Posts filed under 'Operational Risk Management'
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.
Tags: asia pacific china clp cnpc emissions management ess ghg emissions Hong Kong Electric oil and gas petrochina
July 31st, 2009
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.
Tags: Carbon Allowance Market climate change regulations corporate responsibility Ecosystem Marketplace sustainability voluntary carbon credits
May 29th, 2009
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.
Tags: china clp ehs management ghg emissions greenhouse gas Hong Kong Electric utility companies
May 8th, 2009
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?
Tags: earth day environmental challenges ghg global reporting initiative greenhouse gas emissions information management sustainability wbcsd
April 21st, 2009
Now that the U.S. Environmental Protection Agency (EPA) has established its intent to reduce air emissions from industrial and land transportation sources, the agency is proposing to broaden its recent assault on carbon by launching a campaign to improve air quality at major port areas.
EPA recently announced plans to create a 230-mile enforcement zone around most of the nation’s coastline where regulators would enforce air emissions standards around major port areas. The regulations would primarily target large commercial ships and would apply to both U.S. and internationally-chartered vessels.
Under EPA’s proposal, there would be stricter limits on the sulfur content of fuel used by vessels starting in 2015. A year later, new ships would be required to install advanced emission-control technologies to limit sulfur emissions.
Engines on U.S.-flagged oceangoing vessels are currently subject to emission standards that rely on engine-based technologies to reduce emissions.
According to a study by the International Council on Clean Transportation, commercial ships release more sulfur dioxide particulate than the combined total of all land transportation vehicles. The study also indicated that ships produce an estimated 27 percent of the world’s nitrogen oxide emissions.
The primary driver for this action: EPA Administrator Lisa Jackson estimated that 40 of the 100 largest U.S. ports are located in metropolitan areas that fail to meet federal air quality standards. Once the current business downturn abates, industry and government officials say global trade could double the volume of shipping traffic and further exacerbate persistent air quality concerns.
The agency’s proposal would likely drive port authorities, shipping companies and support businesses to launch initiatives to measure and monitor emissions to establish an emissions inventory for the affected area and comply with federal tougher emissions standards.
The World Shipping Council, a trade organization representing international container ship operators, is not opposed to the proposed standards. International shipping companies participated in discussions regarding the proposed regulations prior to EPA’s announcement.
Tags: air emissions standards air quaility carbon reduction epa sulfur emissions U.S. ports vessels world shipping council
April 16th, 2009
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.
Tags: ab 32 california global warming solutions act climate chanage ghg regulations greenhouse gas regulations gwp refrigerant management
April 3rd, 2009
It’s no secret that business decision makers believe the best way to survive the current economic morass is to ensure your organization executes the time-tested “do more with less” mantra.
In that same manner, investments in the environmental, safety, and social domain —including those that are IT-related— are being carefully scrutinized, even as companies take steps to minimize environmental risk exposure and ensure transparent sustainability to satisfy investor and stakeholder demands.
ESS has documented how companies are bridging the gap between streamlined sustainability and efficient EHS information technology in a newly-published white paper entitled, “Building Sustainability in Hard Times.”
The report reminds decision makers that there’s an inextricable link between driving sustainability and having the data management systems in place to measure and drive daily performance. Robust EHS information management has a proven track record for delivering increased efficiency and reduced costs even in a tough business environment.
“Building Sustainability in Hard Times” provides a detailed roadmap for implementing a technology solution that meets your organization’s needs and shows how to leverage EHS IT assets to generate benefits such as:
- Uncovering operational risks
- Robust baseline data to support strategic decisions
- Eliminating risks to an organization’s license to operate
- Supporting a solid climate change strategy
- Streamlining and reducing compliance costs
If you want to know more about leveraging EHS technology for a competitive advantage, I highly recommend you take a look at this outstanding report.
Tags: climate change strategy compliance costs ehs technology ess sustainability white paper
March 5th, 2009
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.
Tags: cap and trade carbon credit carbon emissions carbon market cdm cer climate exchange plc new carbon finance
February 3rd, 2009
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.
Tags: air conditioning epa hcfc hcfc22 hydrochlorofluorocarbon ozone depletion r22 refrigerants
January 8th, 2009
A few days ago, I blogged on a major political shift in Washington D.C. that would increase the likelihood of the U.S. adopting a sweeping new climate change proposal during the upcoming session of Congress.
It didn’t take long for the effect of that seismic shift to reach corporate boardrooms. During last week’s Wall Street Journal CEO Council meeting, corporate chief executives shared their perspectives regarding passage of proposed climate change legislation by 2010, and the types of policies they would prefer to ensure that enterprises can achieve anticipated emissions reduction goals.
Most surprising was an observation by Duke Energy CEO James Rogers, who said the current economic climate “offers the perfect opportunity to start, not an excuse for inaction. This is just the time, because we’ll get a more reasoned approach” to economy-wide regulation. However, he cautioned, that the effort “won’t be cheap, and it won’t be easy.”
The majority of executives polled at the meeting favored a cap-and-trade scheme that encourages emissions reductions through the establishment of a commodity exchange in which companies would purchase credits for carbon emissions levels over a government-designed ceiling.
The group also advocated policies mandating that 10 percent of the total U.S. auto fleet should consist of zero-emissions vehicles by 2020; 50 percent by 2030. Nissan CEO Carlos Ghosn said that goal would require manufacturers to start producing electric cars similar to a model that is being developed by Renault. The French car company hopes to mass-market the vehicle by 2010.
The group’s other recommendation was to develop revised energy efficiency policies, from more stringent building codes to new laws that would provide incentives for utility companies to save, not generate, more power.
These are savvy CEOs who understand that the political climate throughout the U.S. now favors aggressive measures to address climate change. Some of those companies, including Duke Energy, have made the necessary investments in information technology so that they will be properly positioned to transform regulatory compliance activities into a powerful driver for competitive advantage. Companies that want to reduce costly non-compliance risk exposure will want to start planning now.
Tags: cap and trade carbon emissions ceo council climate change legislation duke energy emissions reduction
November 26th, 2008
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