Planning for minimum carbon

Sept. 17, 2007
Energy managers are being asked to manage not only for minimum energy, but increasingly for minimum carbon. If your corporate energy management plan doesn’t actively include climate targets, it’s probably time to revisit it.

I had the good fortune to be at the Energy Star Industrial Focus Meetings at the same time as the World Energy Engineering Congress (WEEC) in August. Both of these events took place in Atlanta in abnormal 100°-plus heat. While listening to energy managers from successful, globally respected companies, I was struck by two things. First, it’s clear their role is enjoying the highest degree of senior management support I have ever seen within the United States.

Second, their need to include carbon reduction targets and strategies is growing dramatically. The energy manager is being asked to manage not only for minimum energy, but increasingly for minimum carbon. If your corporate energy management plan doesn’t actively include climate targets, it’s probably time to revisit it.

What are the basic differences in a plan aimed at minimum carbon? First, one of the hardest aspects to handle is how to put a dollar value on carbon reduction. As there isn’t yet a U.S. regulatory framework either to reward or penalize greenhouse gas generation, the only rational way is to look at various “What if?” scenarios and their risks.

What if some of your operations are obliged to regulate carbon emissions in some countries and not others? How would you justify differing management practices to customers, stakeholders and the wider community?

What if your U.S. operations had to carry penalties at the level of the current EU carbon emissions market of around $25 per metric ton of carbon above a 1990 baseline? Would these operations still be competitive?

What if a major customer demanded accurate accounting of the climate effects of your operations both in general and in the specific products they buy from you? Would you be able to answer the questions, and could the business survive the loss of this customer?

What if the United States ends up with a patchwork of state-level carbon reduction approaches ranging from very strict to nothing? Would your energy management approaches be able to cope, and what would be the associated business decisions around location and management of operations?

These are just some possible scenarios, any of which could have massive effects on a company’s competitiveness, and all of which are becoming increasingly likely.

During the past century, industry used a mix of electricity, natural gas, heating oils, gasoline and diesel fuels. Each carries a distinctive carbon footprint, depending on the fuel and the losses incurred in delivering the energy to the plant.

Long considered an undifferentiated commodity, electricity is interesting. If most comes from coal or oil, then every megawatt-hour carries between 800 kg and 1,000 kg of carbon dioxide resulting from the fuel itself, heat losses and losses in distribution. If most comes from natural gas, it carries only 220 kg. If it comes from nuclear, hydropower, sunshine or wind, it represents nearly no carbon dioxide. These differences are included in a formal registration of a company’s carbon footprint, for example with the California Climate Action Registry. Identical plants in Ohio (coal), California (gas), British Columbia (hydro), or France (nuclear) have radically different carbon footprints, simply from their source of electricity. This fundamentally changes the value of strategies to reduce electricity when carbon is taken into account.

Managing heating takes on a very different complexion in a carbon-based plan. Simply switching from oil- to natural gas-fired boilers makes an immediate and dramatic reduction in carbon emissions. The use of biofuels, such as wood pellets, will give yet another significant carbon reduction step. Actions to improve heat efficiency obviously multiply the effects of these choices. In a carbon-driven energy plan, heat recovery within the plant is effectively carbon-free relative to the baseline. Combining the carbon impact of electricity and heating by using on-site cogeneration (combined heat and power) lowers effective carbon in the electricity by avoiding the need for additional heating fuels.

The importance of efficiency must never be underestimated, however, efficiency actions may have differing priorities when carbon is included.

After WEEC, I was in Germany and France, whose CO2 emissions per capita are a little less than 10 tons and 6 tons respectively, compared to the U.S. level of 19 tons. In late August, Germany announced its ongoing climate plan to further reduce emissions 30% to 40% below 1990 levels as their contribution to the latest EU targets. It is inevitable these kinds of goals around the world will fundamentally change the way carbon is regulated and valued, and industry will be challenged in new and exciting ways.

Peter Garforth is principal of Garforth International LLC, Toledo, Ohio. He can be reached at [email protected].