Green Metrics, Clean Metrics

Resource Efficiency vs. Carbon Reduction

Published at: http://www.environmentalleader.com/2011/12/05/resource-efficiency-vs-carbon-reduction/

The dramatic improvements in efficient lighting technologies over the past three centuries have left the energy intensity of lighting unchanged. The higher energy efficiencies have all been used up by ever-expanding lighting applications. And the share of global GDP spent on lighting has remained constant during this period. This is just one example of the rebound effect, which potentially increases energy use as a result of new energy efficiencies.

So-called direct rebounds of up to 30 percent have been observed in automotive transport, heating, cooling and other consumer energy uses (this means energy savings were reduced by up to 30 percent). Rebound is not limited to end-use energy consumption. An empirical analysis of 30 US economic sectors shows significant energy consumption rebound in the production of goods and services between 1980 and 1995 (60 percent rebound in the 1990-95 period). If these results are correct and energy efficiency does not necessarily lead to a corresponding decrease in (conventional) energy use, there are serious implications for climate change mitigation.

Energy efficiency is a key component of IPCC’s climate stabilization scenarios. The IEA has stated that many industrial processes are using much more energy than the best available technology would permit. An application of the climate stabilization wedges suggests that over half of the GHG emissions reduction in the US will have to come from energy efficiencies. Moreover, lacking a strong climate policy in the US, most responsible businesses are relying on energy efficiency (and, more generally, resource efficiency) improvements to rein in their emissions. These are often below-cost opportunities that deliver a positive ROI.

The possibility of a rebound in energy use weakens the crucial link between energy efficiency and carbon reduction. This can, in fact, be a problem for any resource efficiency improvement and not limited to energy. A recent simulation study of the German economy indicates a 55 percent rebound following an increase in material efficiency and raises a provocative question: Is it possible to make permanent absolute reductions in resource consumption?

Defining Rebound

As the energy efficiency of a process increases, it reduces the implicit price of energy needed to run that process. A business could then expand its output by using more of that cheaper energy, or substitute energy for other (relatively more expensive) inputs to production. These are direct rebound effects.

At an indirect level, rebounds can occur from the embodied energy in new energy-efficient technologies and capital investments, as well as due to the re-investment of cost savings from energy efficiency improvements into other production. In addition, broad economy-wide energy efficiency improvements can drive energy prices down and encourage additional uses of energy that would not have occurred otherwise. The lower energy prices can also benefit the energy-intensive sectors of the economy by reducing their production costs and shift the composition of the economy toward those sectors.

These definitions are adapted from the Breakthrough Institute’s review of the energy rebound literature. Materials make up the larger part of industrial resource use and input costs, and may have a higher potential for indirect rebound effects than energy.

Points of Debate

Much of the debate on this topic appears to be over the size of the rebound effect, not its existence. If energy consumption is largely decoupled from economic growth, then energy rebounds may be small. A report from UKERC points out that the coupling between energy consumption and economic growth appears to be far stronger than normally assumed if energy sources are weighted by their relative economic productivity. This, in turn, would suggest a fairly large economy-wide rebound in energy use, although it is not a completely settled conclusion.

Policy Implications

One way to reduce both direct and indirect energy rebound effects is by keeping the cost of energy relatively constant as efficiency improves (similar considerations apply to material efficiency). The obvious tools include carbon taxes and emissions trading, both of which constrain carbon-based energy sources. Since efficiency improvements and opportunities will vary from sector to sector, an economy-wide carbon tax is likely to be a blunt instrument. The more flexible tradable permits are seen by some researchers as a superior tool.

A carbon price would allow for growth in energy use (and therefore economic growth) by meeting an increasing share of new energy demand with renewables, but there is no immediate prospect of pricing carbon emissions in the US. Moreover, technological challenges remain in any broad adoption of renewable energy. The current alternative to cap-and-trade is much more and better organized financing to make clean energy viable even without a price on carbon.

Business Response

Given the potential for rebound effects to undermine resource efficiency improvements, and the current lack of public policy to mitigate this, what can businesses do? Businesses do have control over direct rebounds in resource use. This would suggest that a way forward for responsible businesses is to focus on absolute reductions in their resource consumption and emissions. Consider these starting points:

• Quantify and report all emission scopes. Include scope 3 so that all emissions are counted in the baseline and any improvements are always reported as a percentage of total emissions – even if approximate at first.
• Absolute energy use will likely continue to increase for most businesses even after implementing energy efficiencies. The only way to sustain continuous emission reductions is by adding lower-carbon and zero-carbon energy sources to accommodate growth, while eliminating chunks of high-carbon energy usage through efficiencies and replacement. This may require using some of the savings from efficiencies to offset the potentially higher cost of cleaner energy (at least in the short term while technologies mature).
• Full scope emissions accounting also provides the right framework for material efficiencies, allowing emissions from energy and materials to be quantified side-by-side. Explore how to optimize material use and how to economically close the materials loop.

While pushing for and supporting the right policies and investments, businesses can certainly take concrete steps to ensure that higher resource efficiencies coexist with real carbon reductions within their operations.

