drinks packaged in typical 20-oz PET bottles, 8-oz glass bottles, or 12-oz aluminum cans, compared to 2,766 lb for aluminum and 4,949 lb for glass.

Then on April 21, 2010 the Aluminum Association said, not so fast. They pointed to their own Life Cycle Assessment that showed aluminum as a lower contributor to greenhouse gases than PET. The point of contention lies in “a consistent and selective use of outdated data for competitive materials.” The aluminum data used was based on the industry’s 1995 production profile. More current data shows a 15% improvement in energy efficiency and a lowering of greenhouse gas intensity by 30%.

Aluminum has a 60 day turnaround from beverage use to re-use through recycling. Aluminum is also an excellent cradle-to-cradle product, meaning it can be infinitely recycled for re-use while PET is significantly less so. The aluminum association was quick to identify why the differences occurred and where the PETRA study was incorrect.

Who is right?

Well that is the value of a well done Life Cycle Assessment. An LCA includes 3rd party peer review and sourcing references. If I was PETRA, I would want my money back – they made claims based on old data and non-standard information (EPA versus industry published rates).

There are two possible scenarios that caused this confusion:
1)    PETRA knew and tried to pull a fast one
2)    The Life Cycle Inventory writers didn’t want to deliver bad news to the client

Either choice makes for a black eye on PETRA and the LCA writer.

Phosphorus is not something that makes headlines very often. If you were a commercial farmer, however, you’d know that it’s the primary ingredient used in fertilizer.  Most phosphorus comes from Morocco and Florida.  According to the Global Phosphorus Research Initiative, we are running out.

If you’re an environmentalist, you know that phosphates (contains phosphorus) can be pretty nasty especially if they are allowed to enter the waterways. They can cause algae blooms that drown out other organisms—reeking havoc on eco-systems.  The mining process of phosphorus also creates tailings of heavy metals such as cadmium and chromium.

Demand for phosphorus continues to increase because it’s such an effective factor in food production for the world. Without it millions of people would starve.

Phosphorus is different than fossil fuels in that it can be used over and over again.  The problem is that this important asset gets washed away because of poor soil management.  Farmers are caught in a cycle: They till their fields, apply fertilizer, the rains come, the fertilizer gets washed away and the cycle starts all over again–very inefficient.

So what should we do?

There is a method of farming called no-till.  No-till farming methods do not open or turnover all the soil, but instead always have either cover or cash crops growing. The crops get flattened or mowed after harvest and are parted so the new crop can be planted in the part. This process leaves the soil relatively undisturbed (watch this video to learn more). No-till has been around for a long time but has recently been recognized for reducing CO2 into the atmosphere (compared to conventional tilling), thus qualifying as an offset project on the CCX.

Offsets provide an extra incentive for farmers to change their practices and now that fertilizer prices are going to rise we can only hope that we can get everyone onboard.

Johnson Controls put out their annual survey of energy efficiency investments for businesses. Here are some interesting observations from the study (which can be found here)

1) The leading sectors that expect to make capital investment in energy efficiency are Government and Education (71%), followed by Healthcare (67%), and the lowest is Retail (26%).

Both government/education and  healthcare are perceived as inefficient. This could mean that they have the most to gain by changing. It reminds me of when Mandy Mahoney, the head of sustainability for the City of Atlanta spoke and said that prior to her actions the energy usage for the city was a flat line. Basically, no one was turning of the lights or heat at night or over the weekend. This small fix has large repercussions. We could also argue that retail, think Wal-Mart, has been acting for the last few years and already captured the lowest hanging fruit.

2) Sixty-four percent of respondents believe energy prices will rise in the next 12 months. Only 8% expect energy prices will decline.

I have to believe that even those who see prices as steady or declining are thinking short term. Meaning anyone who has been paying attention has to see energy prices rising over the long term.

3)      Top strategy for Carbon footprint reduction is Energy Efficiency (38%). All the other reduction strategies represented 5% or less of the answers (26% did not prioritize Carbon Footprint Reductions).

This highlights the attitude to attack the lowest hanging fruit. Also, the use of carbon offsets and renewable energy credits totaled 5%.

4)      Lighting technologies, Smart Buildings and Solar Panels were seen as the greatest performance-to-price ratio improvement over the next ten years.

Once again, companies are relying on the reduction of energy costs.

The interesting point is that companies are not relying on transportation reductions (bio-diesel, electric cars, hybrids). We can speculate that the expectation is that vehicle life will cause a move to more efficiency when the current fleet needs to be replaced. Basically, the cost benefit is not attractive.

