Climate Neutral Network - Business and the Environment

Companies Blaze New Trails to Find Global Warming Solutions That Serve Them Well

A handful of companies are ranging far beyond energy efficiency to explore strategies that claim to leave no carbon footprints behind. Their efforts stretch the horizons of orthodoxy for industry leaders who are trying to reduce greenhouse gas (GHG) emissions, not to mention those corporate executives who have yet to come to grips with climate change.

For more than three years, environmental consultant Sue Hall has been building a coalition of companies into the Climate Neutral Network. Last month, after a long incubation period and with support from government agencies — including the US Environmental Protection Agency (EPA) — and energy policy specialists at NGOs, the group announced the names of the first three companies to receive the Climate Neutral certification: a trademarked brand name signifying that an entire enterprise, product, or service has little or no effect on the climate.

Shaklee Corp., a marketing firm that manufactures and sells nutritional, personal care, and household products through an army of independent contractors, is certifying its US operations. The commercial carpet maker Interface is designating its new resilient flooring product Solenium as Climate Neutral. The Saunders Hotel Group, which owns the Lenox and Copley Square Hotels in Boston, Massachusetts, USA, has created Climate Neutral accommodations.

"The motivation here on the part of Climate Neutral companies is voluntary and market based. They believe that there are ways to gain a market advantage as a result of the commitments they are making," Hall told BATE. "Many of the international discussions rely to a much larger degree on regulatory-oriented approaches. If we are going to be able to tackle some of the major environmental challenges of our day, I believe we have to embrace both approaches. They are very complementary."

Companies that receive rights to use the Climate Neutral trademark conduct a detailed inventory of their GHG emissions and create a plan to reduce emissions internally. Then they invest in reduction projects to offset their remaining emissions. The rules of the program encourage the players to devote a portion of the portfolio of offsets in emerging technologies so the investments will have spin-off benefits.

The plans to achieve Climate Neutral status must pass the scrutiny of the network's environmental panel. The criteria are based on design principles and guidelines developed in consultation with the panel's members, including Daniel Lashof, senior scientist at the Natural Resources Defense Counsel, Bob Wilkinson, senior research associate at Hunter and Amory Lovins's Rocky Mountain Institute, and other experts in climate change and energy conservation.

When the plans are filed, the companies commit to verification and long-term monitoring. The group is developing an accredited third-party certification modeled on the Forest Stewardship Council program for sustainably grown and harvested timber.

Ken Perkins, director of environment, health, and safety, told BATE that Shaklee had done about as much as it can to cut energy consumption on its own and as a participant in EPA's voluntary pollution prevention and energy conservation program, Climate Wise. Joining the Climate Neutral Network "spiked this renewed sense of pride and of wanting to do more." Motivational drivers are vital to Shaklee, which, in addition to 750 employees, depends on the enthusiasm of more than 500,000 independent sales distributors to market the company's health and wellness goods.

Shaklee is a subsidiary of Yamanouchi Pharmaceutical Co., a Japanese corporation. The Climate Neutral certification covers the US enterprise, comprising the headquarters and a small research facility in Northern California, USA, three distribution warehouses, and a vitamin and nutritional supplement manufacturing plant in Norman, Oklahoma, USA. Other product lines are manufactured by independent contractors; they are not covered by the climate plan.

Dock-to-dock operations — from delivery of raw materials to Shaklee, to the shipment of Shaklee products to its sales force — consume the equivalent of 25,000 metric tons of carbon dioxide annually. Shaklee's offset plans are to finance solar photovoltaic systems for rural households in Sri Lanka and India, to upgrade oil-fired steam boilers to natural gas at four public schools in Portland, Oregon, USA, and to capture methane from abandoned coal mines in Ohio, USA. The projects have community development and other social advantages, as well as environmental benefits. Shaklee is paying a premium for the offsets, which range in cost from US $4-$10 per ton of CO₂.

A Regulatory Blueprint

Few companies have entered the global warming debate with more vigor than TransAlta, the largest private utility in Canada and currently the country's second-largest emitter of CO₂. Now TransAlta has announced a new plan to erase the global warming impact of its Canadian operations within 25 years. The hitch is that the government must pave the way by exempting each of the utility's three coal-fired generating stations from carbon emissions restrictions in succession, ending in 2024 when all will either be upgraded to advanced coal technologies or equalized by carbon reductions made elsewhere. If not, TransAlta will close them.

The blueprint for zero net GHG emissions also contains the provision to offset all carbon emissions from new fossil-fueled facilities. The company would accomplish this by funding carbon reduction projects in developing nations, covering its emissions with permits traded with other companies, and earning credits for early reductions in GHG emissions made now before national limits become legally binding. The government will have to enact legislation making these steps possible.

TransAlta says every thermal power generator in Canada can replicate its plan and, if they did, wipe the electricity generating sector's 16% off Canada's inventory of global warming gases. "This is a groundbreaking proposal and we'd encourage the federal government to support it as they work to develop Canada's national implementation strategy," said Bob Page, vice president of sustainable development at TransAlta.

But the plan to grandfather coal plants would mean a five-year postponement of targets set out in the Kyoto Protocol, moving the date by which Canada has agreed to cut GHG emissions by 6% over 1990 levels to 2017 instead of 2012. The environment and the government would be compensated for the extension with much larger reductions in GHG emissions than called for by the international treaty in the period 2017 to 2025.

The approach allows TransAlta to depreciate its capital stock at a predictable annual rate and replace the existing equipment with more sophisticated, clean-burning coal processes. The strategy favors the continued use of coal from mines that TransAlta owns.