 

Kumar Venkat is president and chief technologist at CleanMetrics Corp., a provider of analytical solutions for the sustainable economy.

Sustainable consumption: For all our ingenuity, it still comes down to using less

Published at: http://www.oregonlive.com/opinion/index.ssf/2011/12/sustainable_consumption_for_al.html

 

As the holiday shopping season got off to an early start this year, clothing company Patagonia took a courageous stand with a full-page ad in The New York Times telling consumers to buy less. The ad went on to say, "Don't buy what you don't need. Think twice before you buy anything."

If you are like me, you probably have an uneasy feeling in your stomach when you hear the term "sustainable consumption." After more than two decades of talking about it, and in spite of advances in resource efficiencies, we are not all that much closer to consuming sustainably. The fact is, it is enormously difficult to do this without actually reducing what we consume.

Take clean energy, for example. Supplies are currently limited, costs can be higher and breakthroughs are still needed in battery technologies, solar energy and biofuels before renewables can replace fossil energy on a large scale. In time, with the right investments and policies, the breakthroughs can happen, but we are not there yet.

Can we rely primarily on energy efficiencies in the meantime? Up to a point, yes; but efficiencies are not a panacea for all our energy problems. Energy efficiencies are known to cause rebounds, which can reduce potential energy savings by stimulating additional energy use.

What about an idea such as using white roofs to reflect sunlight and reduce the energy cost of cooling? The downside to this, as a recent study found, is that the additional sunlight reflected from roofs could be absorbed by dark pollutants in the atmosphere and end up warming the Earth.

In recent years, only the financial crisis has been able to curtail greenhouse gas emissions, both in the United States and globally. According to the International Energy Agency, global emissions dipped in 2009 because of the recession and then climbed back to a record level just a year later.

On the materials side, recycling is one activity that many of us participate in. And yet, closing the materials loop remains a challenge. Recycled materials clearly produce lower environmental impacts, including lower greenhouse gas emissions. But supplies are still limited, costs can sometimes be higher and further technological advances are needed to make the collection and processing of recyclables more efficient. There are many similarities between the market struggles of recycled materials and renewable energy.

What about the food sector? Isn't it more sustainable to eat organically produced food? Yes, with the caveat that several studies have noted lower efficiencies and yields in organic production -- so land use could increase as organic production expands. As far as locally produced food, greenhouse gas emissions are not significantly lower compared with food brought in from elsewhere (unless the food is air-freighted) and could be higher in some cases because of inefficient local transport.

My point is not that there are no good solutions; it is simply that virtually every solution out there is either incomplete or has a downside. We should still support the most promising solutions with our purchasing power and vote for policies that can take them further. We should also rethink the notion that we can consume our way to sustainability by always choosing the environmentally preferable products.

It is not just what we consume, it is also how much we consume.

 

Kumar Venkat is the founder and president of CleanMetrics Corp., a Portland-based provider of sustainability and resource efficiency solutions for businesses.

Climate Change and the Consumption Trap

Published at: http://www.greenbiz.com/blog/2011/12/06/climate-change-and-consumption-trap

 

It took a major financial crisis to slightly slow down the global emissions of greenhouse gases. According to the International Energy Agency, emissions dipped in 2009 due to the recession and then climbed back to a record level just a year later. A new study from the Global Carbon Project confirms this trend and says 2010 saw the largest absolute jump in emissions in any year since the Industrial Revolution.

I couldn't help but contrast these grim numbers with the frenzy of the holiday shopping season. By now we are all well aware that we can make or break the economy through our purchasing habits.

I was feeling downright unpatriotic, having done less than my share of shopping this whole year, until I came across the clothing company Patagonia's full-page ad in the New York Times on Black Friday. Patagonia took a courageous stand and asked consumers to buy less. The ad went on to say, "Don't buy what you don't need. Think twice before you buy anything."

This raises an uncomfortable issue that's been literally swept under the rug for many years. After more than two decades of talking about sustainable consumption -- and in spite of advances in resource efficiencies and renewable energy -- we are not all that much closer to consuming sustainably. The fact is, it is enormously difficult to do this without actually reducing what we consume.

Take clean energy, for example. Supplies are currently limited, costs can be higher, and breakthroughs are still needed -- specifically in battery technologies, solar energy and biofuels -- before renewables can replace fossil energy on a large scale. In time, with the right investments and policies, the breakthroughs can happen but we are not there yet.

Moreover, the IEA estimates that 80 percent of emissions from the power sector in 2020 are already locked in because of existing power plants and new construction currently in the pipeline -- which would make it very challenging for emissions to peak in this decade and then decline per IPCC's stabilization scenario [PDF] to keep the mean temperature increase under 3 degrees C.

Can we rely primarily on energy efficiencies in the meantime? Up to a point, yes; but efficiencies are not a panacea for all our energy problems. Energy efficiencies are known to cause rebounds, which can reduce potential energy savings by stimulating additional energy use. Rebounds can occur economy-wide as well as at the level of individual consumers and firms.

