Monthly Archives: February 2014

Ways to Manage Your Company’s Climate Change Risks and Garner Support

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In the last couple of years, the public and governments have understood and accepted the importance of addressing climate change adaptation. If potential climate change impacts on your company – both physical and business – are not addressed, it can be an existential issue. If key facilities lose power, suffer damage to key processes, cause database information to be lost, and impact your supply chain and markets, it can affect your company forever. While climate change adaptation is not guaranteed to avoid all disasters, a viable program to lessen impacts and allow you to bounce back to normal quicker can be implemented. Another problem is how to get internal support for a program that has no immediate financial payback, but is of great value (risk reduction).

Getting Decision Makers and Managers To Take Climate Change Risk Seriously

Climate change risk cannot be assessed and incorporated into corporate decision making until it is taken seriously as the critical business parameter it is, as a discipline and with benefits. Remember, those in the C-Suite are probably older and likely did not learn about climate change in B School; uncharted territory. Managers, who take their cues from the C-Suite, may also resist, thinking of this as just another responsibility to add on to their others, and a doomsday scenario, too, with little financial reward at the end. Here are tips to engender internal support for addressing climate change risk.

• Document losses that have already happened related to climate change. Has your company suffered losses that may be related to severe storms? Perhaps from Hurricane Sandy or a prolonged drought? While it has not yet been established that these events were “caused” by climate change, most of the scientific community believes that climate change did exacerbate and worsen such severe events. Quantify the financial losses from the event(s), and determine what future losses may be if these were to repeat.

• What critical facility or corporate operations may be impacted by climate change in the future? Examine your operation and supply chains for critical elements that may be impacted by severe storms, water shortages, temperature rise, etc. One former client assessed that the agricultural product it needs as a raw material for their main product may not be able to be produced by its currently-contracted farmers 10-20 years in the future, and therefore contingencies should start to be planned before it may be too late or too expensive to change suppliers.

• Quantify and personalize risks of climate change hazards. Once key operations or facilities are identified, determine potential impacts on your company’s viability and profits if long-term damage due to a storm or extreme heat or other effect occurs and the operation becomes non-functional for a significant amount of time. How much money might the company lose short- and long-term? May market share be lost permanently? Present the risk of such an event happening, particularly if it has changed from, say, a once in a lifetime, to a once per decade.

• Determine preliminary risk-averse strategies and rough costs for the most vulnerable elements. For a couple of vulnerable processes or assets, determine preliminary strategies, such as installing flood control measures, moving key equipment up from low lying floors, etc. What are the preliminary upfront and maintenance costs? How do these stack up to the potential short- and long-term costs and losses should the assets not be protected?

Ultimately, most C-Suite executives are swayed by numbers and the fear of substantial, existential risk. Presenting preliminary risk and cost estimates should convince them of the importance of tackling climate change risk now. This is likely an iterative process, so updating existing and showing new examples will help convince more executives and managers the business sense of a professional program to identify and address climate change risk. It is an argument that will likely take some time to win.

Approaches to Begin a Corporate Climate Change Risk Program

• If your company has multiple facilities, it is important to have corporate-wide climate change adaptation policies with specific goals covering all assets. However, it is also important to recognize that one strategy does not fit all facilities, given specific local issues each faces (i.e., operations conducted, local climate). Thus, a balance of consistency, yet addressing local needs is critical.

• “Do the science.” Amazingly, in established areas, such as the Northeast, there is a wealth of accurate information about flood zones and risk – many originating over a century ago. They have stood the test of time – until now. Climate change-caused rises in both the height of water bodies and moisture content of the atmosphere (confirmed by measurement) now raises the frequency of destructive storms damaging buildings and processes. Revisit those calculations and plan and modify to minimize adverse impacts from the more frequent storms.

• Make sure that your climate change risk program does not only focus on the physical effects of severe storms. The program should also look at business-related changes, such as shifting markets and availability of resources. If you produce a product dependent on a raw material from a supplier, may climate change effects eventually risk the scarcity or price stability of the raw material? Any raw material from farming may be vulnerable if your supplier cannot produce it anymore (or at a lower yield). Perhaps long-term rising temperatures will reduce demand for your main products; perhaps it will enhance demand. This is critical for corporate managers to understand and keep track of.

CCES has the technical experts to help you develop a climate change adaptation program, assessing and addressing risk for your maximum financial benefit. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Documented Business Benefits of Going Green

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Some companies and municipalities think about becoming more sustainable. At some, motivated employees bring this up at meetings. However, only a small percentage of US entities are taking the serious steps to go “green”. Why so few? In most cases, there is fear. What may go wrong and what will it cost? Will this process be difficult to control? Are there financial benefits? If so, are they worth the cost? What about liabilities/risks?

However, many entities have successfully gone “green”. Yes, there were upfront costs, education of managers and staff, and some workplace changes. But in so many cases the programs have worked successfully and have brought great financial benefits: not just direct dollars and cents, but also other indirect benefits that save hard cash.

It has been well documented that a robust, well-organized “green” program will save energy costs. The centerpiece of the program is a professional energy audit resulting in energy efficiency and conservation. Energy costs are saved and risk reduced. It is easy to identify and implement low hanging fruits with fast paybacks and use these initial savings to fund just-as-important, but perhaps more long-term, future energy savings.

But robust benefits do not end there. In a good sustainability program, use of other resources, such as water and necessary chemicals are often reduced, as well, saving more costs. And when water and other chemical usages are reduced you have, by definition, saved time and expenses for cleanup, waste management, and, indirectly, agency spotlight and liability. This further decreases energy costs and makes managing your manufacturing or other processes simpler. You make a higher-quality, more reliable product or successful operation, all contributing to a better bottom line.

