Ecobella Blog

U.S. Environmental Protection Agency will, for the first time, require large emitters of heat-trapping emissions to begin collecting greenhouse gas (GHG) data under a new reporting system. This new program will cover approximately 85 percent of the nation’s GHG emissions and apply to roughly 10,000 facilities.

“This is a major step forward in our effort to address the greenhouse gases polluting our skies,” said EPA Administrator Lisa P. Jackson. “For the first time, we begin collecting data from the largest facilities in this country, ones that account for approximately 85 percent of the total U.S. emissions. The American public, and industry itself, will finally gain critically important knowledge and with this information we can determine how best to reduce those emissions.”

EPA’s new reporting system will provide a better understanding of where GHGs are coming from and will guide development of the best possible policies and programs to reduce emissions. The data will also allow businesses to track their own emissions, compare them to similar facilities, and provide assistance in identifying cost effective ways to reduce emissions in the future. This comprehensive, nationwide emissions data will help in the fight against climate change.

Greenhouse gases, like carbon dioxide, are produced by burning fossil fuels and through industrial and biological processes. Fossil fuel and industrial GHG suppliers, motor vehicle and engine manufacturers, and facilities that emit 25,000 metric tons or more of CO2 equivalent per year will be required to report GHG emissions data to EPA annually. This threshold is equivalent to about the annual GHG emissions from 4,600 passenger vehicles.

The first annual reports for the largest emitting facilities, covering calendar year 2010, will be submitted to EPA in 2011. Vehicle and engine manufacturers outside of the light-duty sector will begin phasing in GHG reporting with model year 2011. Some source categories included in the proposed rule are still under review.

EPA

EPA Press Release

Without looking into absolute number of tons reduced and into the different sectors, a company that pledges a reduction of 25%+ on its emissions over a short period of time, makes a strong statement.

Looking into EPA Climate Leaders, the following companies stand out meeting the 25%+ reduction:

