President Obama’s recent proclamation that the government must reduce its green house gas (GHG) emissions 28 percent by 2020 was not entirely altruistic. The measure will, by the administration’s figures, save between $8 and $11 billion in energy costs.

President Barack Obama participates in the CEQ Executive Order signing in the Oval Office, Oct. 5, 2009. (Official White House Photo by Pete Souza)

Senator Tom Carper (D-Del.) recently told the New York Times, “The best thing about reducing energy use is that it’s not just good for the environment–it saves money, too.”

Federal departments and agencies are measuring their energy and fuel usage, and will submit a reduction plan to the White House Office of Management and Budget by June. Some agencies plan to achieve the reductions by switching to solar, wind, and geothermal energy. Others are using federal stimulus dollars to upgrade their auto fleet to hybrids.

“As the largest energy consumer in the United States, we have a responsibility to American citizens to reduce our energy use and become more efficient,” said President Obama in a recent press release.  “Our goal is to lower costs, reduce pollution, and shift federal energy expenses away from oil and towards local, clean energy.”

ambitious targets

The reduction targets are part of Executive Order 13514, which requires agencies to measure, manage, and reduce GHG emissions to meet predetermined targets. However, the executive order goes further: It also calls for a reduction in water and waste. The following are highlights of the order:

• 30 percent reduction in vehicle fleet petroleum use by 2020;
• 26 percent improvement in water efficiency by 2020;
• 50 percent recycling and waste diversion by 2015;
• 95 percent of all applicable contracts will meet sustainability requirements

wanted: green ideas

To aid the government’s quest for efficiency, officials in November launched a program called the GreenGov challenge. GreenGov created a place where any of federal government’s 1.8 million employees could suggest ways to meet the environmental targets. The top ideas were passed along to the Steering Committee on Federal Sustainability. We liked the following submissions to the water efficiency section:

• “Xeriscaping”–plant native species and drought tolerant plants so that irrigation can be eliminated or reduced on federal properties.
• Capture rain water from building rooftops….
• Install water-saver shower heads in all federal fitness center showers.
• Stop subsidizing companies that produce corn-based ethanol. This has become a huge drain on the limited West Texas water supply. Instead, favor companies that produce ethanol using more complex/higher-energy grains or sugars in non-arid regions.

We want to thank the federal employees who participated in the GreenGov Challenge for contributing their ideas, and helping to shape the “greening” of our government. We are also pleased that the government’s focus is broader than reducing GHG emissions. And as the announcement stated, cutting waste and reducing energy and water usage will save the government some serious green.

We think that’s environmentalism everyone can get behind.

In Congress, the debate over energy legislation is once again heating up. Unlike previous efforts to enact climate legislation, this attempt is dividing energy companies who have traditionally been united in opposition. Lobbyists on both sides are trying to influence policy decisions that could cost heavy emitters of carbon dioxide billions of dollars. More than $200 million has been spent lobbying on behalf of energy interests in the first half of the year, according to the Center for Responsive Politics.

this time, climate change policy is for real

“The fact that lobbying is so fast and furious is a positive sign that this thing is moving along,” Mark Brownstein, a managing director at the Environmental Defense Fund told the New York Times. “The fact that everyone is rushing to Washington tells you people believe it is real.”

If companies believe Congress will enact new climate legislation, there are only two moves–embrace the future and attempt to influence policy in your favor, or fight like hell to keep it from happening. For now, both strategies are in play. The formerly allied oil and natural gas lobby has split, with the American Petroleum Institute and oil companies vehemently opposed to climate legislation, and natural gas companies fighting for favorable writing of the legislation. Both sides are spending money on advertising, public relations, and lobbying in an attempt to sway Congress and the public. Electric utility companies have also joined the fight, but they are split on the issue too. On one side are the companies who generate electricity from coal, and on the other, utilities that produce power from sources that emit less carbon, such as natural gas, hydroelectric, and nuclear. While the traditional energy players vie for dominance, the renewable power lobby is attempting to gain an advantage over everyone, turning this into a climate policy battle royal of sorts.