On the materials side, most of us have participated in recycling for many years. And yet, closing the materials loop remains a challenge. Recycled materials clearly produce lower environmental impacts, including lower greenhouse gas emissions. But supplies are still limited, costs can sometimes be higher, and further technological advances are needed to make the collection and processing of recyclables more efficient. There are many similarities between the market struggles of recycled materials and renewable energy.

What about the food sector? Isn't it more sustainable to eat organically produced food? Yes, with the caveat that several studies have noted lower efficiencies and yields in organic production -- so land use could increase as organic production expands. As far as locally produced food, greenhouse gas emissions are not significantly lower compared to food brought in from elsewhere -- unless the food is air-freighted -- and could be higher in some cases because of inefficient local transport.

My point is not that there are no good solutions -- there are many brilliant ideas in the pipeline. But virtually every solution available today is either incomplete or has a downside, and is not quite ready to operate at a scale that can make a big difference. We should still support the most promising solutions with our purchasing power and vote for policies that can take them further. We should certainly choose the environmentally preferable products when we do need to buy something.

But the question that I struggle with is this: Can we really consume our way to sustainability? Many of us are involved in helping companies reduce the impacts of their production, but what about when we go home and turn into consumers? Is sustainability only about what we consume and not how much we consume?

When I first started thinking about sustainability in the late 1990s, it occurred to me that we are caught in a consumption trap. As consumers we control the fate of the economy -- we are responsible for two-thirds of all economic activity (in the U.S.). We also want the latest conveniences and comforts, which in turn requires increasing incomes. The result is a virtuous cycle of economic growth and consumption -- except for worsening climate change and resource depletion that can't be reversed.

Capping greenhouse gas emissions globally through tradable permits would have been one way to cut through this complexity and impose a strict limit on what economic activity can do to the planet's climate. As the world's major emitters mull over lesser options at the United Nations climate conference, I am reminded of the economist Herman Daly's words from the 1970s: "Sustainable development is about sufficiency as well as efficiency."

Kumar Venkat is president and chief technologist at CleanMetrics Corp., a provider of analytical solutions for the sustainable economy.

Will 10 billion of us have enough to eat?

Published at: http://www.sustainablebusinessoregon.com/columns/2011/11/will-10-billion-of-us-have-enough-to.html

When the world's seven billionth person was born last month, that event was merely a signpost along a much longer and arduous path. The world population is projected to reach 9.3 billion by mid-century and exceed 10 billion by 2100. Among all the questions about how such a large population can actually exist (and dare I say thrive), here is a basic one: Will 10 billion of us have enough to eat?

The The Food and Agriculture Organization’s business-as-usual scenario forecasts that annual food production by 2050 will need to rise 70 percent compared to 2006. Annual cereal production will have to rise by nearly one billion metric tons and meat production by 200 million metric tons. The World Wildlife Fund’s Jason Clay estimates that we will need to produce 2.5 times as much food in the next 90 years as we have in all of the last 8,000 years combined.

Food production already uses 58 percent of Earth’s habitable land and consumes 67 percent of the fresh water. Climate change goes hand in hand with this. According to the FAO, agriculture directly contributes 13.5 percent of global greenhouse gas emissions. With the additional impacts of land-use changes, food processing and the rest of the value chain, the provision of food likely exceeds a quarter of all greenhouse gas emissions.

Given the limited availability of additional land and water -- and really nowhere to go as far as higher emissions -- two distinct narratives are emerging about how we should respond to these projections.

One of these takes the population and consumption trends as given, and focuses on how to increase production to meet the rising demand for food. The FAO is part of this thread, and has highlighted the big question of how to achieve the yield and productivity gains needed to feed the world sustainably in 2050. It points out that agricultural productivity growth over the last half century was the real reason why the rapidly rising demand for food, feed and fiber could be met.

Since yield growth rates have slowed down for major commodities such as cereals, the FAO advocates technologies that can boost crop yields -- including crop management practices and plant breeding. One of the opportunities here is to reduce the current 23 percent yield loss across major cereals due to insects and disease.

Clay points out that 10 crops account for nearly 90 percent of all calories and only two of these are on track to double production by 2050. He believes that we can’t afford to leave genetics -- including both traditional plant breeding and genetic engineering -- off the table.

The other narrative takes issue with both the demand projections and the solutions. Isobel Tomlinson of the UK Soil Association has argued that the FAO’s projections reflect its view of the most likely future but not necessarily the most desirable one.

One point of contention is the expected dietary changes in developing countries, with an increasing share of calories coming from livestock products such as meat, milk and eggs. This, in turn, requires a much larger increase in the demand for grains used as animal feed -- about a third of the grain produced today is consumed by domestic animals. This is one of the major drivers behind the need for a big jump in crop production.

Tomlinson and others have suggested that we will not be able to feed 10 billion people on a Western diet without some combination of massive land-use changes -- with deforestation leading to biodiversity and carbon losses -- and very intensive crop and livestock production. There is at least a likelihood that this will not be feasible within the energy, water and greenhouse gas emissions constraints that agriculture might have to operate under in the coming decades.

