Chinese Companies Turn to U.S. Technology to Support GHG Reduction Goals

Earlier this week, members of the Obama administration and representatives from China held meetings to discuss a variety of trade and commerce issues. Discussion topics included the administration’s interest in encouraging the Chinese to reduce their greenhouse gas (GHG) emissions. Of course, the official position of the Chinese has been to decline implementation of broad legislation mandating GHG reductions.

However, behind the scenes, some Chinese companies are quietly taking significant steps to manage GHG emissions.

For instance, companies like PetroChina, and its parent CNPC, launched major emission management programs several years ago, including implementation of enterprise-wide technology platforms that serve as the foundation for those initiatives. Although there has been little fanfare surrounding the company’s actions, it’s important to note that PetroChina’s program was a significant step that was taken without external prompting from government regulators. As a major player in oil and gas acquisition and distribution markets, company officials recognized the need to exercise responsible environmental stewardship in order to maintain its standing with its Western competitors.

In Hong Kong, officials earlier this year adopted a regulatory system that provides financial incentives for electric utilities to reduce emissions to regulatory limits. The long-term agreement between Hong Kong and electric generating companies CLP and Hong Kong Electric would allow the companies to adjust rates to generate a rate significant increase, plus a bonus if they reduce emissions below permitted levels.

Of course, ESS is providing technology solutions that support several of these groundbreaking initiatives. That’s why we’ve found it interesting to note that while government negotiators are debating climate change amid broad trade policies, Chinese companies are doing business with U.S. technology companies like ESS to support responsible corporate emissions management. We’re looking forward to many more opportunities to promote effective sustainability programs in China and elsewhere along the Asia-Pacific rim.

Add comment July 31st, 2009

ESS Named Emerging Leader for Enterprise Carbon Accounting Software

During the past few months, I’ve met with numerous corporate decision makers who are looking to align environmental, health and safety (EHS) concerns into their organizations’ core business operations. Many executives are looking for information technology solutions to assure efficient management and monitoring of sustainability-related issues. This trend is driving accelerated market interest in sustainability software platforms, especially in the U.S., thanks to the cap-and-trade legislation currently making its way through Congress.

That’s why I thought it would be helpful to share some insights from a recent analyst report by Groom Energy Solutions, Enterprise Carbon Accounting: An Analysis of Organization-Level Greenhouse Gas (GHG) Reporting and a Review of Emerging GHG Software Products. This report provides useful advice to help corporate decision makers choose the right software to support their carbon emissions management program. Enterprise carbon accounting (ECA) describes the process of calculating, managing, reporting, reducing and trading carbon emissions in compliance with cap-and-trade requirements.

Paul Baier, a Groom Energy Solutions vice president and co-author of the report, said it was designed to help CIOs, CFOs, EHS directors and other executives understand the drivers for GHG/carbon emissions tracking, calculation and reporting and to identify well qualified software vendors.

Key points from the report include:

• Just as organizations purchased financial accounting software to automate financial data management, companies will similarly invest in ECA software to automate the process of carbon data management.
• Companies will need to produce reporting that is based on accurate and verifiable carbon emission data. In that regard, carbon emissions will need to be as rigorously managed as revenue and expenses.

Not surprisingly, the report identifies ESS as an “emerging leader” based on criteria including strength of product/technology offerings, number of customer deployments, financial strength and corporate vision. We are pleased that Groom Energy has affirmed ESS market leadership at a time when a large number of organizations are looking to adopt technology solutions for carbon management. Our company has been at the forefront of the EHS software space for nearly two decades, and we look forward to helping organizations that are ready to navigate through a new generation of regulatory challenges.

Add comment July 14th, 2009

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

Earth Day and Your Business: Can Cutting GHGs Improve Your Bottom Line?

Is your enterprise ready to meet the challenges of a carbon-constrained business environment?

Earth Day 2009 arrives at a watershed moment for business and industry. If proposed U.S. regulatory changes are adopted, an organization’s ability to limit greenhouse gas emissions and other pollutants will be a factor in determining winners and losers in the new economy. Fortunately, a growing corporate sustainability movement – supported by many leading corporate CEOs — shows clearly that Earth Day’s goals aren’t just for treehuggers any more.

