NEWS Forbes Article: Lower Carbon = Higher Profit


Lower Car­bon = Higher Profit

Car­bon emis­sions sig­nal inef­fi­ciency in a sys­tem, an energy expert said in Chicago this week, so reduc­ing emis­sions usu­ally means increas­ing savings.

In house­hold after house­hold and small busi­nesses and schools, we’ve con­sis­tently found that car­bon– or water-​​saving oper­a­tions are good for the bot­tom line,” Daniel Kam­men, a pro­fes­sor of energy at the Uni­ver­sity of Cal­i­for­nia Berke­ley, told about 150 peo­ple at the Uni­ver­sity of Chicago’s Ori­en­tal Insti­tute on Monday.

Kam­men is backed up, in part, by a study he pub­lished in 2011 in the Jour­nal of Envi­ron­men­tal Sci­ence and Tech­nol­ogy. Kam­men and co-​​author Chris Jones found that a 20 per­cent reduc­tion in car­bon emis­sions resulted in $2,100 per year in poten­tial finan­cial sav­ings for a household.

What we found, no sur­prise, is that actions that save you on car­bon almost always save you on money,” Kam­men said. “Because after all those emis­sions are a waste.”

The sav­ings hinge on a num­ber of actions that reduce waste: change diet, telecom­mute, take tran­sit, eco-​​drive, main­tain vehi­cles, ride bike, turn up ther­mo­stat, turn down ther­mo­stat, reduce fly­ing, trade in vehi­cles, use com­pact flu­o­res­cent bulbs, line-​​dry clothes, use Energy–Star refrig­er­a­tor.

Aver­age finan­cial sav­ings are fre­quently greater than $100 per met­ric ton of CO2e con­served for this set of actions,” the authors write. Some of these actions require an upfront investment—$4,800 for the aver­age Amer­i­can household—which the authors say will pay back in 2.6 years and then con­tinue to pay off.

The great­est sav­ings come from changes in diet—$850 per year on average—which entail giv­ing up carbon-​​intensive meat and dairy prod­ucts and “non-​​essential food items.” The authors urge a reduc­tion in overeat­ing, from 2,500 calo­ries per day to 2,200, and con­tend that dietary change will not only reduce car­bon and save money but com­bat health prob­lems asso­ci­ated with obesity.

The authors mod­eled these changes for about 2,000 types of house­holds in 78 dif­fer­ent regions of the U.S.

Dietary change pro­duced the most dra­matic effect across all regions, but other changes showed more variability.

For exam­ple, they com­pare a two-​​person house­hold earn­ing $90,000 in the San Fran­cisco Bay Area (House­hold A) to a five-​​person house­hold earn­ing $50,000 in St. Louis, MO (House­hold B):

The Car­bon foot­print of house­hold A is dom­i­nated by emis­sions from motor vehi­cles and air travel. Emis­sions from house­hold energy are about half of the U.S. aver­age due largely to the rel­a­tively clean fuel mix of California’s elec­tric­ity grid and mod­er­ate San Fran­cisco Bay Area cli­mate. The house­hold has essen­tially no emis­sions from cool­ing. Emis­sions from goods and ser­vices out­strip emis­sions from food due to the household’s rel­a­tively high income and low num­ber of house­hold mem­bers. The total 20% foot­print reduc­tion poten­tial mod­eled cor­re­sponds to about $2100/​yr in poten­tial finan­cial sav­ings. As could be expected, trans­porta­tion dom­i­nates total car­bon foot­print reduc­tion poten­tial (8 out of 10 tCO2e/​yr total).

The car­bon foot­print of house­hold B is dom­i­nated by emis­sions from elec­tric­ity. This is largely a prod­uct of high emis­sions per kWh of elec­tric­ity in St. Louis and larger than aver­age heat­ing and cool­ing demands. Emis­sions from food also out­strip direct and indi­rect emis­sions from motor vehi­cles, due to the large house­hold size. This mod­est income fam­ily has lower than aver­age emis­sions from goods and ser­vices. The house­hold can save $1400 per year and reduce its car­bon foot­print by almost 3 tCO2e/​yr by reduc­ing overeat­ing and waste from food and reduc­ing the amount of meat, dairy, and nonessen­tial food items con­sumed. Fur­ther sav­ings of $500 per year and 3 tCO2e/​yr can be obtained by increas­ing the family’s aver­age fuel effi­ciency from 20 mpg to 25 mpg, reduc­ing total vehi­cle miles trav­eled and prac­tic­ing fuel-​​saving dri­ving and vehi­cle main­te­nance habits. The house­hold has vir­tu­ally no emis­sions from air travel. Car­bon foot­print sav­ings of 2 tCO2e can be achieved by adjust­ing the ther­mo­stat, replac­ing light bulbs, and line-​​drying clothes; how­ever, finan­cial sav­ings are less than $200/​yr due to rel­a­tively low energy prices in the state of Missouri.

The dif­fer­ences lead the authors to sug­gest that pol­i­cy­mak­ers tai­lor poli­cies and incen­tives to dif­fer­ent objec­tives in dif­fer­ent regions instead of try­ing to craft a blan­ket pol­icy for all.

Kam­men spoke Mon­day in Chicago at a forum spon­sored by the Uni­ver­sity of Chicago Cen­ter for Inter­na­tional Stud­ies and other cam­pus groups. He told me in a sub­se­quent email that Berkeley’s Renew­able and Appro­pri­ate Energy Lab­o­ra­tory, which he founded, has also mod­eled car­bon sav­ings for busi­ness and indus­try, with sim­i­lar results.

Some com­pa­nies have caught on to the finan­cial value of sustainability—Kammen men­tioned Pepsi and Walmart—but most have not because “the data isn’t widely out there yet.”

Jones and Kam­men used the data to build cal­cu­la­tors that enable indi­vid­u­als and busi­ness own­ers to com­pare their car­bon foot­print to their neigh­bors and com­peti­tors. When faced with com­par­isons, Kam­men said, peo­ple will often reduce car­bon emis­sions voluntarily.

For exam­ple, the first brewer to use their cal­cu­la­tor was Sierra Nevada Brew­ing Com­pany, which has long empha­sized sustainability.

The next brewer said, ‘This data has to be wrong, no one can be this green.’ So we pro­vided a lit­tle more infor­ma­tion, they fig­ured out which brewer it was, and a num­ber of oth­ers decided to catch up. They only did it because a peer com­peti­tor had done it,” Kam­men said.

This process of egging each other on is an area of behav­ioral eco­nom­ics for which all of these energy teams have been scour­ing the land­scape for behav­ioral econ­o­mists who want to play.”

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