This alternative perspective advocates changing the definition of the problem itself. Slowing down -- and perhaps even reversing -- the emerging dietary trend is clearly a part of this approach. In addition, Joel Cohen of Columbia University argues that the demographic trends are not cast in concrete and population growth can in fact be slowed down with relatively small investments in contraceptives, education and other initiatives. There are substantial uncertainties about population estimates, and Warren Sanderson of Stony Brook University suggests that educating the masses is the best insurance against uncertainties: This reduces population growth and increases adaptability to environmental changes.

On a less grand scale, reducing the unacceptably high levels of wasted food could be another benign way to reduce demand. This is a problem not just in developed countries, but surprisingly also in developing countries where inefficient supply chains are a major reason for food loss. If the demand for food could somehow be capped, more earth-friendly production methods might become viable. Organic production today typically produces lower yields than conventional production and therefore it is less likely to play a role in scenarios of dramatically higher production.

Long-term projections are dicey at best, but there is every indication that feeding the world’s population at the middle or end of this century could be enormously difficult. The two narratives I have presented here are about fundamentally different strategies: one is adaptation (increase production) and the other is mitigation (decrease demand). There are interesting similarities with the climate change problem in terms of both scale and strategies. And what we have learned from climate change suggests that the right answers will involve both adaptation and mitigation. How we frame this problem and what solutions we back will likely change the world in fundamental ways.

 

Kumar Venkat is president and chief technologist at CleanMetrics Corp., a provider of analytical solutions for the sustainable economy.

Closing the Materials Loop

Published at: http://www.environmentalleader.com/2011/11/14/closing-the-materials-loop/

While shopping for copy paper recently, I noticed that recycled multipurpose paper is often priced 50 percent higher than comparable virgin paper. A pack of mechanical pencils made with recycled plastic costs significantly more than the same brand made with virgin plastic. We have heard a lot over the years about the benefits of closing the materials loop. This means not just diverting waste from landfills but also producing and purchasing products with significant recycled content. But why do the price signals appear to be so skewed?

Let us first establish the environmental benefits of using recycled materials in new products. The chart below shows typical cradle-to-gate GHG emissions for the production of several common materials using both virgin and 100 percent recycled inputs. Using GHG emissions as a proxy for overall environmental footprint, the recycled materials clearly have a much lighter footprint. And this does not include the additional benefits of recycling such as avoided landfill emissions for decomposable materials.

  

In an ideal world, prices would follow the same trend as environmental impacts and recycled materials would offer a significant economic advantage. The real world is messier and prices have other strong drivers, which makes it a challenge to reduce the environmental footprints of the materials that we consume.

Why is recycled paper typically more expensive than virgin paper?  An examination of the supply chain shows that there are several problems. The low price of waste paper often does not justify the labor-intensive collecting and sorting steps, limiting the supply of recycled fiber. Additional processing steps such as deinking add further to the cost. Paper recycling also has an intrinsic problem as the fibers become too short to be useful after about 4-6 cycles, and office shredders reduce recycling potential by cutting the lengths of individual fibers. The market is adjusting to some extent by diverting an increasing share of waste paper to China, where lower labor costs as well as government subsidies may be involved in cutting the cost of recycling.

While pre-consumer waste is typically homogenous, well-sorted and in high enough concentrations – and thus easier to recycle – post-consumer waste is heterogeneous, dispersed and subject to contamination. The cost differential between these two material paths explains why many manufacturers find it easier to incorporate pre-consumer waste in their upstream supply chains.

Plastic recycling faces some of the same challenges as paper recycling. Both paper and plastic waste command less than four percent of the market price for finished recycled materials (paper or resin) – much of the return goes to the value added after collecting and sorting. This minimizes the incentives for increasing the supply of post-consumer waste such as used PET bottles. In addition, most plastic recycling is actually a one-time downcycling for various reasons – including the fact that plastic resin can undergo thermal degradation during recycling.

Except in the case of certain plastics, virgin and recycled materials perform identical functions and are substitutable for each other. The supply of virgin material often far exceeds the supply of recycled material, and global demand is generally high enough to consume all available production. Since the materials are substitutable, at the margin, the recycled material should have the same price as virgin material. A case in point is the price of recycled PET resin, which appears to follow the price of virgin resin with a time lag of about two months.

Similarly, in the glass industry, prices for cullet (crushed glass) are set by the combined price of raw materials displaced in order to be competitive with readily available and inexpensive materials. Recycled metal costs less to produce, but can command higher prices when overall demand for the metal goes up. Secondary aluminum ingot was priced recently at seven percent below primary aluminum.

Since recyclables are used as a marginal supplement in material supply chains, any fluctuation in the overall market demand for a material will result in a much larger and amplified fluctuation in the demand – and therefore the price – for the recycled material. This lack of price stability could discourage companies from incorporating higher levels of recycled content in their products.

