Wednesday, September 24, 2008

Carbon Offsets

Companies that are quick to offset their "toe print" are costing themselves twice as much to decrease their GHG inventory: the company must pay for the offsets while squandering its opportunity to invest in developing a sustainable industry.
While carbon offsets seem noble, their effect on corporate leadership often is damaging. If the corporate goal is to state carbon neutrality, then it is in the best interest of the company to account for the smallest possible GHG inventory, subsequently paying for offsets to reach the target. Leadership should focus on how their organization can rethink, redesign, and/or rebuild their business to no longer assume for an infinite environment, instead of focusing on who has ownership of or responsibility for Green House Gases.
A business's emergence as a leader in the carbon-efficient economy requires company-wide commitment to developing, managing, and optimizing for the whole carbon picture.
Being GHG-responsible is crucial, and the idea that changing light bulbs and small-efficiency gains qualifies as a corporate climate strategy is misleading to stake holders. If the corporate goal is more holistic, then the business is more inclined to develop a comprehensive business strategy. For example: Interface is a leader in industrial ecology. With the vision of becoming the world's first environmentally restorative company by 2020, Interface is pioneering management and manufacturing processes that will achieve this goal. Carbon offsets cannot achieve this goal, because they are not business development. Instead, offsets are mere monetary atonements for a business strategy that needs improvement.

Tuesday, August 26, 2008

What is CO2e

Carbon Dioxide Equivalence (CO2e) is a quantity that describes, for a given Greenhouse Gas, the amount of CO2 that would have the same global warming potential, when measured over a specified timescale (generally, 100 years).

Six examples:

carbon dioxide (CO2) = 1 CO2e

methane (CH4) = 19 CO2e

nitrous oxide(N2O) = 281 CO2e

hydro fluorocarbons (HFCs) = 500-4000 CO2e

perfluorocarbons (PFCs) = 5000-8000 CO2e

sulfur hexafluoride (SF6) = 21,682 CO2e

Sunday, June 29, 2008

Why are companies accounting for Carbon?

Considering the pace at which markets and governments are moving towards reducing the overall carbon footprint, an accurate enterprise account of a business’s green house gas exposure maters to stakeholders. In addition disclosure is increasingly expected, and failure to disclose can put a business at a strategic disadvantage.

Consumer Demand
  • Americans’ appetite for environmentally friendly technologies and consumer products is grossly underserved, with a potential $104 billion in sales this year (2007 National Technology Readiness Survey
  • Wal-mart (NYSE: WMT) announced that its customers have increased purchases of the five eco-friendly products tracked in its Live Better Index by 66% from last year. The retailer says this overall adoption rate, which measures sales compared to other products in the category, serves as a nationwide trend indicator of consumer demand for green products.
  • 50% of US consumers would rather do business with a company that is working to reduce global warming than one that is not (Survey by GlobeScan 2007)

Cost savings

Examples of carbon ROI context for business decision making as illustrated with the following examples (Examples are illustrative and do not represent actual cases):

  • Should the company redesign lighting in a distribution center (a $50,000 investment will reduce lighting costs by 25% , and carbon footprint by 3 tons per year)

  • Should the company make a larger investment in package design to reduce distribution costs? ($100,000 design time, reduces shipment volume by 20% and saves 20 tons of carbon)

  • How do those alternatives compare to the cost of a ‘green’ re-design of a major product? ($250,000 in design time replaces a polymer with a bioplastic, enabling the announcement of a new green product and generating $1,000,000 in new annual revenue while reducing the carbon footprint by 40 tons.)

Domestic Policy

US Climate Security

California AB 2538: Greenhouse gas emissions: consumer product labeling

Global Environment

Kyoto II, United Nations Framework Convention on Climate Change

European Union Emission Trading System (EU ETS)

Friday, March 28, 2008

Green Washing

In today's market there are many claims: Zero Waste, Carbon Neutral, Sustainable; yet there is limited agreement on what these statements mean. Businesses and consumers alike are in search of consensus on such statements. There is market demand for validation by trusted sources of how product offerings meet their claims of environmental value.

We will see the rise of new sources of green data collection (Lucid Design Group, Fat Spaniel), and green certifications across a range of offerings will help differentiate products. (LEED , SCS, CCOF)

Tuesday, November 27, 2007

Conversation with Ullas Naik from Globespan Capital

Executive Green: How does Globespan approach investing across a theme as broad as CleanTech?

Ullas Naik: It is challenging to look across so many distinct business categories. Our approach is to look at the value chain within a category and place strategic investments in the leaders in each area.

For example with the Solar market, we have invested in three phases of the value chain:

At the raw material stage, Calisolar innovation focuses on addressing the global shortage in silicon. The company has introduced innovation in the area of “dirty silicon” in order to achieve competitive advantages in feedstock costs, wafer yields and solar cell efficiency.

Globespan’s investment in Advent Solar is focused on increasing the performance of photovoltaic (PV) cells and modules. Bringing PV efficiency to a price point that is competitive with traditional forms of energy production (Coal and Nuclear) is crucial to building a sustainable solar market.

Solar Power Partners is a leader in driving the adoption of solar energy by reducing the initial capital costs required for a business to deploy solar by offering a power purchase agreement (PPA). The company focuses on deploying solar energy facilities that add real value to commercial businesses, institutions, and government facilities.

EG: Why did you invest in SPP?

UN: We are excited by SPP’s current customer base, and the company has a great pipeline of business. SPP has the third-highest number of PPAs in the solar market (behind MMA Renewable Ventures and SunEdison) and the company is closing the gap.

PPA companies are currently mostly aimed at the commercial sector and could emerge as the key driver for the adoption of renewable energy. The underlying providers are thinking creatively about how to accelerate and scale the growth of the solar market. PPA companies are reducing the financial barriers for businesses to enter the solar market, and increased amount of purchasing creates greater efficiencies downstream. For example SunEdison placed a billion dollar order with First Solar.

EG: How important are subsidies to the success of the solar market?

UN: Innovation will drive the price point of solar and other renewable energy sources down over time. However, for the next 3-5 years, subsidies are critical in order to let a new market grow.

The enormous uptake and positive impact in Spain and Germany are good examples of the benefits of subsidies and feed-in structures.

EG: What investment categories are interesting to you?

UN: We are dedicated to following a value chain-oriented strategy, similar to the one we have employed in the solar industry, to other markets. We are currently looking at opportunities in clean coal, wind, biofuels, building materials, etc.

EG: Are you concerned by the limited number of people in the marketplace with domain knowledge?

UN: Similar to some of the investments we made in the early days of the Internet boom, CleanTech companies will require executives that will adapt from new and adjacent industries.

When we look at investing an “A” round of capital, we prefer that the founding team have domain expertise; but as the company scales and needs professional managers, we look for executives with proven startup experience and will take a chance on managers who come from other domains.

EG: Is CleanTech investing important you on a personal level? Why?

UN: Yes, it is very important to me. Climate change is real, and as a global society we are seeing the detrimental effects of it almost every day. It is important to me to drive the creation of more carbon-neutral options and sustainable business practices for my two children as well as the next generations. I am privileged to be in a position where I can try to make a big difference and hopefully derive profits in the process by building new companies that will reverse the effects of decisions that were made in the past.