Your Morning Routine and Industrial Energy Efficiency – Not so Far Apart

By: Hana Kajimura

The buzz of your alarm against the bedside table jolts you into consciousness. You rise, shower and dress. Habitually, you squirt some Olay into your palm and Crest onto your toothbrush. A few minutes later, you shove a pair of heels in your bag and strap your favorite Adidas to your feet. Armed with a Wall Street Journal in hand, you’re out the door and on your way.

It’s just another Monday morning. You might be surprised though. If your routine sounds anything like this, you‘re taking part in an industrial energy efficiency revolution before you even get to the office.

The global industrial sector uses a third of all energy consumed in the United States so industrial energy efficiency projects hold huge promise. Only recently though have we seen examples of that promise being realized.

Over the past six years, EDF Climate Corps has placed specially trained graduate students in corporations to develop energy efficiency plans that save energy, money and the environment. The results speak for themselves. See some examples below.

Proctor & Gamble

EDF Climate Corps fellow Julia Li devised a plan to cut 18 million kWh in a P&G manufacturing plant and signed the company up for a state-wide incentive plan that will pay back $100 for every kW reduced during peak demand periods.

adidas Group

EDF Climate Corps fellow Elizabeth Turnbull worked in adidas Group’s distribution centers and recommended energy efficiency projects that could save $1.5 million by managing existing systems with no upfront cost.

News Corporation

EDF Climate Corps fellow Jay Stone led the charge to retrofit lighting at Dow Jones’ Bronx Printing Plant, where it prints the Wall Street Journal each morning. Stone developed plans for the plant to drive up lighting quality and worker productivity while driving down costs and CO2 emissions.

Because EDF Climate Corps fellows have demonstrated proof of concept, companies like these keep coming back for more. Collectively, EDF Climate Corps fellows have found more than $1.2 billion in potential energy savings.

EDF recently teamed up with the University of Minnesota Institute on the Environment’s NorthStar Initiative for Sustainable Enterprise (NiSE) to source the collective brainpower of 31 experts from energy service companies, finance, retail, NGOs, government and academia. Together we generated The Supply Chain Coordination and Energy Efficiency Symposium, a report that provides a roadmap to accelerate industrial energy efficiency initiatives. Among its key findings, the report called for more examples of successful energy efficiency projects to prove to investors and industry that energy efficiency projects pay back.

EDF Climate Corps has already provided hundreds of these energy efficiency success stories, many in the industrial sector. Stay tuned to our blog to hear stories from the 116 fellows sleuthing out energy savings across the nation this summer.

Taking Freight Efficiency to the Next Level: Boise's Success Story

When it comes to logistics, strategies that reduce carbon emissions also reduce transportation costs. Boise, a leading manufacturer of packaging and paper products in the United States, launched two initiatives to do just that – shifting from road to rail transport and making more efficient use of rail transport.

Together, these initiatives have resulted in a combined 60 percent reduction in the company’s CO2 emissions from transportation related activities, as well as cost savings on the targeted shipments.

Carbon emissions from freight transportation are on pace to grow 40 percent by 2040 – the equivalent of carbon emissions produced by 39 million passenger vehicles on the road today.

Leading shippers, like Boise, are making changes to put us on a more sustainable path. Boise’s story is the third in a series of EDF and MIT case studies about carbon-efficient logistics.

In the Carload Direct Initiative, Boise switched from using a combination of rail and truck to send products to one of its customers, OfficeMax, to sending shipments exclusively by train.  Both Boise and OfficeMax facilities are directly accessible by rail, so the two companies collaborated to make the switch. More than 200 carloads were shipped via rail direct from Boise manufacturing facilities to OfficeMax distribution centers in 2011.

Taking efficiency to the next level, Boise launched a Three-Tier Pallet Initiative to increase the volume of products in each rail shipment. Prior to this project, railcars were loaded two pallets high, leaving a space from the top of the second pallet to the roof of the railcar.  The company introduced a half-pallet size to take advantage of the extra space in rail cars. This increased railcar utilization by 14 percent and also provided the customer greater order flexibility.

The two initiatives have yielded combined carbon emission reductions of more than 2,800 tonnes of CO2, the equivalent of saving over 313,000 gallons of fuel.

The Boise story is one of efficiency and collaboration. The Caterpillar case study describes how Caterpillar was able to collaborate with suppliers to consolidate inbound shipments and eliminate truck miles. The Ocean Spray case study described how Ocean Spray was able to collaborate with a competitor to make use of empty backhaul on rail.

