Companies Embracing Sustainability Often Do It To Reap Financial Rewards
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Drivers of Change: A discussion with Chris Luebkeman, Director for Global Foresight & Innovation, Arup Group, London. Industrial owners worldwide have led the fight against limits on carbon-dioxide emissions. Now, having been dragged to the table, many are finding that the green diet tastes more of filet than crow. Even U.S. companies, shielded from the Kyoto strictures by their government’s rejection of the treaty, are joining the party and reaping benefits of efficiency, cost reduction and image.
Sweden-based Volvo renovated its Goteborg truck plant last year to operate solely on wind and bio-fuel power. A similar plant being built in Ghent, Belgium, will begin production this year. Volvo claims they are the first carbon-free auto plants in the world. “We hope this project will inspire other companies. The technology is there. It’s a question of daring,” says Patrick Collignon, managing director at Volvo Trucks Europe.
Several hundred manufacturers, governments, universities and other organizations now are trading credits on the Chicago Climate Exchange (CCX), the world’s first greenhouse-gas-emission registry and trading system. Launched in 2003, CCX is a self-regulatory exchange system whose members make voluntary commitments to reduce greenhouse-gas emissions. Emission-reduction targets require all CCX members to reduce emissions to 6% below their 1998 baseline by 2010. Members must either reduce emissions or mitigate them through purchase of allowances or project-based offsets.
"The greenback is what will ultimately drive the green movement." — Bill Heenan, president, Steel Recycling Institute, Washington, D.C. |
The price per tonne of CO2 currently is about $3.40, nearly double what it was in January 2006. The price in Europe on the Amsterdam-based Europe Climate Exchange was $37 per tonne in early 2006 but has plummeted to $6.85, because many European Union governments issued too-generous allowances and because of mild winter weather and falling gas prices in Europe, says Rafael Marques, CCX spokesman.
In the U.S., Congress has proposed federal regulations for CO2 emissions, and industrial owners anticipating the regulations are taking the offensive. Last fall, a consortium of manufacturers and power companies formed the Climate Action Partnership. Aiming to get a hand in shaping federal caps on CO2 emissions, the consortium issued Congress a framework for CO2-capping legislation.
“There’s massive uncertainty right now,” says Jake Siewert, vice president of environment, health, safety and public strategy at Pittsburgh-based Alcoa, a member of the consortium. “We don’t know when the regulations will come or what they will entail.”
Market-Driven
But for many manufacturers, the impetus for change is largely a response to rising energy costs and increased global competition. Environmental rewards of energy-efficient facilities are a side benefit of efforts primarily driven by market economics, many say. Volvo’s carbon-free plants are “not solely an admirable en-vironmental effort. We also expect that [wind- and biomass-fueled plants] will eventually be profitable on a purely commercial basis,” says Volvo CEO Leif Johansson.
Waltham, Mass.-based cement maker Holcim U.S. Inc. reduced greenhouse-gas emissions by 25% since 2003 by implementing a push for more efficient production, says Ruksana Mirza, vice president of environmental affairs. Holcim is phasing out the traditional “wet-mix” method of cement production, in favor of a “dry-mix” method that lowers emissions. Holcim’s progress in reducing emissions is “for economic and efficiency gains,” Mirza says. “But we are very aware of our environmental impact, and we believe economic and environmental progress are intertwined.”
By streamlining plants and processes, the steel industry has reduced CO2 emissions by about 28% since the mid-1990s, says Bill Heenan, president of the Steel Recycling Institute, Washington, D.C. Environmental sustainability “is good business for steel companies,” Heenan says. “Anytime you reduce energy use, you reduce costs.” The laws of economics, more than laws of Congress, will drive the green movement in industry, he says. “If we mandate it, industry will move to other parts of the world,” Heenan says. “Without an economic approach, it won’t work. The greenback is what will ultimately drive the green movement.”
The U.S. Business Council for Sustainable Development was formed in 1997 to help companies find markets for byproducts and waste and to enable them “to learn about technology in other markets that can be applied to their own facilities,” says Andrew Mangan, USBCSD executive director. For example, Mangan notes, a grinder widely used by oil drillers to crush waste material in the extraction of crude oil has been adopted by cement manufacturers because it is 30% more energy-efficient than aggregate grinders traditionally used in the cement industry.
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