"We are dealing with technology that doesn't currently exist," says Tim Richter, communications specialist for climate change, when asked by BATE to justify giving TransAlta special treatment. "It takes time. Plus we do not want to pass along a huge expense to customers. We are deregulated here. We can't afford to have our electricity cost a lot more because we have to do this change tomorrow. So it really is about balance — balancing the need to make this step-change in technology without a large cost impact to us and to consumers. In the meantime, though, we are reducing our net impact on the environment using offsets, the Clean Development Mechanism [projects], and renewable energy. The net effect is the same. We are grandfathered, but our emissions are declining, continuing to reduce on a curve up to 2024."

Offsets and Trading Schemes

The zero-emissions proposal is part of TransAlta's high-profile campaign to influence climate change policy. On 23 March, on the exhibition floor of the Globe 2000 biennial conference and trade show in Vancouver, Canada, in the presence of Environment Minister David Anderson and provincial dignitaries, the company signed the first agreement of its kind in the world. The contract with the Global Livestock Group is to offset the equivalent of 30 million metric tons of CO₂ from cattle in Uganda. The project is structured to fit the constraints set by the proposed guidelines for the Clean Development Mechanism, a clause in the Kyoto Protocol to promote private investments in sustainable development projects in developing countries. International negotiations will take place later this year in The Hague, Netherlands, to try to finalize the rules governing such arrangements.

The GHG savings that flow back to TransAlta's account from the Uganda project would occur over a 32-year period with a reduction of 4 million metric tons taking place during the initial compliance period in the Kyoto Protocol from 2008 to 2012. The company would not disclose the financial terms of the agreement except to say it is a multimillion-dollar deal. Much of the methane contribution to the world's GHG inventory is from belching cows — the source of an endless round of jokes. The humor obscures real gains to be had in wringing more milk and meat from the animals, and at the same time making sizeable reductions in greenhouse warming potential. Cows, especially those in developing countries and fed on low-quality diets, have the highest methane emission rates of all animals.

Domesticated ruminant animals contribute an estimated 20%-25% of global methane production, according to Mark Orlic in the livestock efficiency program at EPA where scientific research on methane mitigation has been under way for many years. Orlic provided technical advice during the deal between Uganda and TransAlta.

The Global Livestock Group was incorporated expressly to undertake and monitor carbon offset projects in developing nations. The company relies on research pioneered by Washington State University and EPA to measure and verify the reductions of methane exhaled by cows whose feed is supplemented with urea to improve their digestion.

"The monitoring and verification methodology involves conducting scientifically controlled feed and methane trials at a local livestock research station on local animals under their normal feeding and improved feeding conditions," says Rod Livingston, director of business development at the company. "An accurate methane reduction figure will be determined from the numerous feed and methane trials for each project and by the tons of feed sold, minus a percentage for loss, spoilage, and other negating circumstances."

While the Uganda deal is ridiculed for straying far from the utility's core expertise, TransAlta led six other Canadian energy companies in another experimental deal to purchase up to 2.8 million metric tons of CO₂ emissions reduction credits from US farmers, initially those in the US state of Iowa. The complex arrangement includes options that must be exercised by June 2001. Delivery of the credits would occur through 2012.

The contract negotiated through the Greenhouse Emissions Management Consortium (Gemco), which represents the Canadian energy firms, allows US farmers to transfer credits they earn by using crop techniques that increase the amount of carbon retained in topsoil, by reducing methane emissions from animal waste, and by using less chemical fertilizers and fuel. The agreement is unusual because — unlike methane emission reductions from livestock — soil sinks for carbon are not on the Kyoto Protocol's approved list. In 1996, Canada argued in favor of allowing carbon sinks from the agricultural sector to count in meeting national commitments but could not sway its negotiating partners, including the US.

"The easiest way to show the US why this makes sense was to try to develop a deal in the US," explains Aldyen Donnelly, president of Gemco. "I don't want to suggest that the US government has said this is a go, but from the moment the US heard, mostly from the farmers in Iowa, that we are putting together a deal, they have been very excited. It was very positive to get a shift of the US negotiating team from opposition to at least consideration. It was a goal we set, and it has been worth it."

Contacts

Sue Hall, Climate Neutral Network, 4 Chenowith Road, Underwood, WA 98651, USA. Tel: +1 509 538 2500; Fax: +1 509 538 2550; E-mail: suehsea@gorge.net.

Ken Perkins, Shaklee Corp., 4747 Willow Road, Pleasanton, CA, 94588-2740, USA. Tel: +1 925 924 2737; Fax: +1 924 2133; E-mail: kperkins@shaklee.com.

Bob Page, TransAlta, Box 1900, Station M, 110 12th Avenue, S.W., Calgary, Alberta T2P 2M1, Canada. Tel: +1 403 267 4774; Fax: +1 403 267 7372; E-mail: bob_page@transalta.com; Web site: www.transalta.com.

Mark Orlic, US EPA, 6202-J, 401 M Street SW, Washington, DC 20460, USA. Tel: +1 202 564 9043; Fax: +1 202 565 2077; E-mail: orlic.mark@epamail.epa.gov.

Rodric Livingston, Global Livestock Group, 1828 L Street, NW, Suite 1040, Washington, DC 20036, USA. Tel: +1 202 463 8451 (Uganda Office: +256 41 540024; Fax: +256 41 543924); E-mail: rlivingston@theglg.com; Web site: www.theglg.com.

Aldyen Donnelly, Gemco, Suite 101-1965 West Fourth Avenue, Vancouver, British Columbia V6J 1M8, Canada. Tel: +1 604 731 4666; Fax: +1 604 731 4664; E-mail: aldyen@mindlink.bc.ca.