Sunday, March 7, 2010

Greenhouse Gas Reporting in Ontario

As North America attempts to address the issue of climate change, Ontario has begun efforts to implement a cap and trade system to reduce its greenhouse gas (GHG) emissions. A cap and trade system (also known as emissions trading), is a market-based mechanism that has the potential to reduce GHGs as well as foster economic growth and job creation. The theory is that market forces will determine the most efficient way to reduce GHG emissions – those that can reduce emissions most cheaply will do so, with the ability to sell those emission credits to others who may not be able to reduce emissions as cheaply. In a cap and trade system, the government sets a limit or cap on the total amount of GHGs that can be emitted from regulated facilities. Individual facilities are issued emission permits (or credits) that allow the permit-holder to emit specified amounts of GHGs. Permit-holders that increase their emissions must find a way to offset them. One way to do so is to buy credits from others. The transfer of credits is known as the ‘trade’. Over time, the limits are gradually reduced in line with the government's emission reduction and climate change goals.

As the reporting of GHG emissions is one of the initial steps necessary to implement such a system, Ontario filed a Greenhouse Gas Emissions Reporting Regulation in December 2009. Moreover, the Regulation is intended to align Ontario's proposed system with programs being developed in other parts of North America, including those by the Western Climate Initiative and the United States Environmental Protection Agency.

Commencing on January 1, 2010, the Greenhouse Gas Reporting Regulation applies to facilities in Ontario emitting greater than 25,000 tonnes of carbon dioxide equivalent per year from a list of identified sources. Facilities emitting between 10,000 and 25,000 tonnes will not be subject to the reporting requirements. But, the Ministry of the Environment plans to encourage smaller emitters to report emissions voluntarily to ensure that they are prepared to adapt to emerging North America-wide requirements.

Ontario's reporting threshold aligns with the U.S. Environmental Protection Agency's mandatory GHG reporting threshold of 25,000 tonnes of CO2 and the introduction of the American Clean Energy and Security Act to establish a cap and trade system. However, unlike the U.S. approach, Ontario does not currently regulate fuel suppliers to report emissions attributable to the combustion of their products in transportation, residential, commercial or other industrial sectors. The emitters (between 200 and 300 facilities) include general stationary combustion, electricity generation, and petrochemical production among others are required to report on 30 Greenhouse Gases listed in the Regulation for inclusion in their CO2 calculations. The various reporting requirements contained in the Regulation will be phased in over the next three years in order to allow facilities to develop the necessary capacity to comply with the standardized emissions quantification methods as well as third party verification requirements.

In response to a number of comments on the costs and administrative burden associated with third party verification of emissions data, the Ministry of the Environment says it will continue to look for ways to "streamline" the verification requirements, in accordance with its other cap-and-trade partners. It will also work with accreditation agencies and verification service providers to ensure sufficient capacity is in place when the verification provisions take effect in the 2011 reporting period. A number of concerns were also raised about the protection of confidential business information. The Ministry has removed from the final regulation data submission requirements that are "not essential for the design of a future cap-and-trade program or for a high level quality assessment of the reported emissions." In addition, much of the sensitive information does not have to be submitted, but can be kept on site by the company for audit by the Ministry.

In conclusion, the implementation of this Regulation may serve as a wake up call to companies who believed that the government would not intervene on the issue of climate change. Moreover, it may be to companies’ benefit as the development of sustainability strategies can result in energy saving which translate directly to their bottom line.

Monday, February 15, 2010

Sustainable Tourism

There is no denying that tourism is a climate-dependent industry, and many destinations owe their popularity to their pleasant climates. Furthermore, clear evidence exists that climate change is impacting the tourism industry and that, simultaneously, the industry and tourists are contributing to climate change through fossil fuel consumption and consumptive behaviors. In an attempt to escape from the worry and stress of everyday life, tourists (on average) indulge in greater levels of consumerism. Research has revealed that tourists consume greater amounts of energy, water and materials while on vacation than they do at home.

