The failure of the Administration to implement any CO2 legislation last year has paved the way for the EPA to control CO2 emissions under permit provisions of the Clean Air Act. Currently this will only affect the largest emitters in the refining and electrical generating sectors – new plants expected to emit over 100,000 tonnes CO2 equivalent or upgrades to plants that would result in an additional 75,000 tonnes CO2. Other facilities in these sectors may well be impacted once the EPA has drawn up and begun to implement a new emissions control strategy. This process could take as long as two to three years and, in the interim, states must decide how they handle expanding facilities. Current thinking is that many will require energy efficiency measures to be implemented – something that should be occurring regardless. One thing is sure, the political positioning and questioning of the EPA’s new powers will be hotly debated – ‘We will not allow the Administration to regulate what they have been unable to legislate.’ said Energy & Commerce Chairman Fred S. Upton (R-Mich).

At C12 Solutions, we have developed a process to evaluate technology opportunities within the Clean / Green technology sector.   Our process is developed from previous experience working in industrial R&D and product development functions.  We’ve put a movie slideshow together that can be view by clicking through to the full post.

The process is split into five main sections:

• Technology – assessing the technical feasibility of the opportunity [will it work?]
• Intellectual Property – does the opportunity have sufficient IP to protect the concept and what threats are out there that might hinder freedom to operate? [is it protected?]
• Finances – has a thorough analysis of the finances been performed and, if so, do the numbers hold up to closer scrutiny? [will it make money?]
• Strategy – where does the technology sit with regard to other solutions and will it become a new way of doing something or just an improvement? [is there a place for this?]
• People – do the people associated with the opportunity have what it takes to bring their invention into the marketplace? [are the people up to it?]

The process is intended for those opportunities that are looking for funding from corporate, angel or venture capital sources.  Although we can do deeper analysis with regard to the business plan, the presentation addresses the feasibility of the technology and strengths of the current team – once an opportunity has received investment, the management team is often altered to fill managerial gaps  in order to steer the new company in the direction desired by the major investors.

I was recently involved in a group discussion regarding the use of network mapping tools a means of exploring the connectivity and linkages for an Angel investor network for clean technologies.  I had looked at network mapping in a previous job function – using the tool to identify innovation networks and information flow within large projects.  For those not familiar with network mapping, I put a short introduction together here :-

Following the workshop, I was talking with Ethan Roland of Appleseed Permaculture who is involved with ecological design and agriculture. Ethan later asked whether network mapping could be used to analyze the fragility of ecosystems.  It’s an interesting question and my response indicated that you should be able to map out the complex system of interactions that occur within an ecosystem and, using the same techniques that I highlight in the presentation, study the dependencies of different parts of the network to disturbances (in this case through human interaction).

I did a little further searching and found a related example in which Prof. David Lavigne of the Natural Sciences and Engineering Research Council had used network mapping to analyze the food web for fish (Cod) in order to better understand the collapse of the North Atlantic Cod fishery.  The example is complex but illustrates how network mapping can be used to identify complex systems on a macro level and, having done so, identify some cause and effect scenarios that might otherwise have been overlooked.

Take a look at some of the other visual network maps on the Visual Complexity site – some are truly amazing!

When a company announces a new sustainability initiative or position, the point- person often becomes inundated by ideas on how to improve operations or implement new policies that promote a more sustainable operating model.  However, although it’s great that employees and stakeholders are engaged in the process, tracking, evaluating and prioritizing the initiatives can prove overwhelming.

There are a number of ways that prioritizing can be done – however, due to the differences between businesses, these techniques are not universally applicable.

Depicted in the accompanying figure, is the output from a technique I developed working at C12 Solutions.  Here, potential projects are plotted against two variables – a Sustainability Index and the Likelihood of Success with the bubbles being sized by potential savings.  This method works across different organizations since the definition of ‘Likelihood of Success’ varies from one company to another as does Sustainability Index.

In the next couple of posts, I’ll elaborate on how you go about defining Sustainability Index and Likelihood of Success for your own organization.

At the recent  ‘Jumpstarting the New Green Economy‘ conference  held at Fairleigh Dickinson University (FDU), Bob Willard and two separate panels of business and executive recruitment specialists discussed how new business models are being developed to help present a compelling business case for going green.