And then there are the social benefits. It has been well documented that an entity with a meaningful “green” program has a more motivated labor force. Employees are more loyal, productivity increases, and are less likely to leave. The latter represents a major cost savings, as finding and training the right replacements is very cumbersome and expensive. A good example of increased productivity is a client of mine that switched fuels from No. 6 fuel oil to cleaner natural gas. Every time an oil truck came on site, a couple of employees had to stop their work to help load the oil into the storage tanks. With several hundred annual truck deliveries eliminated by using gas, these employees were freed up for their regular duties. Plus, they had much fewer areas to clean up. And then there are the neighbors. “Green” facilities emit fewer odors and air pollutants than others. While the public sometimes comes around slowly, they eventually do, and friendly neighbors also add to the bottom line and to future growth potential.

CCES has the experience and the experts to help you get similar results. We can help you implement a successful sustainability program to give you maximum business benefits. Contact us today at 914-584-6720 or at karell@CCESworld.com.

USEPA Announces 2013 Enforcement Results

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Here are some highlights from the USEPA’s fiscal year 2013 enforcement efforts (http://www2.epa.gov/enforcement/enforcement-annual-results-fiscal-year-fy-2013):

• USEPA cases resulted in criminal sentences requiring violators to pay more than $4.5 billion in combined fines, restitution and court-ordered environmental projects that benefit communities, and more than $1.1 billion in civil penalties.

• The USEPA’s efforts for justice for Gulf Coast residents through the Deepwater Horizon cases resulted in over $3.7 billion benefitting those impacted by the spill.

• Required Walmart to commit to cutting edge hazardous waste handling systems, as well as compliance and training programs that will protect employees and nearby residents. Walmart also paid over $80 million in fines and penalties for mishandling pesticides and hazardous waste.

• The USEPA was behind a landmark settlement. AVX Corporation committed to pay over $366 million to clean up contamination in New Bedford Harbor (MA), the largest single-site cash settlement in Superfund history. The USEPA emphasizes that polluters must be responsible to clean up and pay for damages they cause.

• The USEPA is implementing a strategy targeted at reducing air toxic emissions from industrial flares at refineries and chemical plants. A recent Clean Air Act settlement with Shell Deer Park (TX) requires continuous monitoring of benzene emissions and vehicle retrofits to reduce diesel emissions.

• Another USEPA target is air emissions from coal-fired power plants, requiring plants to reduce emissions and promote energy efficiency. Example settlements include Wisconsin Power and Light, Dominion Energy and Louisiana Generating.

• The USEPA shared lessons learned from some communities to help others reduce discharges of raw sewage and contaminated stormwater into waters through integrated planning, green infrastructure and other approaches. Recent settlements include Seattle and King Co., WA, Wyandotte County, KS, San Antonio, TX, and Jackson, MS.

CCES can help your facility chart current and projected future air and other environmental regulations and enforcement trends. Our experienced professionals (including former USEPA engineers) can perform technical air compliance audits to assess your potential compliance status of federal and state rules, and devise reliable, cost-effective strategies to return to or maintain compliance. Contact us today at karell@CCESworld.com or at 914-584-6720.

GHG Emission Regulation Updates

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USEPA Publishes Proposed Rule to Regulate New Power Plant GHG Emissions

The USEPA’s re-proposed a rule for greenhouse gas (GHG) emissions from new power plants, published in the Federal Register on Jan. 8, 2014. See: http://www.gpo.gov/fdsys/pkg/FR-2014-01-08/pdf/2013-28668.pdf. The agency’s 2012 attempt to regulate GHG emissions from fossil fuel-fired electric generating units (EGUs) was very controversial, resulting in over 2 million public comments. But given President Obama’s recent emphasis on climate change, such rules are more critical.

GHG emission limits in the proposed rule (for new power plants only) are as follows:

• Oil-fired utility boilers and integrated gasification combined cycle (IGCC) units:
o 1,100 lb CO2/MWh gross over each 12-operating month period, or
o 1,000-1,050 lb CO2/MWh gross over an 84-operating month (7-year) period

• Proposed natural gas-fired stationary combustion units:
o 1,000 lb CO2/MWh gross for large units (> 850 mmBtu/hr)
o 1,100 lb CO2/MWh gross for small units (≤ 850 mmBtu/hr)

While there are many similarities between this and the previous 2012 proposed rule, there are several notable differences, such as higher emission limits for boilers and IGCC units. The comments deadline on the new proposed rule is set for Mar. 10, 2014.

RGGI States Reduce GHG Emission Cap By 45%

The 9 northeastern states of the Regional Greenhouse Gas Initiative (RGGI) set its 2014 emission cap at 91 million tons — a 45% reduction from last year’s cap – and will decline 2.5% additionally each year from 2015 to 2020. By 2020, power plant GHG emissions in the RGGI states are estimated to be half of its 2005 levels. This change was prompted by the ease in which power plants met existing caps and the depressed market price for GHG credits. A reduction in cap size was felt to both be an impetus to resuscitate the market and a low cost opportunity to reduce GHG emissions further.

The first GHG auction under the new cap will take place on March 5, with 18.6 million CO2 allowances available with a reserve price of $2.

CCES has the technical expertise to advise you on how to comply with federal and state GHG and other energy and emission regulations for reliable compliance and to come out ahead by saving considerable money, as well. Contact us today at 914-584-6720 or at karell@CCESworld.com.