In theory, any increase in the demand for a recycled material will increase its market price and prompt some users to switch to the lower-cost virgin material until the two prices are nearly the same again. When prices for recycled materials are persistently higher than virgin materials, it is often due to specific demand for recyclables driven by corporate green initiatives. This, ironically, can sometimes have detrimental effects for closing the loop. Rising prices for recycled PET has prompted Coca-Cola to reduce the recycled content in its bottles to five percent, half of what it was five years ago.

A review of the literature on the economics of waste and recycling shows that there are two principal reasons why recycled materials are not sufficiently competitive. One is simply that the prices of virgin materials are often below the social costs of their production, which discourages socially profitable recycling and limits the supply of recycled materials. The other reason is that the scale economies for virgin production cannot be easily replicated or overcome in the more spatially diverse and labor-intensive recycling industries, even after taking into account the energy cost savings in the recycled path.

There are, in fact, striking similarities between the market struggles of recycled materials and renewable energy:

Recycled Materials	Renewable Energy
Spatially diverse and dispersed material sources.	Spatially diverse and dispersed energy sources.
Supply subject to fluctuations due to reliance on secondary market for raw materials.	Supply subject to daily and seasonal fluctuations.
Currently a marginal, supplementary source.	Currently a marginal, supplementary source.
Competing with a large, reasonably stable supply of virgin materials.	Competing with a large, reasonably stable supply of fossil fuels.
Competing with the subsidies, tax preferences and externalized costs of virgin materials.	Competing with the subsidies, tax preferences and externalized costs of fossil fuels.
Often selling at a premium in order to satisfy the green market niche.	Often selling at a premium in order to satisfy the green market niche.
Price signals typically do not reflect the environmental benefits.	Price signals typically do not reflect the environmental benefits.
Further technological advances are still needed to make the collection and processing of recyclables more efficient.	Further technological advances are still needed to make the generation, storage and transmission of renewable energy more efficient.

 The solutions in the two markets are likely to be similar as well: Internalize more of the real costs, remove subsidies and tax preferences, fund the development of next-generation technologies, and ensure adequate incentives throughout the supply chain (for example, at the waste collection and sorting stages). Some combination of all of these will be needed to get the price signals right – which is key to letting the markets lead us to a more resource efficient economy.

_______________________________

Kumar Venkat is president and chief technologist at CleanMetrics Corp., a provider of analytical solutions for the sustainable economy.

CleanMetrics releases industry-first business analytics solution for waste reduction & resource efficiency

More details in our news release: http://www.cleanmetrics.com/pages/CleanMetrics-MetaFlowScope-NewsRelease.pdf

The Anatomy of Food Waste

Published at: http://www.environmentalleader.com/2011/09/28/the-anatomy-of-food-waste/

Consider this. There is one economic sector that is essential for survival and accounts for a considerable share of our daily expenses and GHG emissions – and some 28 percent of the production in this sector (in the US) is never consumed. If you haven’t guessed it already, that would be the food sector.

Our analysis of USDA’s food loss estimates at the retail and consumer levels for 2009 shows that the avoidable food waste in the US amounts to as much as 50 million metric tonnes annually. The chart below shows the breakdown of avoidable waste that we calculated from the USDA data for most of the common food commodities (after excluding unavoidable waste such as inedible parts of food and cooking losses).

 

 

The implications of this waste are significant. At least 123 million metric tonnes of CO2e are added to the atmosphere each year from the production, transport and disposal of the uneaten food – this translates to over 13 percent of all food-related emissions in the US and about 1.5 percent of total US emissions, and most of these emissions come from the production stage. The chart below breaks down these emissions by life-cycle stage and commodity type.

A preliminary cost estimate suggests that consumers and businesses are wasting nearly $200 billion worth of raw food commodities annually. If we were to include other food commodities that are produced and wasted in smaller quantities, as well as other emission sources such as additional processing, packaging and cooking, the overall cost and climate change impact of food waste would be higher than the estimates presented here.

 

 

Food and beverage products are unique among consumer goods in that a large slice of production is never consumed. Fresh, perishable foods are wasted in much larger quantities than canned or dry goods. Losses from spoilage, cooking and preparation tend to be higher in households because restaurants and institutions manage their inventories and production much better and use more pre-trimmed/pre-portioned commodities. On the other hand, plate loss is typically higher in a commercial or institutional setting because serving sizes do not necessarily match individual requirements.

Apportioning the food waste burden between consumers and businesses is a difficult task because of limited data and uncertainties. Based on a review of food waste research and food expenditure data, it is likely that pre-consumer food waste represents a tangible opportunity for restaurants, retailers and institutions to save over $30 billion annually and cut national food-related emissions by over 2 percent – about 20 million metric tonnes of CO2e. This could be as big an opportunity on both the financial and environmental fronts as any other initiative currently on the table for the food industry.

A much larger share of the food waste burden rests with consumers, counting household food waste and all of the plate loss away from home. Since consumers do not have the tools and systems to manage their inventories and food preparation, putting a dent in this part of the waste will require a combination of education, the availability of more optimal portion sizes away from home, innovative food packaging/preservation techniques, and perhaps simple web or mobile apps that can help consumers manage home food inventories. Cutting household waste in half could deliver annual savings of $600 per family, plus a further 3.5 percent reduction in national food-related emissions.

