Tag: carbon dioxide

Water Scarcity and Greenhouse Gas Emissions Are Environmental Aspects Worthy of Management System Attention

Posted on by John Shideler

Two of the most successful International Standards of the last 25 years are ISO 9001 and ISO 14001. ISO 9001, a quality management system standard now used by more than one million organizations, first gave international prominence to the “systems approach” to management. It has become one of the all-time best-selling standards of the International Organization for Standardization (ISO).

Its success helped launch ISO 14001, an environmental management system based on the “plan-do-check-act” virtuous cycle of policy-driven planning, managing to meet objectives, establishing operational control, and monitoring and measuring progress towards meeting identified objectives and targets. Several hundred thousand organizations around the world have adopted ISO 14001, usually as an enhancement of a quality management system which has the goal of managing processes for delivering quality goods and services and satisfying customers.

Fundamental to an environmental management system is the identification of the environmental aspects of an organization. These are the “elements of the organization’s activities, products and services that have or can have an impact on the environment,” whether adverse or beneficial. Identifying environmental aspects is key to the successful implementation of the management system, because it helps organizations proactively manage “those that can have a significant impact on the environment.”

Many early adopters of ISO 14001 environmental management systems reaped major benefits from their efforts. Energy efficiency, waste reduction, prevention of pollution, improved compliance with environmental legal requirements, all paid returns that contributed to the organizations’ bottom line while improving their standing among stakeholders, driving improvements through the supply chain, and augmenting workforce morale. Alas, the more the environmental management system standard became commonplace, the greater was the tendency of some later-adopting organizations to use the system as a regulatory compliance management tool and for little else.

In such cases, the true potential of the environmental management system is shortchanged. Properly implemented, ISO 14001-based systems should identify all environmental aspects that have the potential to create significant environmental impacts, whether they are currently regulated or not. Two prominent issues that fall in this category are water consumption and greenhouse gas emissions.

With the world population approaching seven billion, water scarcity is a growing concern. Organizations fortunate enough to be located in water-rich regions can ill afford to be complacent. Although “water wars” have not broken out recently in the United States, regions not normally considered water constrained have experienced some skirmishes. The contested northern boundary of the state of Georgia comes to mind, where claims of a flawed early nineteenth century survey that demarcated the boundary with Tennessee recently were raised. Why the sudden interest on behalf of the state of Georgia in a small strip of land that for nearly two centuries had been recognized as part of Tennessee? The explanation is access to the Tennessee River, which could have been tapped to relieve a drought that recently afflicted northern Georgia.

Another example is public opposition in Minnesota, the land of ten thousand lakes, to commercial development of the state’s water resources to feed an ever-expanding consumer thirst for bottled water. No thank you, say Minnesotans, who much prefer to keep their water for themselves.

Reducing greenhouse gas emissions is another issue that concerns many stakeholders. Regulation of greenhouse gas emissions is now occurring in California and has become an important consideration for the siting of new power plants across the country. For many companies, however, regulation of carbon dioxide is an issue for some time in the future, not today.

However, US companies ignore greenhouse gases at their peril. Aircraft operators landing in Europe or taking off from there face regulation from 2012 as part of an expanded European Union Emissions Trading System. This includes all US transatlantic carriers, and even some general aviation. France and other EU countries have proposed legislation that would mandate disclosure of the “carbon footprint” of products sold in that country from as early as January 2011. Imports from the US would be affected.

Identifying water consumption and greenhouse gases as potentially significant environmental aspects in an ISO 14001–based management system makes good business sense today, in advance of regulations. Doing so helps organizations take early actions to tackle critical issues before the mandates arrive.

© 2010, Futurepast: Inc.

High Quality Carbon Offset Credits Available Now At Bargain Prices—Is Now the Time to Buy?

Posted on by John Shideler

Prices for voluntary carbon offset credits issued in the United States have declined considerably since the beginning of 2010. Diminishing prospects for the passage of climate change legislation in the US Senate is most often cited as the major reason for the price of Climate Reserve Tonnes (CRTs) dropping to around $6 per ton from approximately $10 at the beginning of the year. CRTs are issued by the Climate Action Reserve for carbon offset projects undertaken mainly in the United States and are viewed as “compliance grade” offsets under a future US federal cap-and-trade program.

Meanwhile California and other states and Canadian provinces continue to plan for the introduction of a regional cap-and-trade system within their jurisdictions by the start of 2012—now less than two years away. And in the United States the Environmental Protection Agency continues to develop an approach to regulating greenhouse gas emissions under existing authority granted to it by the Clean Air Act.

The consensus view among many climate change experts is that it is only a matter of time before real constraints are placed upon the emission in the United States of carbon dioxide and other greenhouse gases, and that some form of market mechanism will be used to help ease the transition to a low-carbon future. The success of the 1990s Acid Rain program in reducing emissions of sulfur dioxide is too compelling, market advocates say, for significant reductions in greenhouse gas emissions to be achieved across broad segments of the economy without taking advantage of emissions trading. Trading, they contend, provides needed price signals concerning the value of future carbon emission reductions and helps companies implement the most efficient abatement strategies.

Six dollars per ton is cheap compared with the cost of driving down emissions in America’s power plants, factories, and transportation networks. This can only mean that the price reflects skepticism about the political will of leaders in either the nation’s capital or in state capitals to cap greenhouse gas emissions. However, few voices among the many speakers at the Electric Utility Environmental Conference (EUEC) held in Phoenix earlier this month thought that no action was likely, if for no other reason than the industries most affected by greenhouse gas regulation would prefer the more flexible cap-and-trade mechanism to the blunt instrument that a command-and-control approach would take under existing provisions of the Clean Air Act.

Many speakers at the EUEC speculated that a billion tons of carbon offset credits will be needed to make a cap-and-trade program work at the federal level in the United States. This amount of voluntary emission reductions is enormous compared to the Climate Action Reserve’s current output in millions. In the face of political uncertainty about the timing of climate change legislation, the price of CRTs appears to be supported at current low levels by electric utilities—and others—hedging future carbon risks by taking “pre-compliance” positions in CRTs. It is estimated that such buying may have motivated as much as three quarters of the market in 2009.

At present prices, CRTs are trading at approximately one third the cost of Certified Emission Reductions (CERs) issued by the Clean Development Mechanism (CDM) under the Kyoto Protocol. Companies whose greenhouse gas emissions are currently capped under the European Union Emissions Trading System (EU ETS) are able to use CERs interchangeably with Assigned Amount Units when meeting their compliance obligations. CRTs trade at a discount to CERs because CRTs are not currently priced for use under a mandatory cap-and-trade system, though it is virtually certain that they will play a role similar to CERs under the Western Climate Initiative’s cap-and-trade program that begins in 2012.

Now is the time for companies with exposure to climate change risks to consider adding voluntary emission reductions to their investment portfolios. Since not all voluntary emission reductions are created equal, the present time provides an excellent opportunity to learn how to perform due diligence when conducting trades or financing emission reduction projects. Carbon traders may well look back to 2010 as the time when forward-thinking companies got a head start on their competition by building positions when CRTs were cheap.

© 2010, Futurepast: Inc.