1. 3Degrees pledges to achieve net zero U.S. GHG emissions by 2007 and maintain that level through 2012.
2. 3M achieved its initial goal by reducing total U.S. GHG emissions by 60 percent from 2002 to 2007.
3. Advanced Micro Devices pledges to reduce global GHG emissions by 33 percent per manufacturing index from 2006 to 2010. AMD achieved its initial goal by reducing global GHG emissions by 53 percent per manufacturing index from 2002 to 2006.
4. Burt’s Bees pledges to reduce U.S. GHG emissions by 35 percent per dollar sales from 2006 to 2011.
5. Cherokee Investment Partners pledges to achieve net zero U.S. GHG emissions by 2007 and maintain that level through 2011.
6. Cisco Systems pledges to reduce total global GHG emissions by 25 percent from 2007 to 2012.
7. Codding Enterprises pledges to reduce U.S. GHG emissions by 50 percent per square foot from 2005 to 2010.
8. Conservation Services Group pledges to achieve net zero U.S. GHG emissions by 2006 and maintain that level through 2010.
9. Cummins pledges to reduce global GHG emissions by 25 percent per dollar revenue from 2005 to 2010.
10. Deere & Company pledges to reduce global GHG emissions by 25 percent per dollar revenue from 2005 to 2014.
11. Dell pledges to reduce global GHG emissions by 15 percent per dollar revenue from 2007 to 2012, and to achieve net zero global GHG emissions by 2008 and maintain that level through 2012.
12. Design Continuum pledges to reduce U.S. GHG emissions by 25 percent per square foot from 2007 to 2012.
13. DPR Construction pledges to reduce U.S. GHG emissions by 25 percent per employee from 2007 to 2015.
14. EarthColor pledges to reduce U.S. GHG emissions by 40 percent per dollar sales from 2006 to 2012.
15. Ecoprint pledges to achieve net zero U.S. GHG emissions by 2006 and maintain that level through 2010.
16. Exelon Corporation achieved its initial goal by reducing total U.S. GHG emissions by 38 percent from 2001 to 2008.
17. Fairchild Semiconductor pledges to reduce U.S. GHG emissions by 30 percent per manufacturing index from 2003 to 2010.
18. FetterGroup pledges to reduce U.S. GHG emissions by 25 percent by sheets printed from 2007 to 2012.
19. First Environment pledges to achieve net zero U.S. GHG emissions by 2008.
20. Genzyme Corporation pledges to reduce global GHG emissions by 25 percent per dollar revenue from 2007 to 2012.
21. Green Mountain Energy Company pledges to achieve net zero U.S. GHG emissions by 2005 and maintain that level through 2009.
22. Intel Corporation pledges to reduce global GHG emissions by 30 percent per production unit from 2004 to 2010.
23. Johnson Controls pledges to reduce U.S. GHG emissions by 30 percent per dollar revenue from 2002 to 2012.
24. Lincus Incorporated pledges to reduce U.S. GHG emissions by 30 percent per square foot from 2006 to 2011.
25. Lockheed Martin pledges to reduce U.S. GHG emissions by 30 percent per dollar revenue from 2001 to 2010.
26. Melaver pledges to achieve net zero U.S. GHG emissions by 2006 and maintain that level through 2009.
27. National Renewable Energy Laboratory pledges to reduce total U.S. GHG emissions by 75 percent from 2005 to 2009. NREL achieved its initial goal by reducing U.S. GHG emissions by 10 percent per square foot from 2000 to 2005.
28. Owens Corning pledges to reduce U.S. GHG emissions by 25 percent per unit of production from 2006 to 2012.
29. PepsiCo pledges to reduce U.S. GHG emissions by 25 percent per ton of production from 2006 to 2015.
30. PSEG achieved its initial goal by reducing U.S. GHG emissions by 31 percent per kWh from 2000 to 2008.
31. Quad/Graphics pledges to reduce U.S. GHG emissions by 25 percent per page printed from 2003 to 2013.
32. Shaklee Corporation pledges to maintain net zero U.S. GHG emissions from 2006 to 2009.
33. Steelcase pledges to reduce U.S. GHG emissions by 40 percent per dollar sales from 2004 to 2009.
34. STMicroelectronics pledges to reduce U.S. GHG emissions by 50 percent per manufacturing unit from 2000 to 2010.
35. The Tower Companies pledges to achieve net zero U.S. GHG emissions by 2008 and maintain that level through 2012.
36. Unilever pledges to reduce global GHG emissions by 25 percent per ton of production from 2004 to 2012.
37. Xerox Corporation pledges to reduce total global GHG emissions by 25 percent from 2002 to 2012. Xerox achieved its initial goal by reducing total global GHG emissions by 18 percent from 2002 to 2006.

Reference:  EPA Climate Leaders

George Ahn

CEO

TRIRIGA

Home Depot battled negative headlines in May when shareholders voted down a resolution to enforce more rigid and transparent energy efficiency measures. The resolution proposed that the organization assess company-wide energy use from its buildings, transportation and supply chain. It also urged Home Depot to set energy use reduction targets and report findings and progress to shareholders.

While the measure did not pass, it received support from the $20 billion Connecticut Retirement Plans and Trust, the advisory firm RiskMetrics Group (RMG), and other investors in the $7 trillion Investor Network on Climate Risk (INCR). Despite the outcome, the resolution foreshadows a future in which shareholders increasingly require reports on energy efficiency improvements and climate change risk. Organizations that fail to put the right systems in place today to meet these reporting requirements will suffer.

Findings from CERES, a coalition of investors, environmentalists and public interest groups, report that “the resolution filed with Home Depot is one of a record 67 global warming resolutions filed with 58 U.S. companies and two Canadian companies as part of the 2009 proxy season.” The findings confirm that companies must start to disclose risks from climate change now and provide stakeholder groups with a plan to mitigate those risks.

Further, despite the evidence that climate change disclosure will quickly transition from a proposal to an imperative, many companies have not started to track or abate their carbon emissions.

In fact, according to a 2009 report co-authored by CERES, over 76 percent of the S&P 500 fail to even mention climate change in SEC filings. This is surprising given that, according to a September 2008 McKinsey survey of 1,453 international executives, 50 percent said that environmental issues ranked among the top three areas that would most affect shareholder value in the next five years. While organizations appreciate investors’ concerns, they often lack the tools necessary to address them.

Further evidence that organizations will face more stringent demands from shareholders comes from INCR, an alliance of over 80 institutional investors and financial firms that collectively manage more than $7 trillion in assets. INCR has suggested that congress mandate climate change disclosure in SEC filings, and INCR Director and CERES President Mindy Lubber states, “climate change is a bottom line issue and investors have a right to know which companies are best positioned for the emerging clean energy global economy.”

