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Business Not at Odds with Environment; Companies Can Take Lead in Sustainability

Editor’s Note: This commentary by Suhas Apte and Jagdish N. Sheth, authors of The Sustainability Edge is part of our ongoing #IndieVoices series of commentaries and features in the month of March focusing on Climate Change. Read the introduction to the series here.

Climate change is a global challenge, rather than one that can be addressed at any one local level. So, even if priorities of some governments change on the surface, the issue is not going away without significant, coordinated action. Hence, 140 countries (including the U.S.) signed the Paris Climate Agreement, otherwise known as the Paris Accord, establishing practical and aspirational targets to effectively reduce global greenhouse gas emissions over the next few decades.

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Below, are three great ways U.S. businesses, regardless of government priorities, can minimize their associated greenhouse gas emissions and help address the climate change challenge:

Promote and implement alternate energy options

Regardless of the rhetoric in the political circles, economic and social pressures will dictate the course of alternate energy. Technological advances in solar cell technology, wind turbine blade designs and battery storage capabilities are making alternate energy an affordable solution.

Solar Power: Recent upstream solar module cost reductions, amounting to approximately 40 percent, plus lower downstream costs for installations and services, have put solar power within striking distance, in economic terms, of new construction, traditional power-generation sources, such as coal, natural gas, and nuclear. That’s true not just for residential and commercial applications, where it is already cost competitive in many (though not all) geographies, but also, eventually, for industrial and wholesale markets. This is evident from the investments made in the developed economies such as U.S. and Germany, as well as those made in the emerging markets of India and China.

Wind Power: Massive turbines now constitute around three quarters of the total of wind energy project costs. Innovative wind turbine blade designs are markedly improving efficiencies and outputs, thereby making wind-power more affordable as an energy alternative. The year 2015 was an unprecedented year for the wind industry, as more than 63 GW of new wind power capacity was brought on line. China, the largest overall market for wind power since 2009, retained the top spot in 2015. Not unexpectedly, installations in Asia once again led global markets, with Europe in the second position, and North America gaining on Europe, in third position. (SOURCE: ‘Global Status of Wind Power’, Global Wind Energy Council Report 2015).

Storage: The future of alternate energy can be summed up in one word, “storage.” A great deal of experimentation is currently underway on storage technologies, ranging from a system that supports a 153-megawatt wind farm in Texas, to one in midtown Manhattan that keeps a skyscraper cool, warm, and illuminated, to one that serves as reserve energy sourcing for remote utilities in Alaska.

Experts cannot yet predict which technology or technologies will ultimately prevail as the winner(s). It is clear, however, that storage technologies are getting cheaper, e.g., large-format lithium-ion storage costs have dropped more than 60 percent from high of $900 per kilowatt-hour in 2007 to about $380 in 2015, and are further forecasted to drop below $200 by 2020.

This is one area of alternate energy paradigm where utilities are investing heavily and not dragging their feet. This is because utilities routinely build extra capacity in their grids to meet occasional peaks, and thus if they could store power generated during periods of low demand, and then release it during peak demand, they would save a ton of money on capital costs, while smoothing out frequency variations. (SOURCE: How energy storage could change everything about renewables, by Scott Nyquist, Fortune, Sept 24, 2015).

The new U.S. Federal administration is talking about creating coal industry related jobs, but the reality is that as long as natural gas prices stay below $5/MMBTU the odds of these jobs coming back are not tenable. The Southern Company proposed the Kemper plant in Mississippi to showcase clean-coal technology (oxymoron concept to begin with). It was designed to burn locally mined coal into a synthetic gas, capturing the majority of the carbon dioxide and then selling the carbon dioxide to oil companies that will inject it into older oil fields to extract more hydrocarbons.

At the time the facility was conceived, few predicted the impact that added natural gas supplies would have on the economics of U.S. electricity production. According to the company analysis, the $7+ billion plant investment may never be commissioned as a clean-coal plant because of economics. The faulty base assumption of rising natural gas prices was the nail which sealed this coffin. (SOURCE: Southern Company’s New ‘Clean Coal’ Plant May Not Be Cost-Efficient, Russel Gold, The Wall Street Journal, Feb 22, 2017).

The newly formed Climate Leadership Council consisting of veteran conservative Republican leaders like James A. Baker, Henry Paulson, George P. Shultz, Marty Feldstein and Greg Mankiw are proposing a rising carbon tax that starts at $40 per ton and eliminating nearly all of the Obama administration’s climate policies in exchange. They further propose that the revenue be shared with every American.

The council believes that the economic penalty on polluters will promote the use of alternate energies and innovations. Large companies are recognizing that public opinion will sway against them via social media pressure, hence the likes of oil giant Exxon-Mobil is openly supported such a tax. (SOURCE: A Conservative Answer to Climate Change, by George P. Schultz and James A. Baker III, The Wall Street Journal, Feb 7th, 2017).

Reduce Energy Consumption

Drive energy efficiencies both up and down your value chain. Collaboration with suppliers, customers, NGOs, government organizations, communities and even competitors to identify and promote energy efficiency through best practices adoption including: material alternatives, transportation choices, and innovation, are typically not only beneficial to climate change but also to the business financials of all partners involved. Industries are riddled with case studies demonstrating this contention to be true.

Promote Mindful Consumption

An opportunity exists for businesses to join hands with stakeholders (including national and local governments) and make a difference in effectively reducing global greenhouse gas emissions. This opportunity is in promoting “Mindful Consumption”; the 3 R’s of Mindful Consumption are Reduce, Recycle, and Reuse.

Reducing climate change, at least in part, begins at home. In addition to promoting Mindful Consumption, there exists significant opportunity in developing public-private partnerships aimed at reducing the carbon footprint of homes, appliances and transportation. Innovative approaches, e.g., those that have been successfully implemented to reduce tobacco use, such as instituting smoke-free: workplaces, public buildings and grounds, and jets as well as “de-marketing” efforts such as advertising campaigns and taxation on consumption are required.

Suhas Apte
Suhas Apte is a former sustainability officer and senior executive for the Kimberly-Clark Corporation. He is president of Apte Consultants, LLC and a partner in the Blue Earth Network.

Jagdish N. Sheth
Jagdish N. Sheth is Charles H. Kellstadt Professor of Marketing in the Gozuieta School of Business at Emory University. He is the Founder and Chairman of Sheth Leadership Academy.“

Suhas Apte

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