Recently, lines between mandatory and voluntary energy and carbon management initiatives have been blurred as businesses in nearly every sector face increased pressure from consumers, customers, investors, and regulators to implement sustainability initiatives. Over the last few months this point was reinforced by several new requirements on businesses to develop and disclose sustainability efforts:
These new requirements provide confirmation that businesses must remain focused on energy, carbon, and environmental performance. External pressures aside, sustainability is proving good for business performance.
A Recent MIT Sloan Management Review (Sustainability and Competitive Advantage) survey of executives demonstrated that companies have identified multiple tangible and intangible benefits from sustainability initiatives. These benefits frequently include enhanced profits from improved brand and customer loyalty, reduced costs tied to better energy management and increased operational efficiencies, and strengthened employee recruitment and retention.
Aberdeen Group, in their recent research (Sustainable Production: Good for the Plant, Good for the Planet), determined that 85% of surveyed companies responded to the current economic downturn by either sustaining or increasing investments in their sustainability programs. Significant reductions or improvements across energy efficiency, waste reduction, environmental impact, and reuse and recycling amounted to enhanced financial performance directly attributable to sustainability program investments. Common amongst Best-in-Class manufacturers was a corporate-wide energy and emissions data program.
Pace Globals’s integrated energy and carbon data management solution, ECM HubSM, provides businesses with a foundation for their sustainability programs. These tools centralize enterprise energy, carbon, and sustainability data in a web-enabled environment that provides management with line of sight to key performance indicators at enterprise, business unit, facility, and unit-level resolution – and at a price point 50% to 70% below the cost of internally developed efforts. For more information, please contact us or click here to learn more.
Senators John Kerry and Joe Lieberman have released the much anticipated American Power Act in the midst of a challenging political environment. This comprehensive energy and climate change legislation establishes an economy-wide greenhouse gas (GHG) cap-and-trade program designed to cut U.S. emissions to 17% below 2005 levels by 2020 and 83% by 2050. Under the draft bill, electric utilities would fall under regulation starting 2013 and the program would expand to include manufacturers in 2016.
In an effort to facilitate passage of the bill, several cost control measure were included:
- Manufacturers avoid restrictions of the GHG emissions cap until 2016 and will receive allowances to cover compliance obligations until 2026.
- From 2013 to 2016, manufacturers receive free allowances to cover increases in energy prices resulting from pass-through costs due to the cap on electricity sector emissions.
- Oil refiners receive enough allowances to cover compliance obligation through 2026.
- Utility companies receive enough free allowances in 2013 to cover compliance obligations.
- Allowance prices are controlled by a floor ($12/MT CO2e) and ceiling ($25/MT CO2e).
- Monthly refunds and tax credits will be provided by the federal government for eligible, low income households to cover increased energy prices.
The debate surrounding this bill will play out very publicly during midterm election season. Not surprisingly, initial comments associated with the release of this bill have been strong and mixed.
The American Materials Manufacturing Alliance (AMMA), a group of energy-intensive, trade-exposed industries representing the aluminum, chemical, forest and paper, iron and steel, fertilizer, and cement sectors released a statement recognizing that the bill invests in U.S. manufacturing competitiveness, but outlined several objections. Concerns highlight the emission allowance distribution system, the lack of funding for energy efficiency and clean energy technologies, and inadequate protection against increased energy costs.
The National Association of Manufacturers (NAM) also expressed concerns related to potential impacts to global competitiveness resulting from additional burdens on manufacturers that will raise energy prices.
Over 170 U.S. businesses organized by the We Can Lead coalition issued a letter to Senate Majority Leader Reid urging the Senate to enact comprehensive climate and energy legislation this year. Signatories of this letter included companies from the electric power, manufacturing, clean tech, technology and consumer products sectors.
While vigorous debates will continue and this current bill may fail to garner the political support required for passage, the Democrat-led Congress and Obama administration remain committed to enacting comprehensive climate change regulations. Now is the time for business of all sizes and industry sectors to develop a clear understanding of their assets and liabilities in carbon terms.
Now that the EPA has finalized the first-ever mandatory greenhouse gas (GHG) reporting rules (see Pace's Summary of the EPA Rule) within the U.S., it is clear that organizations must re-think their carbon accounting programs by looking to the future today. The complex GHG data and calculation requirements established by this GHG reporting regulation commence in January 2010 and current approaches implemented by most organizations are out of alignment with this rule. Here, I discuss two specific reasons to modify your current GHG accounting and energy management practices.
- Spreadsheet-based reporting will no longer be adequate: Many organizations currently track carbon and sustainability data within Excel-based spreadsheets managed by internal resources. EPA will not accept these files for annual GHG inventory reports. Rather, reporters will need to transmit GHG inventory reports, supporting data, and unit and facility information electronically via an XML format. Alternatively, reporters can manually enter completed inventory records into the EPA system, but this approach will result in duplicative efforts and is prone to error. Pace's ecolink® solution (click here: ecolink), provides the data management, GHG emission calculation, and electronic submittal capabilities organizations require to comply with the EPA GHG reporting rule.
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EPA builds an exit ramp: Facilities that reduce GHG emission through operational or energy efficiency improvements or organizational changes can avoid future reporting obligations. If a facility can prove it has reduced emissions below the 25,000 metric tonne threshold for five consecutive years or below 15,000 tonnes for three years, the owner/operator can apply to remove that facility from the program. Successful organizations will have the ability to identify, implement, and track efficiency opportunities at the rapid pace dictated by modern business conditions. Pace's ecolink® solution puts these capabilities at your fingertips in a web-enabled environment, that allows for sharing of best practices across all your facilities.
The age of regulated greenhouse gas emissions and scrutinized environmental performance is here, creating a wide range of challenges for businesses today. As organizations begin to prepare for compliance, top decision makers will quickly need to decide how best to manage these direct compliance risks along with much broader business requirements. While compliance regulation may get management's immediate attention with the advent of the EPA rule, there are strong business requirements at play from customers, investors and supply chain partners that impact every aspect of business operations. The answer: Be proactive and get a handle on your GHG emissions performance by developing an integrated carbon and energy management program that allows your organization to tie energy and carbon liabilities and opportunities to strategic business initiatives - the evolving market dynamics will demand it.