To meet shareholder climate risk reporting requirements, organizations need technology that not only measures their current carbon footprint, but also manages abatement opportunities, facilitates emissions reduction initiatives and tracks progress and ROI. To gain a sense of where and how to start reporting, consider real estate. Buildings represent 48 percent of energy consumption and present the most significant opportunities to reduce environmental impact, improve operating costs, and demonstrate carbon reduction accountability.

With a technology framework that can identify underperforming building locations, provide a set of analysis tools to evaluate different carbon reduction options, and manage those options through to completion, organizations can address even the most exacting shareholder resolutions.

Investors will use a number of tools to determine how well companies address risks from climate change, including the Global Framework for Climate Change Disclosure, the Carbon Disclosure Project, CERES, and SEC Filings. Companies should seek out technology solutions that provide flexible reporting platforms to facilitate carbon reporting to multiple agencies. All else being equal, companies that adequately disclose and address risks from climate change will be rewarded with higher valuations and a lower cost of capital.

As your organization evaluates shareholder demands, ask yourself this: do you have the right tools to disclose your impact on the environment, or will you, like Home Depot, face climate nondisclosure backlash and risk losing shareholder support?

George Ahn is President and Chief Executive Officer of TRIRIGA. He has more than 18 years of software industry leadership.

Source: Environmental Leader

Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- ExxonMobil (XOM) Chief Executive Rex Tillerson on Thursday urged federal lawmakers to consider a “carbon tax” to reduce greenhouse gas emissions instead of a cap-and-trade law such as the one Congress is drafting.

Marking a major milestone in the evolution of the oil firm’s stance on the climate change issue, Tillerson’s policy call comes as Democratic leaders prepare to move toward creating stringent cap-and-trade legislation.

“My greatest concern is that policy makers will attempt to mandate or ordain solutions that are doomed to fail,” such as a cap-and-trade system, Tillerson said in a speech at the Woodrow Wilson Center here.

“A carbon tax would be a more direct, transparent and more effective approach, ” he said.

A carbon tax is a straight fee for emissions while a cap-and-trade system establishes economy-wide emission limits and a market for firms to buy and sell pollution allowances based on whether they were above or below their cap.

Only a few years ago, Exxon was a major financial supporter of climate change skeptics, though recently the firm’s position had begun to recognize the political reality in Washington as Democrats’ power rose, and the company started calling a carbon tax a more “reasonable” solution to cut emissions in the economy. Tillerson’s comments represent the first clear call by the CEO for a price on carbon.

Exxon’s public stance on a carbon tax comes as U.S. Rep. Ed Markey, D-Mass., one of the strongest advocates for stringent climate change legislation and clean energy legislation in Congress, is expected to be named chairman of the House subcommittee responsible for drafting greenhouse gas laws.

The move – if ratified as expected later Thursday – will likely mean tougher greenhouse gas and clean energy policies out of the Energy and Commerce Committee than industry had forecast before a major shake-up in the panel late last year. Markey’s play follows the successful November coup by Rep. Henry Waxman, D-Calif., for the chairmanship of the full Energy and Commerce Committee from more moderate Rep. John Dingell, D-Mich. It is widely believed to have been approved by House Speaker Nancy Pelosi, D-Calif., who also backs tough cap-and- trade legislation.

Analysts say Markey in the post will help Waxman to more easily pass tough new cap-and-trade legislation that would cut greenhouse gases sooner, faster and across a wider spectrum of the economy than Dingell or Boucher would have preferred. At one time, Dingell had proposed a carbon tax. By forcing lawmakers and the public to quantify the economic impact of cutting greenhouse gases, analysts said the veteran automaker advocate attempted to make it less politically tenable to support stringent emissions reductions.

Tillerson said cap-and-trade systems “inevitably introduce unnecessary costs and complexity that undercut their effectiveness,” calling it ultimately a ” stealth tax.” Taking advantage of the current economic crisis caused by a systemic problem failure in the financial houses, the Exxon CEO also raised the specter of more economic toil precipitated by a cap and trade. “This new Wall Street of emission brokers will take the emphasis away from the goal of reducing carbon emission and focus it’s attention on price volatility,” he said.