“These fissures are happening because a policy is increasingly seen as inevitable,” David G. Victor, an energy expert at the University of California San Diego, told the New York Times. “Old coalitions are splintering and fascinating new alliances are being formed.”

non-emitters support “greener” energy policy

Some companies are already taking action ahead of new legislation. In a recent interview in the Wall Street Journal, John Rowe, the 64-year-old chief executive of Exelon Corp., gave his assurances that his utility company would dramatically reduce its carbon footprint. Exelon is the nation’s largest operator of nuclear power plants–which don’t emit carbon dioxide. Last month, Exelon dropped out of the U.S. Chamber of Commerce after clashing over the group’s opposition to reducing carbon dioxide emissions. Some have accused Exelon of dropping out of the Chamber because it stands to profit from certain provisions in the climate legislation–a point that Rowe does not dispute. New climate legislation will create winners and losers. Rowe is one of those hoping to be in the winner’s column.

Energy executives and lobbyists believe that some form of climate legislation is on the horizon. For companies to plan effectively, there needs to be certainty one way or another as to whether there will be a new energy policy. The increased lobbying efforts and shifting alliances among energy companies could signal that the final showdown is imminent. We will continue to update you as this debate progresses.

photo credit: Coal power plant-arbyreed/flickr, nuclear power plant-TVA

In Boulder, Colorado, the Outdoor Industry Association (OIA) is vocally and actively supporting legislation that aims to help their industry. The legislation, titled the U.S. OUTDOOR Act was introduced simultaneously in the U.S. House of Representatives (H.R. 3168) and the U.S. Senate (S. 1439). The bill is the result of a two year collaboration between outdoor apparel manufacturers, the U.S. textile industry, and leaders in Congress.

The legislation, sponsored by Representative Earl Blumenauer (D-OR), has several components, including equalizing tariffs for outdoor apparel to that of other goods in order to make outdoor apparel and products more afforable. But the aspect of the bill that is of particular interest to us is the creation of the Sustainable Textile and Apparel Research (STAR) fund. According to Rep. Blumenauer’s website:

The fund will make grants available to certain non-profit organizations to advance U.S. competitiveness in lean manufacturing technologies and supply chain analysis. The STAR Fund grants, made available through a competitive process administered by the Department of Commerce, will help the global textile and apparel industry minimize energy and water use, reduce waste and global warming emissions, and incorporate sustainable practices into a product’s entire life cycle.

We support any legislation that promotes a greener textile industry. We believe that the best way to keep industry jobs in America is to transition the industry to cleaner, greener, sustainable production. There is ample room for advancements, as companies like Columbia Sportswear and others are demonstrating. Using technologies such as AirDye® can help in this process, and we encourage those seeking to reduce waste, water, and emissions to look not only at our solution, but at any and all that will help.

Photo credit: Cranker / CC BY-NC-SA 2.0

Last week a landmark climate bill, American Clean Energy and Security Act of 2009, passed the U.S. House of Representatives. The climate legislation aims to cap and reduce emissions by 17 percent of 2005 levels by 2020, and by 83 percent by 2050. Totaling 1,200 pages, the bill includes a cap-and-trade provision that puts a price on green house gas emissions, affecting almost all sectors of the U.S. economy. If the bill passes, everything from the way buildings are designed, products manufactured, and electricity generated will change. An additional mandate in the bill requires 15 percent of electricity in the U.S. to be generated by renewable energy by 2020.

The bill passed by a slim margin in the House (219 – 212) and still faces an uphill battle in the Senate. One potential hitch, the House bill includes tariffs imposed on the importation of goods from nations not matching U.S. carbon restrictions. The tariffs would greatly affect the price of goods imported from China and India, and thus may be removed in the Senate version to avoid provoking a trade war.

