Life Cycle Assessment—a tool that evaluates environmental impacts on a product-level life cycle—delivers valuable information to companies that can impact their financial performance as well as strategic stance.

Sometimes called “cradle-to-grave” or “cradle-to-cradle” analysis, LCAs take a holistic approach in evaluating factors in product manufacturing that impact the environment.  The analysis provides a methodology to assess often hidden factors starting with raw materials, how the materials that make up the product are transported and what methods are used for consumption and disposal.

LCAs allow companies to integrate environmental consideration into core business operations, revealing opportunities for improvement as well as strategic issues. Overall, information from an LCA can help top management make informed decisions that will impact their company’s top and bottom line and help develop a sound strategy.

Impacting Top-and-Bottom Line

LCAs link environmental impact with financial implications by identifying fuel, energy and environmental risks, but also by identifying ways to cut costs and improve processes within the scope of a product.  With the comprehensive performance data from an LCA, managers can better identify where fuel and energy are being spent and thus focus on where improvements can be made.  By mitigating environmental issues and achieving more efficient and low-impact operations, companies are also able to achieve top-line growth.

Example:

An LCA of for a building product manufacturer revealed that a huge amount of energy use was resulting from a common practice which involves burning off natural gas to destroy toxins before they reached the atmosphere. Using findings from the LCA, the company focused on this as an opportunity to decrease energy use and boost environmental performance, and successfully pursued a grant from their State Department of Energy to purchase a cogeneration unit to capture the wasted energy.  As a result, the company was able to lower its long-term costs by adapting to a more energy-efficient process, which also decreased its carbon footprint.

Developing a Sound Strategy

Protecting the environment is no longer restricted to extending a company’s social responsibility.  More importantly, it has become a matter of strategy and a source for competitive advantage. The benefit of LCAs can vary according to the specific pains and interests of a company.  This information allows top management to make key decisions in defining the strategic direction of its products or company by conforming to emerging client buying preferences, risks and challenges within the regulatory landscape, as well as identifying opportunities for improvement and innovation.

Example:

TreeZero Paper Products—an innovative company that creates paper products without the use of trees—underwent a life-cycle greenhouse gas emissions analysis that helped define it product’s environmental advantages over tree-based paper.  Its unique process of using bagasse from sugar cane and bamboo from waste scaffolding was validated through the LCA and as a result, TreeZero was able to launch a new product by taking a strategic stance that distinguishes its product from traditional paper products.

Conclusion

Whether it is a product manager needing to differentiate product benefits, or a CEO looking to understand the risks and rewards inherent in their business, environmental analysis has never been more important.  LCAs offer directed, meaningful analyses which tell a story about the energy and effect of a product or process, providing critical data to the supply chain, marketing and strategic management.

[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 manufacturing, offices, 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.

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

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!