Tillerson said reductions and changes to other taxes, such as income or excise policies, could offset the carbon tax on the economy.

Although widely encouraged by economists – including within the Congressional Budget Office – who say it’s a more efficient and direct approach to cutting emissions, the carbon tax has been largely shunned by most lawmakers as it’s seen as politically unfeasible to pass. That may be why Exxon has joined the ranks of other heavy carbon emitters calling for a carbon tax, as it would reveal more transparently of the actual costs to the economy of putting a premium on greenhouse gas emissions.

Rising energy prices and a stumbling economy are thought to have played the biggest role in the embarrassing defeat of a climate change bill in the Senate last year. Majority Leader Harry Reid, D-Nev., withdrew Sen. Barbara Boxer’s bill from floor consideration after it was clear that a majority of Senators weren’t going to support the estimated $7 trillion measure.

And the failing economy – along with a massive fight over how the income from auctioning emission allowances will be re-distributed between industries – is why many lawmakers have said final passage of climate change bill isn’t likely this year.

Pressed by reporters to say what price level Tillerson thought carbon would need to be taxed to activate emission cuts, the oil chief said it would take at least $20 a ton. “It’s a question of how much you think the economy is willing to take and how aggressive you want to be,” he said.

-By Ian Talley, Dow Jones Newswires, 202-862-9285; ian.talley@dowjones.com

(END) Dow Jones Newswires

Entrepreneurial cycles and periodic crises are inherent to the free market economy. In the past dynamic and creative societies have prospered thru innovation. Today is not the exception of the rule.

Examples…

In the late 19th Century, during the Grover Cleveland administration, “the panic of 1893″ occurred. The stock market plunged and it seemed that U.S. capitalism (the world’s leading economy at the time) was irretrievably sinking. While that happened, the country’s electrification accelerated, telephones began to ring insistently, the first cars rode down the highways, shipyards launched huge ships designed with new technology, man’s voice was recorded in wax cylinders, and something called “the cinema” captured images in motion. Capitalism was a lot more than just a catastrophe at the stock exchange or uncertainty over the value of the dollar.

One generation later came “the panic of 1907.” It was Teddy Roosevelt’s last year. Banks were swamped by an avalanche of people withdrawing their savings. Again disaster struck and again the pessimists announced the end of capitalism. But that happened in the years when commercial aviation spread its wings, U.S. engineers joined the two oceans by the Panamanian waist, and began to change the urban profiles of Chicago, Manhattan, and eventually the rest of the world.

The Crash of 1929 was like a financial and market earthquake. President Hoover could not foresee it and F. D. Roosevelt later erred in the way he picked up the pieces. But it was a period when the English (who were also much affected) gave us television and antibiotics, the United States developed plastics and nuclear energy. After World War II, out of every dollar generated by the blood-soaked planet, 50 cents were produced in the United States. The Crash of ‘29 was a thing of the past.

May we go on? The financial crisis of 1973, when the price of oil rose sky high, the gold standard came to an end, and a severe inflationary process began (only to end a few years later under Carter’s administration), developed along with impressive space journeys, the popularization of computer communications, amazing discoveries in the fields of physiology and medicine (the DNA, anticancer drugs, spectacular surgical operations). The technical and scientific gap between the First and the Third World became a daunting trench.

In 1987, the credit system failed again. The savings-and-loans went bankrupt. They were killed by inflation, and their burial cost was a whopping $500 billion. But those were the glorious years of the Internet, mobile telephony, the inglorious agony of the USSR and its satellites, a preamble to the prosperous era of Bill Clinton that made us dream of a fantasy where economic cycles were a thing of the past.

The true engine of the market economy is not its financial system but the amazing creativity of its entrepreneurs and innovators.

Today we are faced with multiple challenges. We are midst of economic fallout as most of us have never experienced. We are threatened by relying on our energy needs on a small region around world. We are faced with Peak Oil just around the corner. We have doubled the CO2 level in our atmosphere (if the laws of thermodynamics work no doubt that would bring other effects). People are going mad against everyone. We are in the midst of a crisis of leadership in the world.

So how do we pull out of this one. The same way the world has done it in the past. Thru leadership and innovation. I bet this time innovation is going to be on renewable clean technologies.