If one takes into account the fact that about 1 billion people travelled internationally in 2009 and that this number is expected to rise to 1.6 billion by 2010, the severity and urgency of the problem becomes evident. Tourism is one of the world’s fasted growing industries (generating over 10.4% of global GDP) and so the issue of sustainability needs to be not only addressed, but resolved.

On a positive note, there is some evidence that shows the tourism industry is becoming more environmentally conscious. Consumers are beginning to comprehend the environmental implications of their own consumptive behaviors. The emergence of tourism-specific organizations such as Tourism Concern suggests a growing consumer awareness of the environmental consequences of tourism activity. With this new found knowledge, tourists are becoming more selective in their choice of destinations.

Meanwhile, a recent European Tourism Research Institute paper highlighted the business opportunity for operations that employ renewable energy and encourage reuse and recycling. And consequently, tourism operators are providing ecologically friendly alternatives for their clients. By incorporating more environmental and social sustainability principles into their business operations, these tourism operators are creating opportunities for product differentiation, enhanced brand image and stronger community stakeholder support that reduce business transaction costs.

Being green can translate into a tourist operator’s bottom line in several ways. When energy-saving measures are introduced, such as energy management systems, fluorescent bulbs, ceiling fans, motion sensors for public rest rooms and exercise rooms, energy bills are reduced. Also, when water-saving equipment and techniques are introduced, such as low-flow showerheads, 1.6 gpm dishwashing valves, and low-flow toilets, water bills are reduced dramatically. These measures can also have tremendous environmental implications as the average Canadian household uses 326 liters of water per day while a luxury hotel room guest uses 1800 liters of water per person per night! Lastly, waste hauling is a large expense for hotel operators which can be lowered drastically through recycling and avoiding wastefully-packaged products. The New Orleans Intercontinental started a recycling program and hired staff to separate their disposed materials. The hotel management was shocked to discover that employees were extracting $1,000 a month of hotel property (i.e. towels, spoons) out of the waste stream which had been discarded prior to the implementation of the program. In conclusion, such corporate sustainability actions eventually translate into a better competitive position that will bring guests back time and time again as well as a stronger ‘triple bottom line’.

Tuesday, February 9, 2010

Psssstt...Canada Sets 17% Carbon Emission Reduction Target From 2005 Levels

In case you haven’t heard, the Canadian federal government officially informed the United Nations on January 30th that it has set a 17% reduction in carbon emissions from 2005 levels in the next 10 years. It is Ottawa's commitment to the Copenhagen deal on climate change.

Countries that attended the climate change conference in December were supposed to outline their own emission-reduction targets before the UN's final deadline of Jan. 31. The Copenhagen Accord, which isn't legally binding, offers money to developing nations to help them fight global warming, but it doesn't set new greenhouse gas reduction targets. Instead, countries are to set their own targets, without mandatory limits.

Canadian Environment Minister Jim Prentice pointed out that Canada’s target is similar to those set by the United States, which Ottawa had indicated it would follow during the Copenhagen conference. The United States, on January 28 officially stated a goal to cut carbon emissions by 17 per cent by 2020 off 2005 levels and said it “anticipated” that Congress would approve legislation to meet the target.

Canada and the US are unique in setting their targets against 2005 levels, as most nations, for instance, have set their reductions to be measured by the common UN standard of 1990 levels - the European Union has agreed to 20% carbon reductions from 1990 levels by 2020. US & Canada are in favour of a 2005 baseline as their carbon emissions have ballooned steadily since 1990. In fact, the US target is only 3.4% below 1990 levels. In Canada, the target actually increases emissions, not decreases them as the new target is 2.5 percent higher than the 3 percent cut over 1990 levels announced by Ottawa in 2006.

There hasn’t been much buzz about the target announcement, partly because it’s rather uninspiring and lacking in detail. Some say the low-key target is needed to harmonize regulations with the US to protect Canadian industries that are subject to competitive trade with US firms, while others say it seeks to protect the oil and gas industry in Alberta – where the oilsands contain the second-largest petroleum reserve in the world after Saudi Arabia with an estimated 174 billion barrels.

