NEWS Forbes Article: Lower Carbon = Higher Profit

http://​www​.forbes​.com/​s​i​t​e​s​/​j​e​f​f​m​c​m​a​h​o​n​/​2​0​1​5​/​0​4​/​1​6​/​l​o​w​e​r​-​c​a​r​b​o​n​-​h​i​g​h​e​r​-​p​r​o​f​it/

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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