Carbon Regulation is Already Here

Most people talk about carbon taxes, cap and trade, and other carbon-related costs and regulations as if they were something new and unusual. In fact, most companies already face a very complex environmental and Greenhouse Gas (GHG) regulatory system that includes both private standards and government laws and regulations.

The private and public restraints on GHG emissions range from the Walmart Sustainability Index that requires 100,000 Walmart suppliers to disclose their carbon footprints and sustainability initiatives, to regional GHG cap and trade programs that require power plants to reduce their emissions or purchase allowances in an open auction. And, of course, the 1990 Clean Air Act Amendments instituted a cap and trade program for acid rain that achieved 100% compliance in reducing sulfur dioxide emissions during the 1990's.

The most prominent GHG cap and trade program today is the Regional Greenhouse Gas Initiative (RGGI). The ten Northeastern and Mid-Atlantic states that comprise RGGI have agreed to a mandatory, market-based effort to reduce greenhouse gas emissions. The member states have capped CO2 emissions from the power sector with the goal of reducing those emissions by 10% by 2018. States sell nearly all emission allowances through auctions and invest proceeds in consumer benefits: energy efficiency, renewable energy, and other clean energy technologies.

Similarly, the Western Climate Initiative (WCI) is a collaboration of seven western US states and three Canadian provinces working together to identify, evaluate, and implement policies to reduce greenhouse gas emissions, spur investment in clean-energy technologies that create green jobs, and reduce dependence on imported oil. WCI has announced plans to implement a cap-and-trade system in January 2012 that will provide financial incentives to reduce carbon emissions. The program will start with power plants, then extend to large industrial producers and transportation.

These GHG cap and trade programs, however, are only the highly visible tip of the iceberg. Almost every company in the US faces a complex web of private standards and public laws that regulate their GHG emissions, other environmental impacts, and overall sustainability. CERCLA, RCRA, NEPA, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, the Ocean Dumping Act, and the Endangered Species Act are just a few of the US laws regulating the environmental impacts of companies and individuals in the US. Companies that export to Europe must also be aware of the specific regulatory, green labeling, and other environmental requirements in the European Union and locally.

My good friend Stan Alpert believes that smart companies can use their compliance with environmental regulations as a competitive advantage and ultimately to reduce costs. Stan should know. In addition to working for many years as the Chief Environmental Prosecutor in the U.S. Attorney's Office that covers parts of New York City and all of Long Island, Stan has extensive experience as a lawyer in private practice advising green and sustainable businesses.

Stan has put together a free online webinar entitled Sustainability is Smart Business: A Legal Perspective. The seminar covers the triple bottom line, carbon regulation in the US and internationally, and toxin reduction in the product and waste streams. Businesspeople can view the webinar by clicking here. US lawyers who wish to receive free Continuing Legal Education (CLE) credits for watching the webinar can view it by clicking here.

John Howley
Woodbridge, New Jersey

Could This Be The Year for the All-Electric Car?

The stars are finally aligning for what might be the year of the electric car. Demand will be there as gasoline prices are expected to hit $4 per gallon this summer. Consumers will be able to test drive all-electric vehicles at car rental agencies such as Hertz, and a number of different manufacturers will offer a range of models to choose from. The infrastructure -- a network of electric recharging stations -- is starting to fall into place. There's even an iPhone app that will tell you where the nearest charging station is located.

Let's begin with demand for all-electric vehicles. As noted in yesterday's post, most experts expect oil prices to exceed $100 per barrel this year. That means gasoline prices above $4 per gallon this summer. And high prices are most likely here to stay. While most analysts expect that OPEC will try to keep prices in the $100 to $150 range, Morgan Stanley and others question whether they have enough capacity to keep up with increasing demand from China and other emerging economies. If not, then $200 per barrel oil is within the range of possibilities. John Hofmeister, former president of Shell Oil and author of "Why We Hate The Oil Companies," points out that this could mean gasoline at $5 per gallon by 2012.

Gasoline at $4 to $5 per gallon will start people thinking about alternatives. Can all-electric cars meet their needs?

Car makers and car rental companies are betting that consumers will fall in love with electric cars once they drive them, and so far the reviews have been great. Jim Motavalli, writing in Forbes.com, describes the Nissan Leaf as "impressive, quiet, comfortable, sophisticated, and bristling with high-tech aids to help with charging and plug-in connectivity." He also says that it "handles excellently." In addition to the Nissan Leaf and the Chevy Volt, new all-electric cars are expected this year from BMW, Ford, Mercedes, Mitsubishi, Renault, Subaru, and Toyota in a variety of price ranges. At the top end of the price range, you can even get the very sleek, powerful, and fast all-electric Aston Martin pictured above. A number of other manufacturers are also preparing to enter the market with all-electric vehicles, including China's BYD (backed by Warren Buffett), which is building an all-electric 5-passenger sedan.