Collaborative distribution presents a huge opportunity for companies to reduce costs and carbon emissions. Sure, collaboration has its challenges – coordinating schedules and order sizes, protecting data, adjustments to inventory, etc.

Still, leaders are finding solutions to these challenges.

Get started today – talk to your logistics team, your sustainability team, and your logistics service providers – thinking strategically about logistics will save you money and improve your environmental performance.

To read the full MIT version click here. To read the EDF summary version click here.

Adventures in the Shipping Industry

Finally! There’s someone out there who is just as excited about shipping as I am.

Today, Rose George, a British journalist and author, releases what I think will be the blockbuster of the summer – Ninety Percent of Everythingzeroing in on the overlooked world of freight shipping. Or, what Ms. George refers to as “the foundation of our civilization.” I couldn’t agree more. Photo Credit: Amazon

Besides the fact that this book looks at the world of freight as a grand adventure full of perils and twists, I’m excited because now the mainstream can look at shipping and freight in terms of environmental effects.

Most of us don’t spend a lot of time thinking about how the clothes we wear, the food we eat and the TV’s we watch get from wherever they were created into our lives. I, however, do.  And now so does Ms. George.

Our growing demand for products at competitive prices has put a ton of pressure on the freight industry. This demand has in turn driven up global freight emissions – to the tune of nearly three billion metric tons of heat-trapping carbon emissions each year. That’s equal to over 700 coal plants.

Looking at just the shipping industry, according to this book, if you added shipping to the list of the world's most carbon polluting countries, shipping would come in sixth place. This is despite the fact that shipping is the most carbon-efficient way to move products long distances.

The shipping industry often points to this last fact, but the kicker of the environmental impact of these ships is their direct impact on human health. These vessels run on low grade “residual fuel” or “bunker fuel.” This fuel contains sulfur levels 1,800 times greater than U.S. law allows for other diesel engines. These ships are also a significant source of smog-forming oxides of nitrogen.

Dr. Elena Craft, a health scientist with EDF, has noted that “the dangerous air pollution from these floating smokestacks is a threat to tens of millions of Americans who live and work along our coastlines.”

It is because of this impact that the U.S. established an Emission Control Area (ECA) within 200 nautical miles of U.S. coastlines. Within the ECA, large ocean-going ships must now use cleaner fuel and — starting in 2016 — achieve an 80 percent reduction in smog-forming oxides of nitrogen (NOx).

This ECA provides the strongest clean air standards available under international law for ships, slashing ozone-forming and particulate pollution from oceangoing vessels and saving up to 14,000 lives a year by 2020 and 30,000 lives by 2030.

I agree with Elena’s sentiment that “America has the ingenuity to meet these vitally important clean air standards and protect human health and the environment from the serious impacts associated with shipping pollution.”

The shipping industry is a true marvel of modern society. It enables all of us to obtain a higher standard of living because it fosters international trade. It also has a significant environmental footprint.

Our demand for global goods isn’t going to diminish. So, we need to find a way to address the freight industry’s environmental impact.  At EDF we’re doing what we do best. We’re actively supporting the development and enforcement of the emission control areas; piloting innovative programs to clean-up our nation’s ports; and we are working with some of the largest companies relying on freight to find ways to reduce emissions throughout their operations.

I’m excited to buy Rose George’s new book today and get a peek inside the fascinating system.  And, it’s the freight system, of course, that I’m relying on to get the book to my local bookstore.

For more cocktail party tidbits from Ninety Percent of Everything, check out these 10 fascinating facts.

 

The benefits of tying executive compensation to sustainability

Aligning incentives – this is why executive compensation is linked to financial performance. Corporate America wants to promote financial performance, so it compensates its executives directly for it. With the increasing risk that natural resource scarcity and climate change poses to businesses, what about aligning compensation to sustainability performance?

A  2012 Glass Lewis report states that 42 percent of publically traded companies interviewed across 11 major markets across the world disclosed a link between compensation and sustainability. Last year Ceres found that only about 10 percent of S&P 100 companies have reportedly incorporated sustainability into their bonus structures.

These statistics point not only to an emerging trend, but also to the varying degrees of transparency and rigor with which corporations are linking executive compensation to sustainability goals and results.