This year’s event offers an important opportunity to demonstrate how companies across industry sectors have taken a leading role in slowing the growth of greenhouse gas emissions. A growing number of organizations are participating in voluntary reporting programs sponsored by environmental advocates like the Global Reporting Initiative and the World Business Council for Sustainable Development. Investor-driven initiatives have resulted in companies publishing performance data from their sustainability initiatives.

It’s a sea change from the days when Earth Day symbolized inefficient, labor intensive regulatory compliance that increased operational costs without gaining any significant business benefit. Corporate sustainability is now recognized as an integral component of sound operational planning and execution. Soon it will be a key factor that will impact your company’s risk profile, brand viability, and its ability to attract capital.

ESS has supported the goals of Earth Day for nearly two decades. During that time, we have enabled thousands of organizations to improve emissions management performance, reduce compliance risk and achieve cost savings through improved information management. ESS’ integrated software platform provides up-to-date EHS data that supports better daily management decisions and empowers users to develop innovative practices to assure environmental best practices – including management of greenhouse gas emissions – and improve energy efficiency. We have even provided free downloads of our Waste Reporter software to help organizations fulfill requirements for the EPA Biennial Hazardous Waste Reporting.

Information management is the key to ensuring that your business can gain a competitive advantage in this rapidly-changing regulatory climate. We hope that this time next year, you will join us in celebrating your company’s success at transforming your environmental challenges into drivers for bottom-line success.

Do you agree that this Earth Day represents a historic opportunity for companies like yours?

2 comments April 21st, 2009

ESS Introduces White Paper to Help Businesses Prepare for Proposed Refrigerant Regulations

There has been lots of discussion about greenhouse gas (GHG) regulations, focused on proposals under consideration in Washington. However, there’s an equally important proposal under consideration in California that could have a significant impact on all industries whose air conditioning or refrigeration systems hold 50 pounds or more of a regulated or GHG refrigerant. California Global Warming Solutions Act of 2006 (AB 32) was introduced in 2004, and state officials recently completed public hearings to prepare for final implementation.

AB 32 is designed to reduce emissions of refrigerants with high global warming potential (GWP) from stationary refrigeration and air-conditioning systems through leak repair, reporting, improved refrigerant recovery rates and other approaches.

To help businesses prepare for anticipated regulatory changes, ESS has published a new white paper, entitled “Refrigerant Management: An ESS White Paper on Climate Change and the Bottom Line” that analyzes the state of regulations governing coolants for air conditioning and refrigerant units and provides timely advice to businesses that would be impacted if AB 32 were adopted in other jurisdictions.

“It is important for senior management to help the organization understand the big picture – details regarding the organization’s carbon management initiatives – and then they must know their own day-to-day responsibilities to support the initiative,” the white paper states.

The current AB 32 draft requirements for refrigerant management would effectively:
require facility registration or implementation fees, based on system size;
establish leak detection, repair verification testing, monitoring, and mandatory leak repair requirements.

Although California is the only U.S. state that is poised to adopt regulations governing refrigerants, experts I’ve talked to say that other states are likely to follow California’s lead, once AB 32 is implemented. We think this white paper is a must for any affected business owner who wants to prepare for the significant changes ahead.

I’m sure this informative white paper will provide useful information to guide you through the rapidly-changing regulatory environment. ESS was the first company to introduce software to support efficient refrigerant management and it remains the industry standard. Our experts have helped organizations avoid compliance risks while streamlining refrigerant management for over a decade.

1 comment April 3rd, 2009

Analysts Predict Carbon Market Growth to Hit $150BN Despite Downturn

The global downturn may have a dampening effect on most economic activity, but a pair of leading analysts predict the carbon emissions market will shrug off the effects of the recession to extend a steady pace of expansion into a sixth consecutive year.

The global market value of carbon allowances will increase to $150 billion by the end of 2009, a 27 percent increase, according to a report by market analyst New Carbon Finance. Businesses reported 4 billion metric tons of carbon emissions under national and international protocols and programs, a 42 percent increase compared to 2007.

Guy Turner, director of New Carbon Finance, said growth in the market for certified emission reductions (CER), the carbon credit currency used by the United Nations’ Clean Development Mechanism (CDM), will drive increased carbon credit market trades this year.