Despite the timid target, there is a greater recognition from industry and government of the climate change risk from environmentalists and ‘regular’ consumers who call oilsands’ crude “dirty oil" because of the amount of greenhouse gases that are produced when it's refined. In fact, environment Minister Jim Prentice recently told a Calgary business audience that while the Harper government supports continued expansion of the oilsands, large energy companies need to do more as Canada seeks to reach its targets under the Copenhagen climate change accord. He also acknowledged that “Canada risks becoming the international poster child of unsound resource development if it doesn't do a better job of developing the oilsands”.

Timid target or not, industry and government get the picture - a lower carbon economy is real and here to stay.

Monday, January 25, 2010

Greenhouse Gas Reporting – Here and Now.

The future is now. On January 1st, Ontario's Greenhouse Gas Emissions Reporting Regulation took effect - requiring between 200 and 300 facilities (such as electricity generators, steel & cement manufacturers, and petroleum refiners) emitting 25,000 tonnes or more per year of carbon dioxide equivalent (CO2e) to report their emissions on an ongoing annual basis. The regulation is intended to obtain accurate emissions data to inform the development of Ontario's proposed cap-and-trade system.

Ontario has also announced that while small emitters (facilities emitting between 10,000 and 25,000 tonnes per year) are not currently required to report under the Regulation, the Ministry will develop a program to encourage voluntary reporting in anticipation of inclusion of these smaller emitters in the future in emerging North America–wide requirements, with which Ontario will likely align.

The 25,000-ton limit is comparable to the emissions from burning 131 rail cars of coal or the annual energy use of about 2,200 homes, while a typical coal-burning power plant emits several million tons of carbon dioxide a year.

Ontario's reporting threshold aligns with the U.S. Environmental Protection Agency's mandatory GHG reporting threshold of 25,000 tonnes - which impacts 14,000 large US sources of carbon dioxide. The Regulation represents a further step towards implementation of a cap and trade system in Ontario which will be harmonized to the requirements of a North America–wide system. Ontario has pledged to work with the federal government and other provinces as well as with the other provinces and U.S. states that are members of the Western Climate Initiative ("WCI") to harmonize Canada's carbon regime with the emerging U.S. carbon regime.

Greenhouse gas reporting is no longer a question of "If?" or "When?"...its right here, right now.

Tuesday, January 19, 2010

Airline Sustainability: The Sky is the Limit

Sixty years ago, civil aviation (private and public air travel) was an industry that was responsible for a minute proportion of all forms of transport. In recent decades, there has been rapid growth in aviation as a form of mobility, and subsequently there has been significant growth in energy use. Today it is an integral part of the world economy, accounting for approximately 9% of global GDP and carrying over 2 billion passengers each year.

Most aviation fuels are jet fuels originating from crude oil. Crude oil is a non-renewable energy resource and reports indicate that the world’s crude oil production is close to the maximum level and that it will start to decrease after reaching this maximum. Aviation fuel production is predicted to decrease by several percent each year after the crude oil production peak is reached - resulting in a substantial shortage of jet fuel by 2026. At the same time, it is predicted by the aviation industry that aviation traffic will keep on increasing. This is of particular importance for the airline industry as the price of fuel represents as much as 40% of an airline's expenses. Between 2001 and 2005, airlines lost over $35 billion (US dollars) and high fuel prices will continue to challenge airline profitability.

Aviation fuel consumption also brings about environmental concerns as it contributes to the increase in atmospheric CO2 concentrations. Although the aviation industry claims that it generates only 2% of global CO2 emissions, it is one of the fastest-growing carbon polluters around. The Federal Aviation Administration predicts that passenger levels will double in 10 years and perhaps triple by 2025 and that CO2 emissions will increase by more than 110 % between 2005 and 2025.

With regard to aircraft emissions, strong public pressure to reduce the environmental impact has resulted in improvements in both technologies and the way airline systems operate. A sustainable approach is necessary to ensure continuing growth in the aviation industry where cost reduction is critical and environmental performance is improved.