On one end of the spectrum, some companies mention a sustainability-compensation link in their CSR reports, yet do not provide further details.  On the other end, there are companies that clearly articulate the connection. Alcoa, for example, in 2010 started tying 5 percent of executives’ annual bonus to the company’s CO2 emissions reduction goals. Intel is another example—since 2008 it has tied 3 percent of all its employees’ annual bonuses to specific company-wide sustainability goals (in 2012 the focus being energy efficiency in the company’s operations and products).

On the exemplary side, Xcel Energy ties one-third of its’ CEO’s annual bonus to renewable energy, emission reduction, energy efficiency, and clean technology goals.

What is driving those companies that are aggressively linking executive compensation to sustainability?

A 2012 Conference Board report notes two factors:

  1. Financial benefits: Given the inchoate nature of the field, there is little data yet to show the correlation between this practice and better long-term financial profitability. But, EDF in its 20+ years of corporate partnerships has numerous case studies of how environmental innovation can save companies millions of dollars, and be a critical component of long term value creation. In our Green Returns work alone, we have seen a sustainability lens lead to $650 million in financial benefits while avoiding 1 million metric tons of GHG emissions, 3.4 million tons of waste, and 13.2 million cubic meters of water use across 38 portfolio companies.
  2. Reputation and culture benefits: Linking compensation to sustainability is a powerful marker of a company’s environmental leadership—the Conference Board found that such leading companies were more likely to link their compensation than others.  Additionally, this practice can serve as a powerful tool to increase accountability and promote action around environmental goals, a sentiment echoed in Intel’s 2012 CSR report, and articulated by Tom King, president of National Grid U.S.—who notes: “linking executive pay and climate change deliverables has increased accountability and positively impacted our culture. Employees across the company are increasingly incentivized to put sustainability at the heart of the way we do business.”

If you want to learn more about linking executive compensation to sustainability, the Conference Board report is a good place to start.  As everything from water scarcity to carbon constraints start impinging on your company’s growth, now is a good time to think about implementing such a powerful tool to position your company for success in this new environment (pun intended).

Generating solutions for energy reduction across the supply chain

How China can harness the power of supply chains to save costs, energy and ultimately the environment

Gearing up for the start of a new school year begins with shopping for new school supplies. Your daughter has asked for the latest princess backpack and a full set of colored pencils. While she has insisted that you buy the set of 36 and not 12, she has not specified any carbon footprint limit. And neither have you.

Turns out, your purchases hold great promise for reducing emissions. According to the International Energy Agency, the global industrial sector emits approximately one-third of energy related CO2 emissions and consumes the same amount of total primary energy supply.

Luckily, a perfect storm of consumer awareness, corporate responsibility and government incentives has ushered big US players like Walmart into the spotlight, who can use their market clout to move their suppliers away from wasteful practices. The good news is that from a technical standpoint, we know how to help companies like Walmart reduce their footprint at in a way that actually saves a lot of money.

But despite making economic sense, the average company implements less than two thirds of energy efficiency projects. We can attribute a lot of this disparity to the complexity of the marketplace in China, where most consumer goods on the shelves of US retailers are manufactured. Among these small and medium sized producers, the scale is vast. Coordination is difficult. The true numbers are obscured. The promise of financial return is hazy. There is a lot of room for improvement.

In October of last year Environmental Defense Fund (EDF) partnered with the University of Minnesota Institute on the Environment’s NorthStar Initiative for Sustainable Enterprise (NiSE) to convene 31 participants from energy service companies, finance, retail, NGOs, government and academia to brainstorm real solutions to this challenge.  This week, we’re launching The Supply Chain Coordination and Energy Efficiency Symposium report to summarize the group’s findings and outline a roadmap to close the gap between the energy efficiency opportunities that are identified and those that are implemented in the supply chain.

Once again, EDF’s commitment to “finding the ways that work” has paid off in spades. This group of unlikely partners has crafted ideas that will help guide our work moving forward. Our ideas included staging pilot programs at leading companies, engaging peer manufacturers to collaborate and compete for success, and advocating for increased industry transparency.  Finally, and most importantly, we emphasized the need to find quick and easy ways to prove to investors what we already know—that investing in energy efficiency pays back, and pays back well.

At the heart of this report lies the goodwill of unlikely partners working together to catalyze solutions. As we know, the trick is ensuring that these solutions are not only imagined, but that emission reductions are realized both in the US and in China, both among industry giants and small businesses. A purchase as simple as a backpack and colored pencils could be a powerful tool in securing a safe future for your daughter. This report is a step toward that future.