So there it is. If reducing GHG emissions is not a sufficient incentive, then let us do it to save money and free up valuable productive resources for better uses.

Kumar Venkat is president and chief technologist at CleanMetrics Corp., a provider of analytical solutions for the sustainable economy.

Scope 3: Pivoting to Material Efficiency

Published at: http://www.environmentalleader.com/2011/08/24/scope-3-pivoting-to-material-efficiency/

The upcoming release of the scope 3 emissions reporting standard from the GHG Protocol is significant for two reasons. One is the more obvious reason: The larger part of emissions resulting from a company’s operation usually belongs in scope 3, so this is an essential component of a complete corporate GHG inventory. But many companies across the economy will require a strong business case for undertaking this potentially arduous task, so we need another reason for even talking about this.

The second and more important reason for developing scope 3 inventories is to open up entirely new opportunities for efficiencies and cost savings – and certainly emission reductions. The traditional scope 1 and scope 2 inventories shine a spotlight on energy consumption and provide a basis for managing energy use within an organization – which can lead to meaningful energy efficiency improvements, adoption of renewable energy sources, and so on. Scope 3 inventories can potentially do the same for material use, and allow us to pivot from energy efficiency to material efficiency.

For companies in many industries, scope 3 emissions will be dominated mainly by the inflow of materials from the upstream supply chain and, to a smaller extent, the outflow of materials or products downstream. The upstream emissions will be a result of the embodied energy and process emissions associated with the extraction and manufacture of the incoming materials. The downstream emissions will depend on the fate of the materials after they leave the organizational boundary, including how the materials are treated at the end of life. Leaving out the use-phase emissions – which can be quite large for companies making products such as clothes and appliances, and must be addressed primarily at the product design stage – and other sources such as business travel, making a significant dent in scope 3 emissions will require a new focus on material efficiency.

What does material efficiency mean? On the upstream side, it means using smaller amounts of material inputs to produce the same quantities of finished products or to deliver the same utility. It can also include use of alternate raw materials that may have lower environmental footprints, such as certain engineered materials, recycled materials and refurbished components. Another example is the use of redesigned packaging that saves materials upstream while allowing for more optimized product distribution downstream. Material efficiency can also be improved by diverting scrap and used materials from the normal waste stream: one company’s manufacturing waste could become someone else’s raw material. Most of these resource savings and emission reductions are capable of producing concomitant economic benefits as well.

How large is the economy-wide potential for emission reductions and cost savings? A recent study conducted for Defra (the UK department for environment) calculated that UK businesses could save over $63 billion annually by implementing waste reduction through process efficiencies – essentially delivering the same products while using less material – and nearly half of that would be available immediately at little or no cost. If we were to extrapolate this to the size of the US economy, waste reduction alone could yield annual savings of over $400 billion and cut GHG emissions by 6-7 percent.

Opportunities for waste reduction cut across many sectors in the economy. The WellMet2050 program at the University of Cambridge points out that about one-quarter of liquid steel and aluminum never make it into a product and most products could use one-third less metal without loss of performance. Altogether, the potential for reducing metal use is as high as 50 percent.

A recent analysis by the Waste & Resources Action Program showed that nearly $20 billion worth of food and beverages are wasted annually in the UK (including waste at the consumer level), amounting to three percent of national GHG emissions on a life cycle basis. Our internal study of US food waste came to a similar conclusion: approximately two percent of GHG emissions in the US could be attributed to wasted food. Food waste due to trimmings, spoilage and other reasons can be as high as 10 percent in commercial food service.

It is also important to recognize that not all waste is equal. When the waste stream consists of many different materials or commodities (as in the case of food waste), the economic values and environmental footprints of the waste components can vary widely. This, of course, implies that waste reduction efforts must be prioritized by material or waste type in order to deliver the highest returns.

Direct reduction of material use and waste is just one part of the material efficiency solution. Given that US industrial facilities generate 7.6 billion tons of solid waste each year, waste diversion is orders of magnitude larger in terms of material flow but is thought to have much smaller economic value. It is likely that valuable materials in useful concentrations are embedded in waste streams. Although markets are emerging where waste can be traded as useful raw material, most companies have limited knowledge of their waste composition and how to separate out the marketable portion of the waste stream.

All of this suggests that material efficiency presents a potentially large business opportunity, but we have thus far lacked the framework and tools to systematically address it. A detailed scope 3 GHG inventory can establish a baseline for emissions from material use, and highlight regions of high emissions both upstream and downstream. In conjunction with other analytical tools capable of suggesting optimizations in the flow and use of materials, scope 3 inventories can be part of an overdue solution for advancing the efficiency of material use.

Kumar Venkat

Is sustainability all about the supply chain?