Those who oppose the bill insist that consumers will suffer due to a higher cost of energy and goods. According to the Congressional Budget Office (CBO), the bill will create an annual economy wide cost of $22 billion, or $175 per household. The Obama administration and other supporters of the bill insist it will spur the growth of new ‘green jobs’ and that rise in energy cost will be modest. The legislation mandates that if 60 percent of permits are given to the business community as planned, those businesses must pass the savings along to consumers.

Personally I don’t care if the new law does result in modestly higher prices. If I have to pay $175 more a year in 2020 for a greener country so be it. That additional cost will help bring the price of traditional energy in-line with that of sustainable sources. Carbon emissions do carry a downstream cost, and it’s about time we assigned it a dollar value.

Are you or your business concerned by the affects of the new legislation?

As the comprehensive energy bill continues its way through the halls of Congress, we thought it might be a good time to take note of the potential effects for your company.  Though the majority of the policy has yet to be written, much less pass, we’re taking a look at what could happen in order to create an action plan for all of us.

leaning towards cap-and-trade

The pressure on the government to enact policy regulating carbon dioxide (CO2) emissions is growing, as citizens increasingly fear the effects of climate change. Though some may feel that a cap-and-trade policy is not ultimately the most effective at curbing CO2 emissions, it is the route we are currently pursuing. The alternatives, a carbon tax or regulation of emissions by the Environmental Protection Agency (EPA), are not popular policies. Getting anything labeled a “tax” through Congress is nearly impossible and would not sit well with Americans in this economic climate.  As for the EPA regulating emissions, that has received a big rejection from the business community. So we’re left with cap-and-trade.

what is cap-and-trade?

Cap-and-trade would set a cap on the CO2 companies are allowed to emit, and then gradually reduce the allowed levels over time. Companies that need to increase their emission allowance must buy credits from others who pollute less, creating the trade portion of the policy. The buyer is being fined, in effect, for polluting more, while the seller is being rewarded for reducing emissions more than required. Issues arise when determining the cost of this policy and where those costs fall.

possible effects of cap-and-trade

In short, the price of energy could become even more volatile. Cap-and-trade will create a new system for pricing carbon, adding volatility to the energy markets. The European system of cap-and-trade often experiences price movements of 17 percent a month. This volatility could lead to financial speculation on permit pricing, with energy companies having a distinct advantage in predicting future demand. Stefan Heck of McKinsey believes “cap-and-trade might add 20 – 30 percent to energy costs.” The rise in energy prices could increase production costs for American companies, decreasing their competitiveness in the world market. Businesses which can no longer compete with foreign producers would have to close or move–which is how we get back to asking whether this policy will move more of our industries to China.

Photo credit: voux

move to china? the answer is no

Well, perhaps no one knows for certain. Currently, it is unclear if higher energy costs will create a profit incentive to move to China. One should keep in mind that China is the world greatest emitter of CO2. They too will be facing internal and international pressures to implement a CO2 policy of their own, negating any prior energy price advantage. If that doesn’t happen, the U.S. would have the option of instituting carbon tariffs on goods from countries without a carbon cap. There are problems with this policy, notably with certain existing trade agreements as well as the tendency of other countries to enact tariffs of their own in response.

solutions

Reduce, reuse, recycle. Indeed, it may sound like something from 1996, right out of an episode of Captain Planet, but it should be your corporate mantra. Opportunities exist throughout the supply chain to put these techniques into action. Implementation is industry specific, however here are a couple of examples.

Wal-Mart is executing a plan to reduce their packaging five percent by 2013; they estimate that for Wal-Mart U.S.A. 667,000 metric tons of CO2 will not be emitted into the atmosphere, 66.7 million gallons of diesel fuel will be saved, and 213,000 trucks will come off the road annually. The bonus: Wal-Mart is saving money too.

In the textile industry, use of AirDye® technology can result in energy savings of up to 87 percent. Using AirDye can additionally eliminate excess inventories. This allows goods to be ordered as needed, better matching supply with demand.

When faced with a cap-and-trade policy that could increase the cost of energy 20-30 percent, will you reduce, reuse, and recycle, or do you plan on learning Mandarin?