For an alternate view of the same principles follow: http://www.firmaspress.com/950.htm

A study by McKinsey in October of 2008 assessed the impact of carbon mitigation on benchmark companies in the aluminum, automotive, beer, construction, consumer electronics, and oil and gas industries.

They modeled their sensitivity to regulatory moves, technological shocks, and shifts in consumer demand and analyzed the potential impact on the cash flows and 2008 net present value. The events in these companies and sectors were examined in the context of their carbon intensity, geographic footprint, and ability to pass through costs and to redeploy capital.

In some industries, shifts in demand would have a broadly negative impact on company cash flows and therefore valuations. Oil and gas consumption, for example, would experience falling demand over the long term as the economy shifts toward cleaner sources of energy (including solar, wind, and carbon capture and storage), and as oil-consuming sectors (such as automotive and power generation) increase their emphasis on energy efficiency. They concluded that valuations would fall by around 5 to 15 percent depending upon the scenario.

By contrast, other industries could enjoy considerable gains. Companies in the building-materials sector—particularly those that do business in places where building efficiency is not yet a major issue—will probably benefit from rising demand for improved energy efficiency and insulation products, which will increase their cash flows. As compared with the business-as-usual scenario, the valuation of a representative building-materials company in the developed world increases by 35 to 80 percent depending upon the scenario. If more stringent regulatory measures do not materialize, valuations could fall by 10 to 20 percent as a result of possible short-term cost pressures.

Efforts to offset climate change will structurally transform certain sectors—including automotive and aluminum—which will experience more volatile returns and increased rates of entry and exit as new technologies or regulatory restrictions emerge and the competitive landscape changes.

As common sense would command, on given industries there will be winners and losers, depending upon the ability of the different companies to approach the challenge. Companies that address the challenges in a creative and innovative way would develop strengths that could help on their margins and thus their cash flows and valuations.

Some sectors will experience minimal long-term stress from carbon-abatement efforts: they will be able to pass along any short-term cost pressures to customers and will not face substitution by other products or significant shifts in demand. In such cases, profit margins would revert to average levels over the medium to long term. The consumer electronics industry, for example, will probably have the technology to deal with regulation in a way that will not harm the bottom line.

As nations and companies start acting more aggressively to reduce carbon emissions, major shifts in the valuations of sectors and companies will start to become clearer and more predictable. Over the next 18 to 24 months, a number of regulatory and policy events, such as the December 2009 Copenhagen conference to replace the Kyoto treaty, will probably reduce the uncertainty and spark a rethinking of how carbon reduction efforts will affect valuations across a wide range of industries.

Several steps can help companies and their executives as they start to position themselves to thrive in a low-carbon economy:

• Review the company’s exposure to regulatory measures (such as carbon pricing, new standards, taxes, and subsidies), new technology, and changes in consumer behavior
• Develop a consistent strategy, informed by analysis and to engage with policy makers to help shape/understand the policies and regulations
• Generating more sophisticated forecasts and deeper insights into climate change–related developments.
• Decisions about new corporate investments should be geared toward carbon- and energy-efficient technologies that will remain competitive over investment life cycles
• Network around knowledge centers (venture capital firms, universities, scientists) that can help companies understand and manage the impact of climate change and develop technology
• Companies will need to focus on how and when to signal the value of their climate change bets so that investors can assess them. Each company will have to explain its overall level of preparedness for the future, the way climate change–related events could affect its specific cash flows, and what differentiates it from its competitors in these respects.

So far very few public companies have succeeded in explaining the more deeply hidden effects of climate change on their cash flows and competitive strategies.

An easy first step that Corporations can take is to engage with companies that have already started their efforts to mitigate Climate Change in their chain of supply.

Permalink:www.mckinseyquarterly.com/How_climate_change_could_affect_corporate_valuations

Recently found on the site of the EPA a list of “climate leaders”.

They are EPA partner companies that commit to reducing their impact on the global environment by completing a corporate-wide inventory of their greenhouse (GHG) gas emissions, setting long-term reduction goals, and annually reporting their progress to EPA. Through program participation, companies create a lasting record of their accomplishments and identify themselves as corporate environmental leaders.

For the comprehensive list visit: http://www.epa.gov/stateply/partners/index.html