Sustainable Enterprise

Is An Environmental Education Right For You?

Young people are being exposed to some of the environmental concepts as they attend elementary school, high school and then on to college.  Unfortunately, obtaining a thorough knowledge of the environment can be accomplished only at a few universities and a more thorough understanding of this field requires attending a graduate school program.

One option would be to take the technical route and study environmental engineering.  It is also possible to earn a minor in environmental engineering as part of a major discipline like Civil or Chemical Engineering.  Another alternative is to take the less technical route and study Environmental Management which is more interdisciplinary as it includes law and business, as well as the environmental sciences. 

The environmental manager for a corporation is usually responsible for all aspects of environmental issues such as setting policies, instituting waste minimization and recycling programs, complying with regulations, submitting reports to government agencies, and communicating with environmental engineers.  The engineers design the environmental systems that the managers eventually require for their company.  It is for that reason that the manager does not need to be as technically literate as the engineer.

The traditional environmental manager was trained to understand pollution prevention and compliance.  Some of the more progressive schools now go one step further and offer courses, or even programs, in sustainability.  This concept challenges companies to manufacture products without producing waste, or at least really minimizing the quantity of waste generated.  But someone might ask -- can I have a good career in the environmental field?  Is it really that important?

Anyone interested in the top business schools focusing on sustainability should review the Aspen Institute survey of over 500 accredited graduate business schools worldwide by going to www.beyondgreypinstripes.org.  With the world population continuing to grow coupled with limited natural resources, environmental issues will continue to mount.

Servicizing: A Business Model for a Sustainable Environment

For corporations, there are numerous strategies that can be adopted to lead to a sustainable environment.  One such strategy is the conversion from a manufacturing business model to a service model, sometimes called “dematerialization” or by a newer word, “servicizing”.

Employing the servicizing paradigm, companies can sell the function of the product rather than the product itself, and maintain ownership of the product throughout its useful life.  This would result in fewer products manufactured, less resources employed, and less waste created.

A simple example of this business model is in the manufacturing of incandescent light bulbs.  Manufacturers sell light bulbs to an end user.  But the user doesn’t really want light bulbs; he wants the function of light bulbs, illumination.  So why not sell illumination? 

Currently, when a light bulb burns out, it is because the tiny filament in the bulb is broken.  The owner of the light bulb throws it out and replaces it with a new one.  What if GE or Phillips could manufacture a light bulb where the glass bulb itself could be safely removed and the broken filament replaced?  Now the only resource necessary to produce a new light bulb is the tiny filament and the only waste is the broken filament.  The resources needed to produce this new light bulb are probably less than 5% of a whole light bulb and the waste produced is also less than 5% of the original model. 

Interface, one of the largest manufacturers of commercial carpeting, introduced a new model for providing carpeting to its customers.  Instead of selling carpeting, it sold a floor covering service.  Its customers pay for the comfort and esthetics of a floor covering on a monthly or yearly basis.  Interface manufactures the carpeting in the form of tiles, and after it is installed, the company provides a service to maintain it.  During the term of contract, some carpeting tiles will be worn out more frequently than others. Interface will only replace the worn carpet tiles, which are returned to the manufacturing facility, separated into its original component and recycled to produce new carpeting. 

This business strategy and others, to be presented in future commentaries, should be adopted by companies wherever possible.   Only in this manner can we strive for a more sustainable environment.

The Confusion of Carbon Offsets, Green Tags and RECs

Companies or individuals that feel guilty of generating carbon dioxide emissions because of the electricity that they are using can buy carbon dioxide credits.  These carbon offsets that are purchased by the company or individual represent the amount of carbon dioxide produced.

Some companies buying and selling green tags include 3 Phases Energy, Terra Pass, Climate Friendly, and My Climate.  These companies purchase the credits from companies that are generating renewable energy or from projects that actually absorb the carbon emissions from fossil fuel power plants. 

These companies also purchase carbon credits from forest companies that remove the carbon dioxide from the atmosphere. A recent study showed that tropical rainforests are very beneficial in reducing global warming, because trees in the tropics, in addition to absorbing carbon dioxide, promote convective clouds that help to cool the planet.  However, some of these trees may even wither and die before they absorb much carbon dioxide.  And when they die, they will rot and emit carbon in the form of methane which has 23 times the impact on global warming than carbon dioxide.

Several years ago, the U.K. started selling carbon offsets, called Renewable Energy Certificates or RECs.  Each REC is equivalent to the elimination of carbon dioxide from the generation of 1,000 kilowatt hours.  Each REC has an I.D. number and is registered.  No such registry exists in the U.S.  In other markets, these RECs, or green tags, or carbon offsets may be known as Tradable Renewable Certificates (TRCs). 

