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Seminar Report on The Future Size of the Carbon Footprint, Hosted by SDForum and Nixon Peabody LLC. Summary: Event write-up by Keith Rayner To put some initial structure to a broad theme, the panel defined two main categories of corporations: firstly, the carbon-intensive industries such as utilities, oil, gas, cement and steel, which are already at the heart of carbon usage, and second, everyone else such as retail, finance, and consumer goods producers, etc. For carbon-intensive industries, reduction in energy costs, as well as monitoring of other pollutants, have been a priority. Now they are also facing CO2 cap-and-trade legislation which puts a cap on CO2 emissions and a price on carbon, forcing regulated companies to balance and offset their emissions by buying carbon credits. Driven by software systems of course, formalized carbon trading systems such as the Chicago Climate Futures Exchange provide the marketplace for these trades. Member companies in such an exchange that reduce carbon footprints can also earn credits which can be sold on these markets. Caps in the US will likely be more broadly established in the next few years, but major companies that do business internationally may also need to comply with carbon emissions standards set by other counties. The panel discussed various other proposals such as a tax on emissions, noting that both taxes and caps can penalize companies in countries such as the US that may impose them, compared to other producing countries such as China and India that may not. Balancing with import tariffs smacks of protectionism and can result in trade wars. Tax breaks for carbon reduction is yet another option. To prevent “carbon leakage” across borders where accountability is lost, all countries need to fall under the same standards and legislation. Some standards are emerging, pushed by organizations such as the WRI Greenhouse Gas Protocol (GHG Protocol) which provides corporate accounting and reporting guidelines. All this points to the importance of software systems that can provide carbon management solutions that the panel defined in three areas:
Provided by major software vendors as well as startups, these software systems provide essential value to any industry or commercial concern. There could be two tiers to these solutions - one for large companies, another, perhaps a SaaS model, for smaller companies with a more limited set of concerns. Companies that have rigorous carbon management standards will be better able to react to future carbon legislation. However the panel agreed that this is not an easy task as most of the carbon value chain occurs outside of a company. The carbon cost of producing and shipping raw products or parts to be used and assembled at a central production facility is difficult to measure, as is product use by the consumer – frequency of product usage, power consumed, and end-of life recycling issues can all vary radically. The clean tech industry also adds to the economy and creates jobs. Certainly new software solutions are needed for accountability and reporting, and there are opportunities for startups that create carbon management software or carbon reducing technologies at the smoke stack, or that turn carbon into a high-value product. Even on a voluntary basis, managing carbon emissions within commercial companies can help to improve efficiency, and provide immediate benefits in lower energy consumption. Being green is also a good branding point, and is increasingly needed to respond to competitive pressures. Disclosure of the corporate carbon footprint and reporting to stakeholders with a legitimate and transparent claim to “greenness” improves the brand story. Companies that produce greener products or services can also market them more attractively to customers such as local, state or federal government organizations that do have a stated carbon policy. The term “dark green” surfaced as a description of the consumer that places a strong emphasis on carbon usage. So how can these consumers compare two products to see which has a lower overall carbon footprint, products that may otherwise be very similar, say, a can of Coke compared to a can of Pepsi? Unlike other consumer information such as calorie counts, there is no easily understood unit for carbon usage. Perhaps the first step would be a red, amber, and green ranking system so the consumer can at least tell whether carbon usage conforms to a certain level, or a barcode which points to more complete information on the web. There are moves towards standards, for example the UK Carbon Trust sets a Carbon Trust Standard that certifies an organization has genuinely reduced its carbon footprint and is committed to making further reductions year on year. The panel indicated that other consumer watchdog organizations are springing up to monitor green brand claims. In conclusion, cost savings emerged as the overall driver for carbon footprint monitoring and reporting, and those companies that diligently apply this are well prepared for any pending legislation, will start with a better hand to play at the carbon trading table, and enjoy an enhanced reputation with their customers. Software systems are ultimately essential to provide the complex life cycle assessment, carbon credit accounting and trading, internationalization and standardized reporting that will give transparency and understanding to this complex field. Thanks to the Panelists: Don Bray, AltaTerra Research Write-up: Keith Rayner, Kemarra Inc: May 2009
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