OK, so the supply of all-electric vehicles and the demand for them might show up this year, but what about the infrastructure needed to recharge them? Turns out that charging stations are already in place, and more can come on line very quickly in response to demand. For example, utilities around the nation are installing recharging stations for electric cars. Hertz has installed charging stations in Manhattan, and will soon be installing more charging stations at select Starwood Hotels. Walmart has been planning to deploy recharging stations in its parking lots across the country, and if that happens it won't be long before Target, Walgreens, CVS, and other national chains follow the lead.

The constraint this year may be whether supply of all-electric vehicles can keep up with demand. When the Prius first came out, many prospective buyers found themselves on waiting lists to get one of the now iconic hybrids. The same could happen this year, especially with a federal tax credit of up to $7,500 for electric vehicles plus additional credits from states such as California, Georgia and Tennessee.

The longer term, and more troubling issue is whether the electric grid will be "smart" enough to handle the new type of demand for electricity. It is not simply a capacity issue. Existing generation capacity could probably handle tens of thousands of electric cars being recharged during off-peak hours, such as overnight. The problem arises if large numbers of electric cars are being charged during peak demand periods. Ideally, electric cars would act as back-up storage sending electricity back to the grid during peak demand hours and recharging during off-peak hours. But the grid is not yet capable of handling that or billing for it. Building a smarter grid, more than anything else, is the biggest barrier to a future of electric vehicles.

John Howley
Woodbridge, New Jersey

Green Resolutions for a Happy New Year

2010 was the best of times and the worst of times for green energy. Here are a few resolutions to help us make 2011 a Greener and Happier New Year.

Resolution #1: Keep The Faith

It is easy to get discouraged during a year when the media and Congress ignored an urgent warning from the National Academy of Sciences that Strong Evidence on Climate Change Underscores the Need for Actions to Reduce Emissions.

But do not despair. We did make progress this year. Walmart launched a Sustainability Index requiring 100,000 of its suppliers to disclose their energy and water consumption, carbon footprint, waste management practices, and what they are doing to become more green and sustainable. President Obama ordered federal agencies to reduce the federal government's carbon emissions by 28% by the year 2020. Both of these actions are having ripple effects as evidenced by Deloitte LLP acquiring three of the largest carbon consulting firms in the world. Deloitte, IBM, Accenture, McKinsey, and all the other consulting firms are building sustainability practices because their clients know that being profitable in the 21st century means finding ways to reduce waste and becoming more sustainable.

So resolve to keep the faith in 2011. We are making progress.

Resolution #2: Share the News

Edward R. Murrow, Walter Cronkite, and other low-key, professional newscasters have been replaced with jesters and snake-oil salesmen. Traditional media are desperately trying to get our attention because we no longer rely exclusively on them for news. Most of us get our news from many different sources including, most importantly, our social networks. Think about how many times you have found a story or a video because a friend sent it to you via email or posted it on your favorite social networking site.

That, my friends, is how we will continue to build upon the growing consensus in support of green and sustainable energy. When you see an interesting article / video / podcast on green energy or climate change or sustainable business practices, post it and share it with your friends. Some of them will share it with their friends. Sometimes it will even go viral.

So resolve to share the news. We can change the world by sharing.

Resolution #3: Think and Choose Green

Many of us have made greener choices when buying cars based on their fuel efficiency rating or when buying appliances based on their EnergyStar rating. This makes sense because a single decision will save energy, save money, and reduce environmental impacts for many years. There is another choice that we should be making and that has only become available in the past 5 years or so. That is choosing where our electricity comes from.

In many states, you have the right to tell your utility to get your electricity from green and sustainable sources. It does not cost any more than you pay now, and it often costs less to choose greener energy. I've done this for my own home. We now get greener energy for 12.4% less than we were paying before. You can click here to find out how you can choose greener energy at an affordable price for your home or business. It's free, it's easy, it will help the environment, and it could save you money. And it will increase the demand for sustainable energy.

So resolve to think and choose green whenever you can. We can make a difference.

Happy New Year!

John Howley
Woodbridge, New Jersey

Breakthrough in Genetically Modified Plants for Renewable Energy

Scientists at The Samuel Roberts Noble Foundation in Ardmore, Oklahoma, have uncovered a gene that could revolutionize the biofuels industry in the United States. The gene is responsible for controlling the density of plant material. By removing the gene, farmers can grow denser plants that produce more biomass from the same acreage. In short, more energy from the same amount of land and less conflict with land needed to grow food.