Without any standards on calculating the emission or the absorption of carbon dioxide, stay away from carbon offsets. It is a great concept but while it is in its infancy, there are too many uncertainties.

Can Renewable Energy Truly Replace Non-Renewables?

During the past year, I am sure you have read many news articles predicting that we may very well run out of oil in the next few decades.  Oil along with natural gas and coal are the major non-renewable sources of energy and scientists expect them to be depleted at the rate that we are currently consuming them. 

The U.S. has already consumed 50% of its known oil reserves. Globally we expect to have consumed 50% of oil reserves within the next five to ten years.  With one-third of the world population in China and India and their economies growing rapidly, this will be happen very fast.

There are three fundamental differences between non-renewable and renewable energy sources: 1) Renewable fuel is not exhaustible as long as the sun exists.  2) Conventional (non-renewable) energy creates environmental problems by emitting pollutants that cause illnesses and others that cause global warming. 3) About 75% of the oil is controlled by Islamic countries, whereas renewable energy sources are everywhere. 

The United States must produce more solar and wind energy.  Of the ten largest solar panel manufacturers, none is in the U.S., and of the ten largest wind turbine manufacturers, only one is in the U.S.  These forms of energy can solve our energy and climate change problems.  On the other hand, the operations of the conventional energy companies remind me of a remark made by the Polish satirist Stanislav Lec: “It’s true that we’re on the wrong track, but we’re compensating for this shortcoming by accelerating.” 

Why Is The Energy Market Predicted To Be So Huge?

John Doerr is well known as a major venture capitalist in the U.S.  He has directed venture capital funding to some of the top companies in the world including Amazon.com, Compaq, Google and Sun Microsystems.  He recently predicted that the energy market could very well become a $6 trillion market.  If his prediction becomes a reality, the energy market would be about 60 times larger than the internet or the biotech market. 

When I read about this comparison, I started to think why this market should be so much larger than two of the most recent high technology markets that we have experienced.  I thought about the importance of each of these three to our social well being.  What has the biotech industry meant to us?  The company that probably started this whole field of genomics is Genentech.  If this company and others in the field never existed, the impact would probably be a quality of life similar to what existed, say, 50 years ago when I was a teenager.  It really wasn’t that bad although the life expectancy may have been a little lower and perhaps people didn’t develop some illnesses of today that require the higher tech medications developed as a result of the Genentechs.  The main point is that the biotech industry is not critical to society.

Then I started to think about the internet and how was life without it.  All communication was by telephone or postal mail, the latter being considerably slower than email.  All information gathering required one to go to a library or your personal set of encyclopedias.  All purchasing meant you had to go to one or more stores to purchase a single item.  I could go on with the comparisons but the point is that everyone was used to life without the internet and everyone survived, albeit everything was much slower than today.

Now I am thinking about the energy market including the “green energy” market.  How important might this market be to the social well-being of mankind? This really explains why this market could very well become about 60 times greater than the other two mentioned above.  If we don’t solve the carbon emissions problem within the next several decades, the result could be catastrophic to everyone on this earth.  Carbon dioxide concentrations could increase to a level that would cause the average temperature on earth to rise to a level causing rapid melting of the ice caps which, in turn, would increase the ocean water level and thus causing widespread flooding.  The increase in average temperature would also cause other problems.

So basically, while the biotech and internet industries have been very beneficial to all of us, neither has been critical to life.  On the other hand, the development of a “green” energy market may be necessary for the survival of all of our children and grandchildren.

The Future of Hydrogen-powered vehicles

So, where is all this going?

If all of the perceived problems with a hydrogen fuels are not really problems at all, why don’t we have fuel cell cars now?  Demonstration vehicles have been successfully operated and more will be seen in the near future. 

A few years ago, the Chicago Transportation Authority (CTA) operated a few buses running on fuel cells.  It has been predicted that it will be another ten to fifteen years before we see mass produced fuel cell automobiles.  However, Honda has announced that it plans a production model within the next three to four years.

Going to a hydrogen economy for transportation fuel has two major benefits.  It will reduce, or even possibly eliminate, our dependence on oil. But even more important, switching to hydrogen will have a significant reduction in the effects of global warming. 

For more information about advances in fuel cells for automobiles, you may wish to visit the website of Rocky Mountain Institute at www.rmi.org.  I also recommend you see a documentary called “Who Killed the Electric Car”.

Concerns with Hydrogen Fuel

A couple of weeks ago I wrote two postings on hydrogen fuel. I feel it is important now to consider some of the concerns that this issue has provoked:

Some people are concerned using hydrogen because it is considered too volatile and explosive.  They have heard of the 1937 Hindenburg disaster when the dirigible caught fire.  In a recent investigation of that accident, it was determined that none of the 33 people that died was killed by the hydrogen fire, but rather by jumping out or by the burning of the diesel fuel or other combustibles on board.  The clear hydrogen flames swirled harmlessly above the 62 surviving passengers as they rode the flaming blimp safely to earth.