Improving the fuel efficiency of aircrafts is an important aspect of technological development, since it directly improves airlines’ direct operating costs. Technological improvements involve aerodynamic changes, weight reductions, more fuel efficient engines, and increased operational efficiency. For example, the Boeing 787 Dreamliner is attempting to incorporate energy efficiency into its design. The airplane is expected to use 20% less fuel than its contemporary counterpart. The key technologies include lightweight structures, highly efficient engines, and aerodynamic improvements to the body and wings. As much as 50% of the primary structure on the B787 will be made of composite materials. The advanced engines for the new airplane are expected to contribute as much as 8% of its increased efficiency. According to the Boeing Company, it will be possible to eliminate 1500 aluminum sheets and 40,000–50,000 fasteners by manufacturing a one-piece fuselage section, and to attain greatly improved aerodynamic and structural efficiency.

Another way for airlines and passengers to reduce their environmental impact is to become carbon neutral. Becoming carbon neutral involves the purchase of carbon offsets to neutralize the pollutants added to the environment. Carbon offsetting occurs when an individual or organization emits a given amount of greenhouse gas (GHG) but invests in measures that will pull the equivalent volume of GHG out of the atmosphere or prevent other emissions from taking place at all. Carbon offsets include programs such as wind power, solar power, and other such projects that focus on energy efficiency and renewable resources. Carbon offsetting is becoming prominent in the airline industry. For example, Virgin America offers the opportunity to buy carbon offsets based on the length of your flight. Also, Ethiopian Airlines has planted 7.5 million trees in Ethiopia, one for each passenger flown since 2005 at no extra charge to their customers.

As consumers become more aware of the environmental effects of aviation on global air quality and demand airlines to reduce their engine emissions to climate change, the industry will need to make adjustments in order to stay competitive. Innovations in aircraft technology and carbon offsets are two important steps toward sustainable air transport that have the potential to generate industry profit growth while protecting the environment.

Friday, December 18, 2009

Clean Energy Initiatives: A Winning Situation For All

During the Copenhagen Climate Change Conference last week, a global 10 billion US dollar annual fund was proposed to assist developing countries in averting their carbon emissions prior to when the new treaty comes into effect in 2012. Critics claim that this proposal is insufficient and one proposal put forward involves shifting some of the International Monetary Fund’s investments into financing clean-energy projects in the developing world.

In the developing world, agriculture is a primary economic activity, accounting for about 30 percent of their GDP. Lack of access to adequate, affordable, and convenient sources of energy is one of the key challenges faced daily by rural inhabitants. Worldwide, 2.4 billion people rely on biomass for cooking and heating while another 1.6 billion have no access to electricity whatsoever. The UN reports that such an energy gap "entrenches poverty…and erodes environmental sustainability at the local, national and global levels."

It is undeniable that access to clean, reliable, and affordable energy is critical to sustainable development. Research indicates that sustainable energy technologies and programs can directly contribute to development as they offer an income source, improve health, air and water quality, and provide amenities such as heat and light.

In particular, renewable energy can be beneficial for developing countries. In rural areas transmission and distribution of energy generated from fossil fuels can be complicated and costly. Producing renewable energy locally can reduce such a financial burden.

There is increasing awareness that conventional, ‘top-down’ development approaches have failed to deliver results that satisfy the needs of the developing world. An alternative to top-down development approaches is provided by initiatives that aim at increasing local participation. This ‘bottom-up’ approach has been adopted by organizations such as Wisions, and Grameen Shakti who acknowledge that local participation allows projects to better reflect local needs rather than sole instruction from the professionals who are working with them.