Throughout the three sessions that this post covers, the overriding message was this – a company has to ‘do the right thing, right and profitably’.

During his keynote presentation, Bob Willard used a metaphor of a three legged stool to describing sustainability – each leg denotes a different area: environment [eco efficiency and effectiveness], equity [employees, community, culture] and economy [growth, taxes, products and services].  These cover the foundations of most sustainability programs more commonly referred to as the ‘triple bottom line‘.  In addressing the value of a company, Bob postulates that a company has tangible and intangible value.  Tangible value is easily measured and can be understood through examination of a company’s financials.  The intangible value is less easily measured and covers a company’s reputation which is a function of the relationship it maintains with public, media, customers, investors, NGO’s, government agencies and other similar stakeholders.  Bob argues that the intangible value can be described by a company’s market capitalization (#shares x price of each share) – a poor reputation or perception can result in reduced share price and therefore market cap. despite the financials looking okay.  With the high degree of transparency now available through news and media, the intangible value of a company has grown in importance over the last few decades and, using an iceberg as another metaphor, represents the body of mass lying beneath the water.  Underestimate the impact of reputation and your ‘iceberg’ will be top-heavy and most likely the financials will go under!  Bob Willard’s slides are available here

The first of the business sessions comprised sustainability officers or those engaged in associated activites: Ed Madzy, BASF, Dave Stingis Campbell Soups, Hugh Tole Roche, Ron Reisman NJ Board of Public Utilities, Kevin Tubbs Ingersoll Rand with host Victoria Zelin of Hudson Gain.  Ron gave an overview of the energy efficiency and challenges faced in New Jersey together with some of the incentives already distributed (mainly lighting, electricity and HVAC system components).  Kevin  highlighted some of the projects undertaken at Ingersoll Rand which focused on lighting, boiler efficiency and remote monitoring elements.  Of note was the benefit of sub-metering to determine which pieces of equipment are the heavy users and hence areas that might generate greater savings or opportunities for improvement moving forward.

Ed described sustainability within the highly matrixed BASF organization and described their eco-efficiency analysis which plots environmental impact against costs.  Ed presented an interesting summary of their efforts as defined by projects in land use,  toxicity and risk potential, resource and energy consumption and emissions. Dave, of Campbell Soups, explained what sustainability means to them in terms of consumers, the environment, workplace and society.  Project examples included the use of fuel cells for power generation, reductions in packaged materials and efficiency improvements using heat recovery equipment.  In a similar manner Hugh Tole of Roche described a cogeneration project as well as how Roche is engaging their employees to think about energy efficiency issues such as lighting both in the workplace and at home.  In all examples, there were ‘low hanging fruit’ projects that require little investment as well as capital projects requiring capital investment.  The latter require a strong business case to move forward especially given that corporate funds are scarce during the current economic climate.  Different evaluation methods were adopted by each company but most were either Net Present Value (NPV), payback period or Return on Investment (ROI) based.  I asked the panel if they were factoring in carbon credits or the price of carbon into their projects.  The unanimous response was that although there is a price for CO2 in some geographical regions (EU, RGGI etc.), it is not currently being factored into their financial calculations.  As CO2 regulation is developed and a price for CO2 becomes more robust, expect to see projects becoming more viable as the emission savings are more easily monetized.  The slide-pack from the session is available here.

The seccond session entitled, ‘Changing business models in the green economy’  tied in nicely with some of the material presented by Bob Willard in the keynote. Speakers included Christoph Lueneburger (Egon Zehnder), Sandra Lauterback (EEP) and Krista Pilot (DKC) with host Anna Tavis (AIG).   Christophe presented a model for corporate sustainability adoption which splits the process a company goes through in adopting a sustainability program into three phases – create the vision, implement the vision and then sustain the vision of the long term.

Egon Zehnder’s three phases of sustainability adoption

Given Egon Zehnder’s focus on executive recruitment, they developed a competency model for executives acting in the CSO role. Although all competencies are required, each phase is argued to require specific strengths:  Phase 1 = change leadership, collaboration and influence, Phase 2 = commercial alignment and results delivery, Phase 3 = commercial alignment and strategic vision.

Christophe argued that the best background for a role in sustainability comes from individuals who have held profit and loss responsibility (P&L) and my understanding was that this comes from a need to present a strong business case for sustainable projects.  Skillsets and competencies required for CSO’s has been studied by Hudson Gain and it’s interesting to compare the different models – clearly a topic for a future post.

