Sustainability Initiatives Continue to Drive Growth of Carbon Allowance Market

The market for voluntary carbon credits continues to grow, fueled by an ever-increasing number of corporate responsibility initiatives. According to data compiled in State of the Voluntary Carbon Market 2009, a report published by Ecosystem Marketplace, trading volume on the world’s voluntary carbon markets nearly doubled, surging from 65 million tons in 2007 to 123 million tons in 2008. Increased volume is a clear indication that the number of organizations aligning sustainability with their core operating functions continues to trend upward.

“The fact that the volume of the market has grown even in the most stressed times indicates that people are looking at the sustainability of their business,” said Caroline Angoorly, head of Environmental Markets for North America at JP Morgan, a report contributor.

The U.S. remains the largest provider of voluntary offsets (28 percent) and, collectively, U.S.-based companies are the largest buyers (39 percent) according to the report. Asia contributed 45 percent of all carbon credits bought on the over-the-counter (OTC) market in 2008, and the Middle East emerged as a key source of credits, supplying 15 percent of OTC transaction volume in 2008.

Experts suggest that compliance with existing (European Union, Australia) or proposed (U.S.) climate change regulations will drive increased carbon market activity this year. As more EHS professionals discover the benefits of sustainable operations, it is likely that efficiency and cost savings will be the primary driver for sustainability initiatives, which will be good for the enterprise, good for the environment and good for the long term viability of carbon markets.

1 comment May 29th, 2009

Bottom Line Benefits Continue Momentum for Corporate Sustainability

I’ve noticed that organizations are continuing to invest in corporate sustainability programs, including robust environmental, health and safety (EHS) information management systems, despite the challenging market environment. Momentum for sustainability continues because corporate decision makers understand those initiatives deliver both immediate and long-term benefits to the enterprise.

Authors Bruno Berthon and Eric Lowitt, provide ample evidence of sustainability benefits in “Don’t Give up Sustainability Now or You’ll Pay Later,” an article recently published in Forbes Magazine.

Berthon and Lowitt flatly assert, that “sustainability is closely aligned with critical moves companies need to make in a downturn–moves like doing more with less, returning to basics and investing prudently.”

Sustainability supports solid goals that are good for businesses in any economic environment. For instance, corporate managers are always looking for ways to reduce waste and inefficiency to enhance their profit margins. A growing number of companies have discovered that sustainability can generate associated cost reductions and operating efficiencies.

Building Sustainability in Hard Times, a recently published ESS white paper, provides solid evidence about the correlation between sustainability and profitability.

Berthon and Lowitt also suggest that sustainability offers other business benefits, including opportunities for:

• Business growth in the expanding market for consumer products and services that improve energy efficiency; and
• Partnerships that influence future government regulations. Numerous ESS clients have joined the U.S. Climate Action Partnership, a nonprofit that has worked closely with federal regulators to craft climate change legislation under consideration in Washington.

In times like these when companies are looking for strategies that deliver reliable benefits, experts like Berthon and Lowitt show that investments in sustainability – including EHS information management – clearly deliver bottom-line results that can help companies survive the current market instability and provide a foundation to help your business thrive for many years to come.

2 comments May 18th, 2009

Hong Kong Regulation Ties Future Utility Rate Hikes to Emission Reductions

A new regulatory scheme adopted by the government of Hong Kong has attracted the attention of experts who follow the electric utility industry in Asia. This approach, called “scheme of control,” ties future electric rate levels to emission reductions by the territory’s electricity providers, CLP and Hong Kong Electric.

Scheme of control is an intriguing approach because of its carrot-and-stick approach to environmental oversight. It’s an especially interesting development because we’ve recently applied our solution to address the rapidly changing regulatory scheme in Hong Kong.

This may be a precursor of things to come for other utility companies.

According to an article from The New York Times, the agreement “authorizes the companies to charge electricity rates that will give them a 9.99 percent return on assets. If either company exceeds regulatory limits for any pollutant, however, it would be required to charge customers less, reducing its allowed rate of return by 0.2 to 0.4 percentage points.

“If the companies manage to cut their pollution rates more than required, then they are allowed to raise prices to the point where they effectively earn bonuses of 0.05 to 0.1 percentage point on their rate of return.”

With a strong incentive to reduce emissions, it won’t be surprising if Hong Kong Electric and CLP take steps to strengthen their pollution control programs so they meet their emissions reduction targets.

This is yet another example of rapidly changing worldwide regulatory requirements that are driving organizations to implement enterprise-wide platforms for EHS management and voluntary sustainability reporting. Under the Hong Kong scenario, EHS technology not only helps organizations save time and reduce operational costs; it also becomes a powerful driver for business opportunities that can provide significant long-term payoffs. With regulatory activity accelerating across the globe, a growing number of organizations are leveraging the power of EHS technology to generate those benefits and more.

We’ll continue to follow developments with Hong Kong’s implementation of this regulatory scheme to determine how it impacts the territories’ utility companies.

1 comment May 8th, 2009