Making money by reducing emissions

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Courtesy of VisionMonitor Software, LLC

Efforts to reduce emissions are really about changing companies' behavior. Pressure on companies from various activist groups combined with daily headlines in national and international media are driving various agendas among federal, state and local regulators. The current financial crisis does not appear to have lessened this pressure, rather the opposite. Compliance is now a must; non-compliance will not be tolerated and hefty penalties, corporate and personal liabilities, will be incurred.

So what is a company to do? Faced with pressures from financial markets, shareholders, customers, communities and employees should they now spend their limited funds on complying with stricter environmental rules? I contend that this investment carries a higher ROI than just about anything else at this time.

First, start by assessing the risks of going forward with business as usual. Know your carbon footprint and the value of your emissions assets. Get a handle on your current environmental process. Assess your current systems for collecting environmental data. If this is an excel spreadsheet with manual data entries, think about how you will collect this data in a real-time operating environment. Think about how you will manage this data in a real-time environment. Think about how your future operation will be affected by actions you take today and about how actions you take today will affect your future operation. Your environmental operation is just that – it is part of your operation. It is an increasingly more important part. It can no longer be viewed as simply a staff function where the Plant Manager says to the EHS Director, 'Are we in compliance?' Compliance is a must and a given. One of our clients once told me that the fines resulting from non-compliance do not hurt nearly as much as the required 'fixes' when you operate in a reactive fashion. In a company organized for the future, the senior environmental officer is the CEO. He will ask questions like: 'What is the expected return on environmental investments made this year?' 'How can we maximize the return on our emissions assets for next year?' 'Are there any environmental risk factors that can surprise us next year?' He will demand the company operate in a proactive fashion using actionable, real-time data as a basis for operating decisions.

Other than from the media, where does the actual pressure come from to change how a company develops and executes its environmental strategy?

Congress has the power to adopt emissions regulation. Federal agencies, such as the US EPA, have the power to enforce emissions regulations. However, they often delegate to the states the power to effectuate and enforce the federal programs. The process from regulation to enforcement then actual emissions reduction is very slow and politically charged. Furthermore, introduction of legislation does little to affect emission reduction, if not also followed by a dramatic increase in funding for enforcement and actual collection of financial penalties for non-compliance.

In addition to regulatory pressure, companies face increased pressure from certain activist shareholder groups. However, they typically get little more than 30% support at annual meetings for their agenda of moving companies in a green direction.

Local communities and state, county and city agencies have no stick to force behavioral changes and often have to develop an adversarial relationship (media and lawsuits) to force behavioral changes within a company.

Is there a better way to meet modern societies' goals of cleaner air and a healthier environment? We think there is.

By making investments in systems and processes to increase operational efficiency, companies can dramatically lower their operational costs and at the same time reduce environmental risk. We call this Real-Time Environmental Operations (RTEO).

The problem with the current approach is that there is a perceived cost and negative bottom line impact of stricter environmental regulation. However, our experience has shown that this is not the case. In the short term, investments have to be made by companies to achieve emission reduction goals; however the longer term benefit is a more efficient operation. The most efficient way to reduce emissions is often by using less power, less feedstock or to limit production losses. The first step in this process is always to analyze how the current operation is being conducted, track the processes, track and monitor emissions and tie this information to operational plans.

A RTEO software system ties together relevant data sources within an operation and enables a company;
- To track current emissions and workflows in real-time
- To be able to predict future emissions and associated costs given certain operating parameters
- To make significant improvement in operating efficiencies

By facilitating easy communication among various parts of an organization in real-time, the right person has the right information available at the right time. Our experience has been that efficiencies resulting in as much as 20-30 times the investment made in this process can be achieved.

With the increase in commodity prices in recent years, a more efficient operation has a greater bottom line effect for all companies. Less energy use and a more efficient operation typically results in emissions reduction. In addition, many company processes are still mostly manual and falls within the category of: “this is the way we have always done it”. RTEO systems enable real-time corporate collaboration. One example of how a RTEO system can be used to increase operational efficiencies was found at a client where the practice of “flaring” was used indiscriminately. By monitoring this operation and requiring an explanation for flaring that exceeded a defined limit, a dramatic reduction in flaring was realized. Now, the RTEO system alerts management when indiscriminate flaring occurs, so operational behavior is continuously monitored leading to significant reductions in the loss of saleable product.

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