Huanzhong Wang, Ph.D., a postdoctoral fellow at the foundation, found a gene that controls the production of lignin in the central portions of the stems of Arabidopsis and Medicago truncatula, species commonly used as models for the study of plant genetic processes. Lignin is a compound that helps provide strength to plant cell walls, basically giving the plant the ability to stand upright. When the newly discovered gene is removed, there is a dramatic increase in the production of biomass, including lignin, throughout the stem.

Increasing lignin in non-food crops, such as switchgrass, may increase the density of the biomass and produce more feedstock per plant. Compared to corn- or soybean-based biofuels, switchgrass and other low-input grassland perrenials can provide more usuable energy, greater greenhouse gas reductions, and less agricultural pollution per acre. In addition, many of the grass varieties can be grown on agriculturally degraded land, are drought and salt tolerant, and therefore can be grown on land that is not used for food production. Perrenial grasses also offer an excellent habitat for a wide variety of birds and small mammals.

"In switchgrass, as the plant matures, the stem becomes hollow like bamboo," said Dr. Richard Dixon, director of the Noble Foundation's Plant Biology Division. "Imagine if you use this discovery to fill that hollow portion with lignin. The potential increase in biomass in these new plants could be dramatic. This technology could make plants better suited to serve as renewable energy sources or as renewable feedstocks to produce advanced composite materials that consumers depend on every day."

Collaboration with scientists at the University of Georgia revealed that removing the gene also increases the production of carbohydrate-rich cellulose and hemicellulose material in portions of the plant stem. These are the components of a plant that are converted to sugars to create advanced biofuels, such as cellulosic-derived ethanol or butanol. More celluloses and hemicelluloses mean more sugars to use for carbohydrate-based energy production.

Biofuels have already shown that they can help even a large nation wean itself from foreign oil. Brazil has eliminated its dependence on foreign oil by using ethanol from sugar cane to meet most of its fuel needs. Increased lignin production in switchgrass and other perennial grasses could help the US reach energy independence as well.

John Howley
Woodbridge, New Jersey

Learning 2010

Posting may be sporadic this week as I am getting ready to be a keynote speaker on sustainability at LEARNING 2010 in Orlando.  Other keynoters include Apolo Ohno, Marshall Goldsmith, and of course Elliott Masie.  For details, go to http://www.learning2009.com/L10-Keynotes/john-howley.htm  You can expect a full report in this blog after the conference.

John Howley
Orlando, Florida
www.HowleyGreenEnergy.com

Peak Oil and the Reactionary Media

Lloyd's of London issued a report two weeks ago warning that businesses must take our peak oil problems seriously. The report predicts oil prices above $200 per barrel by 2013, and it warns businesses to take action now or face "expensive and potentially catastrophic consequences."

News that the world's largest insurance market sees significant risks in the problem of peak oil was reported in the UK media, but I did not see (and have not been able to find) a single mention of it in the mainstream US media.

If the US media doesn't cover the story, does that mean the story isn't real? Even if the story comes from a reputable organization such as Lloyd's of London? What is going on here?

The problem is that "peak oil" is a very expensive story to develop and report. Our media prefer to report on "events" that they can simply "cover" and comment upon. For example, the media spent very little time or effort on the risks of offshore drilling or corrupt and ineffective government regulators before the BP Deepwater Horizon catastrophe happened. And you can bet that they will pay only passing attention to the complicated environmental consequences of that spill now that oil slicks on the surface are evaporating (no more photos of oil soaked pelicans) and the underwater video stream no longer shows oil gushing from a broken pipe.

Peak oil is not so dramatic as an oil spill, and its consequences are only felt over a period of years or decades. It is not the end of oil. It is simply the end of increasing oil reserves and the start of declining oil reserves.

As Lloyd's of London warns, however, peak oil will will be very disruptive over the coming decade or so. As reserves start decreasing instead of increasing, supplies will tighten and prices will rise. That will happen even in a weak economy. And as demand grows dramatically in developing markets, prices will rise dramatically.

It does not take an economics degree to understand that demand will grow dramatically in the coming decade. Billions of families in China, India, and other growing economies want more cars and SUVs just like the American dream. That's why, even in a Great Recession, GM is already selling more vehicles in China than it sells in the US. As the economy improves, China alone will put 2 or 3 times as many vehicles on the road as are on the road in the US today. Plus billions of people in China, India, and other developing countries would love to have lawnmowers, pickup trucks, ATVs, buses, recreational vehicles, air travel, and ocean cruises. Plus pharmaceuticals, plastics, cosmetics, and thousands of other products that contain petroleum by-products. Plus more factories and industrial plants to make all these oil-derived and oil-consuming products.

All of this dramatically increasing oil demand will occur as the accessible oil reserves start declining.

Now if only we could figure out a way to put that on streaming video.

John Howley
Orlando, Florida
www.HowleyGreenEnergy.com