I still believe there exist 30% reductions in the US economy from energy efficiency. This confirms that many decision makers agree.

We all know that power plants that burn fossil fuels generate a lot of greenhouse gas.  But did you also know that fossil fuel mining, milling, enrichment, power generation, storage and disposal facilities also create more GHGs than wind and hydro (run-of-river)power? Run-of-river power generation has less GHG impact because it does not generate methane like hydro dams.

A life cycle assessment conducted by the University of Sydney Australia to study the impact of nuclear energy versus other forms of energy creation revealed yet another reason why we should move away from coal and natural gas.

The study identified the energy intensity and GHG intensity of nuclear, coal, natural gas, wind. photovoltaics and hydro (run-of-river). The least energy intensive was hydro, followed by wind, nuclear and photovoltaic. Coal was the most energy intensive, 56 times that of hydro. Natural gas was 51 times as energy intensive as hydro.

The GHG intensity was slightly different. The order of intensity was the same, however coal was 62 times as GHG intensive than hydro.  Natural gas GHG intensity was more efficient than their energy intensity at 38 times hydro.

The study tells us two things:

1. Hydro (run-of-river) should be further explored around the world.
2. Life Cycle Assessments provide details to make more well-informed decisions.

Why aren’t there more Solar installations? I am constantly asking this question. The numbers seem to bear out that the return makes sense. If you own a warehouse, large retail location or manufacturing facility it seems an obvious choice.

It makes sense because:

• the federal government pays you back 30% of the cost 90 days after the panels are up;
• depending on where you are there exist other incentives;
• depending on the panel company there is financing;
• electricity costs are rising;
• you have the ability to sell offsets or renewable energy credits;
• peak use times are the times you get the most energy;
• your utility may set your pricing based on peak energy usage (meaning a multiplier benefit for solar); and
• you are a “greener” business.

Why it may not make sense:

• You have to pay upfront investment cost;
• solar panel prices keep dropping;
• the technology is improving;
• captive utilities make it difficult to sell the electricity back; and
• depends on light hitting your location.

I have come to the conclusion that it is more of a tipping point argument. More and more locations are using solar. As more people do it, we will hit the point where it will be the obvious decision and then it will be commonplace. Once the concept tips, costs drop and technology improves.

According to the Solar Energy Industries Association, residential solar doubled in 2009. We are already seeing an increase in solar installations on the corporate level.

On April 19th, the Cowley Company, announced that they are putting up the largest commercial rooftop solar power system to date on an 850,000-square-foot building in Phoenix. The 2.4-megawatt SunPower T5 Solar Roof Tile system chosen for this rooftop represents approximately 6.5 acres of solar panels. The new solar power system will allow Cowley to provide tenants with electricity that is not only renewable, but also about 25 percent less expensive than typical industrial electric rates.

On April 15th, Kohl’s Corp. will convert 10 of its stores in Colorado to solar power by the end of the year. Colorado will be the seventh state to have Kohl’s locations with solar panels. Kohl’s also has solar locations in California, Connecticut, Maryland, New Jersey, Oregon and Wisconsin, in Waukesha and Sussex. The company has 86 solar locations nationwide and plans to have 100 locations in the coming months.

So maybe we have tipped.

New York City has taken some very progressive action that will pay huge dividends. They have introduced energy efficiency software for use in over 4,000 government buildings. These buildings are spending $800 million a year for energy. The software is part of an overall plan including lighting and other projects, which they expect to reduce energy use by 30% by 2017.

That is over 32,000 metric tons of CO2e to be reduced and over $240 million in savings. We are not surprised to see large organizations change their business to be more efficient. However, it is telling when the government is leading the way.

According to Reuters, the five greenest cities in the world are: 1. Reykjavik, Iceland 2. Portland, Oregon, United States 3. Curitiba, Brazil 4. Malmo, Sweden 5. Vancouver, Canada. What do all these cities have in common?

Four of five are in colder climates (except Curitiba). New York fits this mold…

Why?

In any mandatory Greenhouse Gas management system there will be a place for Carbon Offset projects. This is true in a regional system like the Regional Greenhouse Gas initiative in the Northeast or a potential nation-wide federal system.

There are many types of offset projects that exist under each system. The protocols differ, as do the project types. Some are more stringent and others are more balanced. We are often asked, if there is a mandatory market, what protocols and projects will be accepted? We can speculate, but first lets set some guidelines. The protocols need to be peer reviewed and accepted. They also need to be balanced enough to allow both project managers and environmental buyers to have comfort. We use the Chicago Climate Exchange offsets (for many reasons but also) because their protocols are proven to be balanced by the fact they have been traded on many times over.