Sandra from EEP presented a framework based on that outlined in Esty and Winston’s ‘Green to Gold‘ book.  I think the ‘Esty’ framework clearly presents how the reputation based value of an organization – the below-the-water part of the iceberg, interacts with the different elements of an organization’s operations.  Sandra gave an example of how a company, NetJets, has implemented a four-pronged climate initiative  that focuses on energy efficiency and GHG reductions, technological transformation, offsetting and leveraging outside expertise  in order to minimize their overall impact.  In the Q&A, a question regarding the different drivers faced between small and large companies was asked.  The discussion revolved around all companies having the same sustainability drivers although the nature of their business dictates the relative importance of these.  In the case of small companies, my takeaway was that larger companies (who are greening their supply chain) are exerting increased pressure on their suppliers. The driving force to become more sustainable for the smaller companies comes more from this downward pressure from their large customers rather than their own investor and community stakeholders.

Krista Pilot gave an interesting talk that touched upon various green marketing and communication issues facing organizations implementing sustainability initiatives.  The importance of sending out the right message at the right time is paramount – clearly a company’s communications function wants to advertise successes but if these aren’t done in a strategic manner, the message can draw focus onto other projects or operations that can undermine the initial message.  Some interesting dialogue was generated around the area of ‘green intent’ and ‘green action’ – more people appear to be buying green despite the recession and a generation gap maybe appearing with the young being much stronger advocates of green practices and products. Krista touched on an area I’ve often wondered about when traveling – what would change your actions: Being informed that 75% of guests re-use their bathroom towels  or the standard message which asks you to help the company save resources by re-using?  The latter message generates a ‘why should I help you make more money?’ response whereas knowing that the masses are adopting a more sustainable behavior or ‘following the crowd’ message appears to have a greater impact in hotels. I wonder if getting a dollar back on your bill would have even greater effect?

All told it was a very interesting day.  That said, it was one that left a number of continuing questions including:

How does a company identify and prioritize sustainability projects?

Has the CSO position existed long enough for us to really be able to draw conclusions as to what makes a great CSO?

I’ll touch on these in future posts but appreciate any comments…

Examine your waste outputs and you will discover some interesting opportunities for savings.  A recent event gives a good example…
Sig. Other: “I can’t find my driving license”
Me: “When did you last have it?”
Sig. Other: “At the supermarket…I think I might have thrown it away with the receipt….”
Me: “Did you double-check your purse”
Sig. Other: “hmmmph”
And so began an interesting evening.  The cashier at the store had not, per my hope, kept the license by mistake and we were faced with the prospect of sifting through the trash-can at the store exit in the vain hope that we would find said license.  Now my initial thought was that this would involve getting covered in gum, soda, banana skins and other discarded gems from the general populus.  This was not the case however for two reasons…

1. the store personnel decided that since it was on premises they couldn’t have a customer sifting through trash (I LOVE that policy)
2. and here’s the main point, the ‘trash’ appeared to comprise entirely of discarded receipts.

As they replaced our ‘license’ bag with a fresh one so that a deeper analysis could be done in the store office in private, I stayed back and watched the now empty trash-can.  Now I admit, this is not ‘normal behavior’ but normal behavior is what has gotten us into our high consumption and inefficient  way of life.

Here’s the checkout process (which I admit, isn’t that interesting)….customer selects goods, teller scans them in, teller asks whether they have a ’store card’, card gets scanned, goods packaged, and paid for.  Customer takes a receipt, typically about 2-4ft in length, scans it for about 1/2second and then, wait for it,  throws it in the trash. I’m not sure what information is gathered during the 1/2 second scan  but whatever it is, it’s enough to convince the customer that they no longer need the receipt.

Now to be fair, not all customers do this – some keep the receipt – it’s a small sample but 1 out of 8 do. That one person also had a store card so my thinking is that they are quite involved in the purchasing process.  If you don’t have a store card, my sample showed, you’re not really bothered about receipts.  Kind of makes sense if you think about it.