Another concern with using hydrogen is how to distribute it throughout the country to hydrogen filling stations.  Would we have to build new pipelines and what would we do with the existing pipelines?  In general, the existing pipelines could be converted by adding polymer-composite liners.  In addition, the compressors for moving the product through the pipes could also be converted.  However, it might make more sense to transfer natural gas to the filling station and equip each filling station with a reformer to produce the hydrogen.

But then, how would each automobile store hydrogen?  Is this a problem and how safe is it?  Tanks that can safely store hydrogen have already been produced but they are larger than gasoline tanks. This is because hydrogen is so much lighter than gasoline, even under pressure. 

Are Oil Company High Profits Acceptable?

A few weeks ago in a meeting with Congress, top executives of the country’s five biggest oil companies said that their huge profits are in line with other industries.  It is not really clear what they mean by “in line with other industries”.  Were they talking about return on sales or return on investment or some other metric?  And with which industries were they comparing themselves?  Not all industries use the same metrics for determining how well they are doing.  You cannot compare the return on investment of a service oriented company with that of one that requires huge capital investments.

The oil companies argued that they are investing considerable funds for research in alternative forms of energy but Congress says it is not enough.  Exxon countered in stating that it is spending $100 million on research into climate change. However, this amounts to only 0.25% of their earnings.  That is not very much. 

One of the problems inherent with oil companies as well as other industries is that the corporate executives have incentives to maximize the bottom line.  However, there are not many incentives, if any, to minimize the company’s impact on the environment.

Green MBAs vs. Stuart Environmental Managers

In a recent article published by Sustainable Industries (http://www.sustainableindustries.com/), there was a question as to whether green MBAs are getting green jobs.  The question surfaced because there was an 87 percent increase in membership to Net Impact, a global organization comprised of green-minded MBA students and professionals, while during the same three-and-a-half-year period, the number of jobs in corporate social responsibility (CSR) increased only 37 percent.  The problem with these statistics is that the 37 percent increase in CSR jobs refers only to those posted on certain job sites. However, companies actually may be hiring people for other positions that allows the worker to eventually become involved in CSR issues.

The Stuart School of Business, however, offers an M.S. in Environmental Management and Sustainability that trains the students in a wide range of environmental issues.  In addition to environmental law, students are required to take courses in pollution prevention, compliance, environmental risk, industrial health and safety, and a number of courses related to sustainability.  These include industrial ecology; energy, environment and economics; sustainable business strategies; and global sustainability.  Because of the excellent reputation earned by this program, particularly in the greater Chicago area, almost all of the full-time students obtain internships and most of the graduates obtain full-time jobs before they graduate while all have a job within a few months of graduation.    The main point, however, is that all of these jobs are “green”.

Is Bottled Water Right for You?

One of the fastest growing food products in the U.S. is bottled water. Last year, Americans drank 31.2 billion liters of bottled water. It is now a $4 billion market and growing.  But, should you be drinking bottled water or tap water?

Bottled water is a food product and thus is regulated by the Food and Drug Administration (FDA).  Tap water, on the other hand, is regulated by the Environmental Protection Agency (EPA). In general, the EPA standards for drinking water are more stringent that those of the FDA for bottled water.  There are many gaps in the regulations, favoring tap water, that have been identified in a study by the National Resources Defense Council (www.ndrc.org). 

Children that drink too much bottled water would be deprived of the fluorine, typically introduced to tap water but not in bottled water, which helps reduce tooth cavities. 

For many of the people that prefer bottled water, their primary reason is because of taste.  For those that live in or near large cities like Chicago, better taste is not really a valid reason.  Experiments have been conducted to allow people to taste different waters and chose the one that has the better flavor. Surprisingly, in Chicago, tap water came in first and beat out even the most expensive waters. 

Another reason given for drinking bottled water is convenience.  That is a very valid reason, but one must consider the cost of this convenience.  If you pay $1.50 for a 16 ounce bottle of water, that comes out to $12 per gallon.  Chicago tap water, on the other hand, costs $2.70 per 1000 gallons. 

Finally, just recently the Pacific Institute has estimated that it takes approximately 17 million barrels of oil to produce a one year supply of the bottles that water comes in. That, says the institute, is enough to fuel more than 1 million cars for a year!

The best of all worlds is to fill a bottle with tap water; then you have the convenience, low cost, better taste and possibly more pure.  Just make sure you don’t leave the water in the plastic bottle for a long time.

Once again, clever marketing by big industry has swayed the American public.