As far as offset projects, there needs to be a compelling reason for it to occur. If an action would happen as part of business as usual then it fails the test of “additionality,” and would not be counted. Along those lines, if the action is legally mandated, then it is not an offset. For early actors and companies that want to prepare for impending legislation, it is important to consider whether you can purchase offsets that will be applicable.

According to Barclays Capital, US domestic deals to convert bare lands into forests and keep tree stands healthy could supply 60 percent of available offsets in any U.S. cap-and-trade plan on greenhouse gas emissions. That is an amazing comment. There are also political aspects to what will be allowed. For example, the Agriculture lobby would like to include as many offsets as possible. So no-till farming has a good chance for offset creation. On the other side of the coin, a landfill that is told to cap itself by the EPA could not sell the offsets. So, it is important to identify if the action will eventually be mandated.

The trick is to know the market.

While the Senate discusses details of a new Cap-and-Markets bill (formerly Cap and Trade), the EPA moves forward with plans to regulate greenhouse gases under the clean air act. Expectations are that the EPA will announce limits by the end of April. The EPA will use the “tailoring rule” to set emissions limit for emitters of 75,000 metric ton per year or more. The idea is to avoid overwhelming federal and state agencies with work by focusing on the larger emitters.

This is a natural step and comes a year after they formally declared carbon dioxide and five other heat-trapping gases to be pollutants that endanger public health and welfare on April 18, 2009. The progression of the EPA has run lock step with the congressional action. The EPA moves forward and seems to galvanize legislative action. Once again, this seems to be the case.

The Senate would like to regulate Greenhouse Gases (GHGs) instead of the EPA. They have included language in drafts of the Senate bill to stop the EPA from regulating above and beyond the legislature. This is sensible since there should be one rule and not many. We shall see shortly. On April 11th, Kerry spokeswoman Whitney Smith said “Senators Kerry, Graham, and Lieberman will unveil their proposal later this month.”

With the increased exposure of the public to environmental issues in the past few years, shareholders have begun to expect direct action from the companies in which they invest.  More and more, investor groups are looking for corporations that are ahead of the curve in environmental awareness and transparency.

The existence and success of organizations such as the Chicago Climate Exchange and the Carbon Disclosure Project pay homage to the fact that many large corporations have begun to realize the value in being seen as an environmental leader.  In fact, the trend towards reducing one’s environmental impact has become so widespread that is the companies who are not taking such action that are now being highlighted.

Corporate sustainability reports and long-term emission reduction goals have become standard for the Fortune 500 and any other nationally recognized businesses.  Companies that do not exhibit the same commitment to sustainability and corporate responsibility are being called out.

In the Atlanta Business Chronicle’s April 9-15th issue, two cover stories are dedicated to this topic.  Recently, Georgia Power has announced a new solar project due exclusively to customer demand.  However, the energy giant is still being criticized that it is not focusing enough on renewable energy, which makes up less than one percent of its portfolio.  The size of the new project is meager compared to similar initiatives by Georgia Power’s peers, and many say that the development is merely lip service to silence the critics.  Yet, the fact that the conversation has begun shows the great importance of this issue.

Georgia Power’s parent company, Southern Co. is being pressured by groups of shareholders to be more transparent about their greenhouse gas emissions.   Many faith-best investment groups, among others, are requesting that the utility report their emissions and release a business plan to deal with their environmental impact as the nation’s 2nd largest carbon emitter.  While Southern Company hopes that this proposal will be voted down at its upcoming annual meeting, the corporation will not be able to ignore such issues for much longer.

Similar to the issues facing Southern Company, SunTrust, the nation’s seventh-largest bank, is facing allegations that it is not keeping up with the environmental advancements of its peers, like Bank of America and Citigroup.  Investors are worried that the bank’s failure to report how climate change could pose risks to its balance sheet will put them at risk in the future.  SunTrust is already facing financial difficulties and if its investors remain unappeased it could lead to further troubles not so far down the road.

Investors have become aware that energy efficiency and emission rates are likely to be regulated by the government at some point soon.  Even more so, that these issues will undoubtedly affect the bottom line.  To this end, shareholders need to know what their investments are doing to thwart the risk of being left behind in the move toward more sustainable business practices—environmentally and economically.  The emphasis on sustainability and environmentally sound business practices has become more than an issue of moral consciousness, it has become a hallmark of good business.