Published at: http://www.environmentalleader.com/2011/07/21/is-sustainability-all-about-the-supply-chain

A manufacturer of home decorative items engaged my company sometime ago to conduct a scope 1 and scope 2 GHG emissions inventory, mainly to meet the requirements of a retailer’s sustainability scorecard. The manufacturer was eager to take this a step further and engage 20 of their key suppliers and put together a scope 3 emissions inventory based largely on primary data. In the end, only three of those suppliers signed up and the effort went nowhere. These small companies couldn’t see an immediate benefit to spending time and money on this, and our client wasn’t large enough to convince them otherwise.

Lack of supply-chain visibility is a common problem in other sectors. In the food and beverage industry, food ingredients are generally purchased on the open market and often through third-party distributors. The actual mix of producers can change from season to season or year to year – it is next to impossible to even know who produced an ingredient for a particular batch of your product, let alone work with that producer on sustainability.

If your company is not named Wal-Mart, Procter & Gamble, Unilever, Pepsi or something similar, the upstream supply chain might look rather opaque or the upstream suppliers might not be in a position to cooperate on sustainability initiatives. There are really two variables at play here. One is sheer size: Large companies will always get more cooperation out of their suppliers than small and medium enterprises. The second variable has to do with where a company is located on the supply chain. Companies that are closer to the consumer – such as retailers – can often identify their immediate upstream suppliers more easily. Companies that are both large and close to the consumer have a unique capacity to mobilize their suppliers in search of supply-chain-wide efficiencies.

This, of course, leaves a large part of the economy to fend for itself when it comes to environmental sustainability. I have seen many instances of smaller companies struggling to get basic process information from suppliers in order to complete a product life cycle assessment. Asking the same suppliers to participate in efficiency improvements – some of which may require upfront investment and possibly payback periods greater than a year – is simply not realistic in most cases.

The obvious solution for most SMEs is to look inward, and focus on design and process improvements within the boundaries of their own organizations. But isn’t sustainability all about (or mostly about) the supply chain? The short answer is, yes and no.

The supply chain provides the context in which a company can identify its most significant environmental impacts as well as opportunities. Most of the improvements that a company can make in this context will be within its own boundaries where it has full control.

There is in fact an excellent analogy for such a paradigm in the design of microprocessors and other complex chips in the semiconductor industry (where I spent two decades before starting CleanMetrics). The process there is heavily data-driven, and a typical chip is partitioned into many different subsystems – just like a supply chain. Engineers working on any one subsystem usually start with an approximate data model of the other subsystems while they design and optimize their own subsystem – similar to using secondary data to model other parts of the supply chain outside the organizational boundary. In chip design, more accurate data is normally used in later stages for verification and fine-tuning of the full system.

This highly successful methodology essentially breaks down a complex system into smaller and simpler pieces that can be worked on independently. A similar approach can provide an adequate basis for serious resource optimizations in the sustainability domain – leading to both cost savings and smaller environmental footprints. The key is to develop comprehensive and widely available industry-average life-cycle data for all common (and some uncommon) materials and processes, including data unique to specific sectors such as construction, food, packaging and apparel. Ideally, the data model would also account for important variations in production methods, geography, climate and other parameters.

Armed with a life-cycle inventory database that can provide secondary data for most supply chain functions, potential hot spots and areas of concern can be identified. Individual companies can focus on quantifying and optimizing their part of the supply chain – in context – without heavy dependence on primary data from many other companies. Thus, the iterative analysis and optimization loops can be smaller, faster and manageable – remaining within the boundaries of a company and selectively including other companies when optimization opportunities are identified at a broader level.

Companies can use this analytical framework to explore their resource use without reference to specific suppliers, and evaluate a full range of solutions to improve resource productivity – such as use of alternate materials and ingredients, changes in manufacturing processes, transition to renewable energy, internal recycling of materials and energy, waste reduction/diversion, and redesign of packaging. Most importantly, much of this can be analyzed and decisions can be made without unnecessary information flows up and down the supply chain.

The best way to support sustainable production is by developing information systems that are simple and elegant, rather than unduly complex. Part of this can be achieved by using modeling techniques to match accuracy levels to the needs of the problem at hand. An elegant system would also keep information flows and overheads to a minimum, so that companies in a broad swath of the economy can begin to make progress without excessive effort.

Kumar Venkat

EWG's Meat Eater's Guide to Climate Change

Sign up to receive info on EWG's upcoming Meat Eater's Guide to Climate Change & Health http://t.co/JAcI67x - based on CleanMetrics food LCAs.

Framing the Food Sustainability Challenge

Published at: http://www.environmentalleader.com/2011/06/14/framing-the-food-sustainability-challenge/

Here is a mind-boggling estimate from Jason Clay of the World Wildlife Fund: We will need to produce 2.5 times as much food in the next 90 years as we have in all of the last 8,000 years combined. Or, more than a factor of three increase in annual production in this century alone. This is a direct result of the world’s population exceeding 10 billion by end of this century, accompanied by a doubling of per-capita consumption.

Food production already occupies 58 percent of Earth’s habitable land and accounts for 67 percent of fresh water consumption. Climate change goes hand in hand with this. According to the FAO, agriculture directly contributes 13.5 percent of global GHG emissions. With the additional impacts of land-use changes, food processing and the rest of the value chain, the provision of food likely exceeds a quarter of all GHG emissions.