The Ashden Awards for Sustainable Energy is an organization that awards and brings to light inspiring sustainable energy solutions in the UK and the developing world and helps to ensure that these solutions are promoted more widely. Grameen Shakti, a non-profit organization in Bangladesh, was a recipient of the award in 2006. The organization’s goal involves “rescuing rural poor from energy poverty which undermines their social and economic development” by empowering rural people through access to environmentally friendly and sustainable energy at affordable costs, while providing them with income-generating activities, and access to a better quality of life. Grameen Shakti is involved in a range of activities related to small-scale photovoltaic (PV) systems, including: marketing, sales, servicing, training, research and development, credit provision, payment collection, and credit guarantees.

Through small micro-credit loans, self-employment is provided to the country’s rural families. Buyers of PV systems have reported increases in income and productivity by extending working hours after dusk and due to the introduction of computers powered by PV. Grameen Shakti is training technicians in PV installation and maintenance, thereby creating employment for local people, facilitating technological transfers, and developing skilled technicians in rural areas. Funding for the micro-credit system comes from the World Bank and Global Environment Facility via the Infrastructure Development Company Limited (IDCOL).

Energy is central to economic development: there is a clear correlation between energy consumption and living standards. And, microfinance is one solution that can meet large and small scale needs. Unlike commercial loans, no collateral is required for a micro-loan and it is usually repaid within six months to a year. Those funds are then recycled as other loans, keeping money working and in the hands of borrowers. Government investments into renewable energy projects in the developing world will also benefit the global economy. The EU's Project Catalyst estimates such global investment will generate about $100 billion by 2020. It is evident that clean energy initiatives world yield financial and social benefits to citizens and businesses alike.

Tuesday, December 1, 2009

Peak Water: Crisis or Opportunity?

Many experts report that global water supplies are dwindling and that it poses a risk to businesses which will have impacts more far-reaching than oil. While alternative sources for oil exist, there is no substitute for water: it’s a necessity for human survival and many industrial processes.

One of the most important considerations for business is access to clean water. It’s used for things such as power generation, cooling of air conditioning systems, amenities, process needs, and so on. Companies across industrial sectors could be affected by water shortage issues directly and indirectly through their supply chains, with even non-water intensive companies realizing higher costs as suppliers deliver higher costs.

The impacts of climate change on water will be felt in the form of droughts and changing precipitation patterns while population growth and rising consumption patterns will increase demand and further stress water supplies. In fact, the Organization for Economic Co-operation and Development (OECD) forecasts that, as early as 2030, 47% of the global population will be living in areas of high water stress.

This water challenge provides businesses the opportunity to develop and implement solutions both locally and internationally. Companies need to plan now for the impact of water shortages on their business operations. However, for most companies, water does not appear on the bottom line as awareness and understanding of water-related risks and opportunities is lacking.

In an attempt to bring companies together and to take action, the Water Disclosure Program was created which aims to “provide critical water-related data from the world’s largest corporations to inform the global market place on investment risk and commercial opportunity.” In 2010, a questionnaire will be sent to 300 of the world’s largest water-intensive companies which will assess the risks and opportunities companies face in relation to water; water usage and exposure to water stress in companies’ own operations and in their supply chains; and companies’ water management plans and governance. The data will be utilized to move investment towards sustainable water use.

It’s a reality that corporate reputation represents a large percentage of a company’s market capitalization. Companies that treat water risks as a strategic challenge will be far better positioned in future as investors are already urging companies to measure, disclose and reduce their environmental risks. And, people are more likely to invest in a company that has a high rating in terms of environmental and social performance.

Being proactive and using water proactively will reduce the water footprint of any business. In fact, studies reveal the commercial sector has the potential to save on average 39% of their water use. So what can businesses do to reduce their water consumption? Toilets and urinals account for more than one-third of the water consumed in office buildings. Installing waterless urinals and low flow dual flush toilets use only a small fraction of water when they are adjusted to the minimum amount of water required per flush. Water saving bathroom fixtures can also eliminate a large percentage of gallons annually for businesses. Adding aerators to existing faucets can cut water consumption in half but faucets should first be checked for leaks. Lastly, water use on outdoor landscapes can be reduced if the sprinkler timer is adjusted with the seasons and if it is watered early in the morning or late at night to minimize loss.

“An organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.” - Jack Welch