Carbon Productivity, a reality?

BY: DOMENIC K. ARMANO, P.E.

Over the next 20 years global energy use is expected to peak at 270 QBTUs and the accompanying carbon emissions will top out at over well over the 500 ppmv target. With growth in energy and carbon emissions of this magnitude the effects will surely be felt globally.  No doubt a complex environmental and political issue, developing nations will argue that the costs of carbon reduction strategies should be borne by the developed countries since they have contributed in large part to the increased elevation in CO₂e concentration in the atmosphere. Albeit a fair statement, all costs should not be borne by the developed nations and a comprehensive approach should be developed.

In 2008, the McKinsey Global Institute (“MGI”) published a white paper substantiating the global carbon productivity challenge. This paper outlined 5 areas of focus which could contribute to the necessary economic, political and climate changes required to stem the CO₂e emissions worldwide and thus improve carbon productivity. Prior to the publication of the MGI study, the US Department of Energy (“DOE”) and the Rocky Mountain Institute (“RMI”) published a study outlining the success of various energy efficiency projects. Coincidentally, a key strategy outlined by MGI; “Capturing the energy-efficiency opportunity” is estimated to offer 25% of the target green house gas (“GHG”) reduction potential¹. Further, the DOE/RMI report substantiates that investment in efficiency projects also exhibit a positive ROI and typically the energy savings are dwarfed by the monetary value of business productivity improvements.

Reduction of GHGs must start with the developed nations taking a leadership position. Specifically for businesses, the MGI report provides a carbon reduction framework through its 5 areas aimed at reducing CO₂e emissions. These areas of focus are listed below and if followed provide tremendous opportunity to reduce GHG and contribute locally to a growing global concern.

5 Areas of focus from MGI report:

1) Capture energy efficiency opportunities,

2) Decarbonize energy sources,

3) Low-carbon tech,

4) Behavior modification,

5) Expansion of carbon sinks

These 5 areas, when followed by businesses or consumers, can provide substantial energy efficiency, carbon productivity and business productivity benefits. When it comes to sustainability, energy efficiency and carbon productivity, a new way of thinking is required.  Individuals and business alike need to be compelled to make changes to their current business processes that help contribute to the reduction of GHGs. This issue is far more behavioral and cultural than realized.

From a business perspective, companies can contribute to the reduction of GHG by implementing projects that adhere to the 5 areas outlined by MGI. A brief synopsis of the opportunity in each area is provided below.

Capture energy efficiency opportunities: Perhaps the simplest of all recommended areas, capturing energy efficiency opportunities through the retrofit of existing facilities can easily be implemented in a cost effective manner. Retrofit of lighting systems, commissioning of HVAC and improving the building shell among others all provide positive ROI.

De-carbonize energy sources: Installation of renewable energy technologies such as solar, wind and biomass when coupled with a sound energy efficiency strategy and government incentive structure can provide strong financial returns and create price stability in a business’s utility supply chain.

Low-carbon tech: Depending on the business product, investments in low carbon tech could include taking a Cradle to Cradle design approach or adhering to ISO 14000. Improvement in this area would be harder to come by as they tend to be more product or business process related.

Behavior modification: At present, the prime examples of this area can be found in K-12 and Healthcare environments. Many consultants today offer behavior modification training and strategies that have proven to be fruitful. Simply raising the awareness of the energy and sustainability impact can have a profound effect on constituents and their energy usage habits.  Energyeducation.com is a great example of this type of program.

Expansion of carbon sinks: One way to address this area from a business perspective would be to adhere to the sustainable sites criteria embedded in the LEED rating system. By adhering to this section of LEED it would encourage efficient land use and thus indirectly benefit the end user and the environment.

As presented herein, opportunity exists to reduce GHG through the implementation of comprehensive projects with specific goals of achieving meaningful impact in each of the 5 areas of focus. However, many of today’s energy efficiency projects are implemented under the guise of facility renewal as opposed to enhancing business productivity and sustainability. Often times, financing is available for these projects however many are not poised to take advantage of the opportunity. The MGI report provides the framework for realization of the GHG reduction goals and the RMI report provides the examples or proof that this process really works.  With the right approach and focus, carbon productivity improvements and achieving a favorable ROI can coexist.