Given the limited availability of additional land, water and energy – coupled with the need to first cap and then reduce GHG emissions – much of the daunting challenge of sustainably feeding the world’s population will have to be met through dramatic increases in efficiencies. We can talk about increasing two very different types of efficiencies. One is the efficiency of food production and supply. The other is the efficiency of food consumption.

The supply-side efficiencies depend on better technologies and practices on multiple fronts, including: increasing the productivity of land and input use by a factor of 2-4; cutting waste and spoilage in processing, storage and distribution (especially in developing countries); and leveraging carbon storage in soils (potentially as much as 6 Gt of CO2e/year) to reduce net agricultural emissions.

This will involve many different technologies, but chances are that some of the ideas commonly associated with food sustainability – such as organic production, locally produced food, grass-fed or free-range animals, and the like – are unlikely to make a big difference. Here is why:

–Life-cycle assessments of organic production – including our recent study – point to a number of common inefficiencies such as lower yields and higher on-farm energy use. Soil carbon sequestration from the application of manure and other organic inputs remains the one clear advantage in the first few decades of transition after converting conventional croplands or other degraded lands to organic production.

–Transport generally contributes less than 10 percent to life-cycle GHG emissions and is therefore not a high leverage point. Moreover, local food production often suffers from inefficient distribution compared to the highly streamlined logistics of long-distance goods transport. The one significant exception is air-freighted food.

–Recent research has shown that grass-fed beef raised in established pastures in the Upper Midwest produces about 30 percent higher GHG emissions than comparable feedlot-finished beef, primarily because of the lower-quality diet. On pastures transitioning to management-intensive grazing, the pastured beef produces 15 percent lower net emissions than feedlot beef during the transition period due to increases in soil carbon – still far short of the efficiencies needed for beef production.

–Our analysis of a few instances of free-range poultry and swine production suggest that the feed input requirements are similar to confined systems (the animals get little or no nutrition from foraging), but the efficiency of food production is lower. (This is only an efficiency argument and not meant to condone unethical treatment of animals.)

If we move away from rigid, binary classifications of food production – such as organic and non-organic – we might agree that the solution space is more continuous and larger than previously thought and includes many more possibilities. For example, it should be feasible to design highly optimized hybrid farming systems that combine management practices to increase soil organic carbon stocks with ultra-efficient conventional systems to produce high yields at a lower footprint.

WWF’s Jason Clay lists crop genetics – including GMOs – as the most important supply-side strategy to freeze the footprint of food. Genetic engineering in the food sector is the big elephant in the room, not unlike nuclear power in the energy sector: The upside can be wonderful and the downside can be frightening. But we are already using genetic manipulation widely and will likely need to focus on safe and strategic ways to integrate it into optimized food systems to improve the yields of high-volume crops.

The consumption-side efficiencies involve finding ways to meet nutritional, taste and aesthetic needs at the lowest possible level of resource use and cost to consumers. We know that food consumption is going to increase dramatically in the coming decades and some of the key drivers – such as the general population trajectory, higher per-capita consumption and the need to provide basic food security to everyone – are already well established. However, there are areas where consumption could be made much more efficient and thereby relieve some of the immense pressure on the supply side.

The first of these areas is food waste. A recent report estimated that food waste in the UK is large enough to account for three percent of domestic GHG emissions. Our analysis of US food waste came to a similar conclusion: about a third of the food reaching the retail stage is ultimately wasted, amounting to at least two percent of national GHG emissions on a life cycle basis.

While most of the food waste in developing countries occurs in storage and distribution (which is a supply-side problem), the biggest share of waste in developed countries occurs at the consumer level both at home and away from home. There is clearly a need for smart food management solutions that consumers, retailers and the food service industry can all use to get the most out of the food that we are already producing. Any significant reduction in food waste will free up resources that can be used to feed more people elsewhere.

A second consumption-side issue is how we obtain our nutrition. Our analysis of USDA’s new MyPlate framework for building healthier diets shows that GHG emissions (and indirectly agricultural resource uses) are dominated by protein consumption. In a typical diet conforming to the MyPlate recommended amounts for each food group, the largest share of emissions comes from animal proteins. We can cut per-capita agricultural emissions and resource use significantly by getting most of our proteins from plant sources. National food service companies such as Bon Appétit and Sodexo, as well as mainstream food writers such as Mark Bittman of the New York Times, are now advocating plant-based diets augmented with small amounts of meat.

As developing countries become more affluent, consumers there will increasingly need to contend with the same consumption-side issues. While much more food needs to be produced in the coming decades using both existing and yet-to-be-developed technologies, we also need to make the most of every pound of food that we already know how to produce.

We do have an existing model for a combined supply-side and consumption-side solution in the energy sector: vigorously promote energy efficiency and conservation while expanding the energy supply through new technologies and investments. Why not take the same approach when it comes to food?

Kumar Venkat is president and chief technologist at CleanMetrics Corp., a provider of analytical solutions for the sustainable economy.