(CDM is an arrangement under the Kyoto Protocol that allows industrialized nations to reduce their overall greenhouse gas footprint by investing in projects that reduce emissions in developing countries.)

Neil Eckert, chief executive of Climate Exchange PLC, which owns and operates Chicago and European-based commodity exchanges where carbon emissions futures are traded, agreed with Turner’s assessment. “It is a pretty bullish market. The growth is not in a straight line and there are ups and downs, but overall there is a really healthy growth pattern.”

The chart above indicates that the total value of the global carbon market has grown from $1 billion in 2004 to $118 billion last year. The purple bar shows that European Union transactions accounted for $94 billion of last year’s total. This year, EU transactions are expected to post moderate growth. However, demand for allowances from U.S. and Australian buyers is expected to increase as those nations’ regulators prepare to implement national carbon emission cap-and-trade schemes.

Calculating the impact of carbon emissions on your business can be a substantial investment of time and staffing resources. If your jurisdiction adopted a cap-and-trade scheme this year, would your business be prepared to efficiently address the complex requirements for reporting carbon emissions? The price of inaction could be greater than you think, as reflected by the continued growth in the worldwide value of carbon allowances.

Add comment February 3rd, 2009

Deloitte Advises Companies to Consider Sustainability for M&A Deals

This week, I am attending a highly-regarded workshop for sustainability executives, sponsored by the AHC Group. I’m especially excited about the privilege of introducing Kathryn Pavlovsky, a principal with Deloitte’s Enterprise Sustainability Services group, who will give a presentation entitled “M&A Considerations Regarding Risk, Accounting Standards and Corporate Strategy.”

Why should executives be concerned about their organization’s sustainability performance in relationship to a merger or acquisition deal? Pavlovsky makes a very compelling case in a Deloitte white paper entitled “How Green is the Deal? The Growing Role of Sustainability in M&A.”

The paper, co-authored by Pavlovsky, Christopher Park, Kevin Lynch and Ron Millott, says the growing global focus on corporate responsibility and environmental compliance means that companies that have a favorable sustainability profile will be more highly valued either as a merger partner or an acquisition target.

“New and proposed changes to regulations are causing dealmakers to think more carefully about the implications of upcoming deals and — if necessary — alter their approach, as a recent energy industry deal highlights.

“Environmental matters are not new to M&A. Assessing the scope and cost of remediating soil and water contamination, for example, has long been part of the deal calculus. But today the requirements are increasingly far reaching, both in the industries affected and the types of exposures that companies face. In light of this, it’s important for both M&A buyers and sellers to understand the scope and impact of sustainability issues on the structure, execution, and value of deals.”

Deloitte’s conclusion serves to remind executives that more than ever, sustainability is an important business performance indicator that companies are leveraging to generate a wide spectrum of business opportunities and competitive advantages. In today’s business environment, that’s an advantage that’s hard to ignore.

Add comment January 28th, 2009

EPA Rule Could Reduce Production, Hike Costs of Popular Refrigerant

The U.S. Environmental Protection Agency (EPA) kicked off a public comment period regarding proposed rules that could result in some sweaty palms for homeowners, contractors, distributors and facility managers by next summer.

EPA’s new rule significantly reduces the amount of a hydrochlorofluorocarbon (HCFC) refrigerant substance that can be manufactured and bans imported supplies, starting next year. The substance, commonly known as R22 or HCFC22 is the most popular refrigerant used in residential and industrial air conditioning systems. EPA’s regulation would accelerate the existing phase-out quantities substances like HCFC22 that scientists believe contribute to ozone depletion.

The Montreal Protocol requires that U.S and other participating nations gradually decrease HCFC production starting in 2010, with a complete phase-out of HCFC-22 in developing nations by 2020.

Experts believe phasing out production and consumption of HCFCs could result in significantly higher costs for HCFC22. Eventually market forces would compel consumers to seek other alternatives that EPA officials believe pose less of a threat to the environment.

ESS been working with our customers for more than a decade to help them formulate operational strategies to minimize exposure to potential operational costs increases and supply disruptions for all refrigerants, including HCFC22. We suggest that your organization develop contingency plans for maintaining air conditioning systems once this regulation takes effect next year. In the meantime, you should also consider sending your comments about this proposed rule to EPA.

Add comment January 8th, 2009