There has never been a more critical time for businesses to focus on carbon and environmental sustainability issues. Even now, in a time marked by a global economic downturn, accounting for greenhouse gas (GHG) risk is an increasingly relevant cost of doing business. It is the expectation put on businesses by customers, shareholders, and regulators.
Historically, prior to 2009, the U.S. GHG regulatory environment had been defined by fragmented state and regional initiatives. Federal carbon regulations are now on the horizon with US Environmental Protection Agency GHG reporting mandates set to commence in January 2010 and a clear directive by President Obama to the US Congress to pass cap and trade legislation. In 2009 to date, environmental policies impacting the energy sector have been progressed with unprecedented speed and urgency.
March 2009 saw the release of the U.S. EPA's draft mandatory GHG reporting rule which is arguably the most stringent GHG protocols drafted to date. These GHG reporting regulations will cover 85 - 90% of the nation's GHG emissions and will require reporting from approximately 13,000 facilities. Pace anticipates that this proposed rule will be finalized this fall and compliance obligations for U.S. businesses will commence in January 2010. As organizations were beginning to come to terms with the complexity of the EPA GHG reporting requirements, the U.S. House of Representatives passed a landmark bill that has the potential to define carbon and energy regulations for decades to come. "The American Clean Energy and Security Act of 2009" (a.k.a. The Waxman/Markey Bill) seeks, amongst other provisions, to establish a Federal cap-and-trade on Greenhouse Gas (GHG) emissions.
These are clear signals that the timeframe wherein companies can maintain an unmanaged carbon position is fast closing and the need to begin incorporating carbon into corporate strategy and energy planning is now. Whether your organization is directly impacted by these regulations or not, carbon compliance costs passed through by power generators and distillate fuel suppliers are a guarantee and will represent a significant variable expense. Without a clear project and energy management strategy, this risk is unmitigated. Businesses that proactively manage their carbon risks before they occur will establish a competitive advantage.
About Pace - Pace is a full-service, energy and carbon management firm with over 30 years of experience. Pace provides full-scale GHG inventory services to a variety of energy consumers, from commercial to heavy industrial companies as well as utilities.
About the Author - Sean Metivier has over 8 years of combined experience related to project management and product management within the environmental consulting and retail energy industries. At Pace he provides consulting and project management support for a variety of Carbon-related engagements. Sean is also the product manager of Pace's robust web-based, enterprise carbon accounting and project tracking service (ecolinkTM) designed to support corporate-wide sustainability, GHG emission management and energy management programs. Sean holds an M.S. in climate change science and a B.S. in environmental biology from Syracuse University.
Enterprise carbon accounting (ECA) software solutions have received a significant amount of media attention during the first half of 2009. The confluence of emerging Federal, GHG regulations with announcements of new market entrants, has spurred this heightened attention.
Much of the recent media attention has focused on software vendors that are new to this space and offer pure turnkey software solutions. Carbon management is primarily an energy data issue and it occurs to me that ECA software solutions integrated with established energy consulting services are not receiving appropriate attention. Integrated carbon and energy solutions of this nature tend to be better equipped to solve complex data management issues and at a price that is more economical than traditional enterprise-scale software solutions. Vendors with extensive experience providing energy and carbon data management and advisory services to proactive businesses fully appreciate the fact that carbon and energy are inextricably linked. Further, the most complex and labor intensive aspect of developing a carbon footprint is the establishment of data collection processes. Vendors with comprehensive data management solutions are better prepared to address these market challenges.
I also observed that much of this media attention around ECA solutions, and many of the vendors themselves, tend to focus exclusively on voluntary, sustainability drivers for implementing enterprise carbon accounting initiatives. These initiatives are both commendable and decidedly more vital as energy costs rise under a carbon constrained economy and stakeholders increasingly expect clear carbon risk disclosure from businesses. However, the first half of 2009 was also marked by unprecedented speed and urgency around newly proposed, Federal GHG regulations. Specifically, the U.S. EPA's Proposed Mandatory Greenhouse Gas Reporting Rule is arguably the most rigorous GHG inventory protocols designed to date. Those organizations with compliance obligations will benefit from compelling ECA software solutions that integrate regulatory carbon reporting requirements with energy data management and carbon advisory services.
While the calculation and data quality requirements of the EPA rule exceed those of voluntary reporting protocols, organizations without compliance obligations also benefit from partnering with a firm that has the ability to provide compliance solutions. It is conceivable that, as the EPA reporting requirements are established as the industry best practices for carbon accounting, other stakeholders will adopt aspects of the Federal GHG reporting rule. The U.S. Securities and Exchange Commission (SEC), for example, is under significant pressure from investors to require corporations to disclose climate risks with financial reporting. Will the SEC look to the EPA guidance related to carbon accounting standards?
Whether your organization's drivers for establishing carbon management practices are tied to voluntary or regulatory needs, it is important to partner with a service provider that competently addresses the data management challenges and is capable of delivering a true, regulatory-quality solution.