So how could the store use this information?  They are effectively printing 8 x 3ft of receipts so that one person can take 3 ft home.  21ft of waste.
“…but it’s recycled paper” I hear you say.  Rubbish (!).  It’s a waste of paper (recycled or not), ink, printing power as well as added distribution and disposal expense.
Now, if you’ve taken the time to fill out a store card application, you’ve probably filled out an email address – the store ‘has you’ on record.  Why can’t they just default to emailing you the receipt (and those pesky coupons)?  If someone insists on their receipt, the teller just pushes the ‘burn the planet button’ on the till and one can be printed.
Think about it, you then have electronic record of all your purchases, the next time you shop, the teller can apply whatever coupons you had in your electronic ‘coupon box’ and you don’t need  receipts.  No trash to be collected and disposed of either.  Now I am no expert on the number of paper rolls a typical supermarket goes through but I’m guessing it’s not trivial.  I bet there’s a good payback on implementing this system.  You could take it a step further, start a company, receipt.com, that manages all store card receipt handling for all chains…. but now I’m digressing.

Analyzing waste streams is a profitable exercise and can also give you great insight into your operational efficiency.  If you know what’s in your waste, you can determine where it came from.  It’s a flashing arrow to a process that says ‘potential savings here’ or ’something ain’t working properly please HELP’. My supermarket has their receipts, an industrial furnace might have unburnt methane in their combustion gases or, if you want to get closer to nature, you might have something going on in your own waste streams that have their own ‘presentable features’.  Knowing about it means you can act….the supermarket chain goes electronic and in doing so, creates further opportunities for competitive advantage and reduced expense.  The industrial furnace operator realizes his burners aren’t working properly, overhauls them, saves fuel, reduces GHG emissions and improves efficiency. Your doctor examines your ‘waste stream’ to conclude that there are tell-tell signs of a stomach ulcer, which, you’ve guessed it, were probably obtained while sifting through public trash cans. You get the right treatment as opposed to popping Tums all day long.  In all cases, a change in behavior leads to a more sustainable way of operating.

It doesn’t take a huge effort to do this – observation can be the first step to reduced waste, improved efficiencies and a better way of doing business.  Encourage your workers to do this and you’ll be surprised by the potential benefits that arise.

Oh, and what about the lost license?  Well, turns out it somehow made it into a different section of the purse and never came close to the trash-can…hmmmmphh!

In April 2007, the Supreme Court ruled that greenhouse gases (GHG’s) are pollutants under the Clean Air Act (CAA) (EPA vs. Massachusetts).  As such, the EPA was tasked to determine whether GHG’s endangered public health and welfare.  It had three options:

• they did
• they did not
• no judgement could be made due to uncertainty in the science

In April 2009, the EPA found that GHG’s did indeed endanger public health and welfare.  This finding, termed the ‘endangerment finding’ was made under Section 202 of the CAA which applies to motor vehicles.  At the same time, the EPA also found that  the emissions from motor vehicles also contributed to the problems of climate change.  This finding is commonly referred to as the ’cause or contribute finding’.  If both of these findings are finalized, the EPA is required to move forward with regulatory rule-making procedures.
As the CAA is currently defined, the EPA can regulate motor vehicle emissions through  performance standards i.e. grams of CO2/mile.  However, EPA may chose to go further with regard to how it might control GHG emissions from these sources.  Furthermore, with regard to stationary sources, the EPA could set performance or technology standards that would require facilities to install measurement and control technologies.  The EPA could also implement a cap-and-trade program for GHG’s if, for example, similar cap-and-trade options being discussed in Congress are fruitless.  However, as it currently stands, limitations within the current CAA may limit the scope of such an EPA driven program.
As the issues are debated, many refer to the increased cost regulating GHG’s my impose upon businesses.   Certainly, new control technologies may result in increased costs to manufacturers which would be passed onto consumers.  However, the efficiency savings and resultant reduced fuel and electricity reductions may result in the final cost-to-consumer being less.  At this stage, it’s unclear how this would affect the consumer – some products may be more expensive and some might be cheaper.

So, moving forward, should Congress pass an act to control GHG’s through a cap and trade program (such as being proposed under Waxman-Markey), there may be a conflict with the EPA regulations under the Clean Air Act.  The easiest way to resolve this would be amend the CAA rather than create a stand-alone act of Congress.  As far as the current administration is concerned though, having the option to control GHG’s through the EPA finding puts pressure on Congress to define regulation  and propose a workable cap-and-trade solution that would control the US’s greenhouse gas emission footprint.