by By John Battista — What’s the second most important topic in the heads of executives at the moment? Sustainability. Despite the financial challenges that have trickled from Wall Street to Main Street, the importance of implementing sustainable business practices has not disappeared. For many businesses, the responsibility of finding the answer to the energy consumption problem lies in the hands of one newly appointed sustainability manager. At many corporations, this is the person who has been charged with identifying the crux of the carbon dioxide emission problem, finding a solution, implementing it, managing it and reporting back to upper management with good news—a smaller carbon footprint. For a sustainability manager in the technology industry—which is known for the amount of energy consumed to produce and operate its products— tackling the company’s carbon footprint may seem an insurmountable task. But recent developments at one of the largest technology companies in the world, Dell, show us that it is in fact possible to tame an energy beast.
The action plan
In September 2007, Dell announced it would make company-owned and leased facilities carbon neutral in 2008. In August of 2008, Dell announced that it had achieved its goal an impressive five months ahead of schedule. Through a combination of strategies that addressed energy consumption, Dell reduced the carbon output of its global facilities from about 450,000 metric tons of carbon dioxide equivalents (CO2e) per year to zero. The problem for most who would attempt such a feat is this: companies can’t reduce their carbon footprint without a process to track and measure the carbon emissions that result from their business operations. Dell needed a lot of internal devotion to manage the job and quality partners with expertise in the green energy markets. The company used a sustainable energy and expense management firm, Advantage IQ, that had the resources needed to: Gather and analyze the large volume of data to set the benchmark—including the creation of the detailed estimate of energy use at all of the Dell facilities where utilities information is not available; and Research options for purchasing renewable energy and help drive the effort to create the complex agreements needed to take Dell’s headquarters campus to 100 percent green power. A significant percentage of carbon emissions in the United States comes from the generation of electricity and natural gas consumption. Utility invoices are a source of the energy consumption data that easily converts to emissions output, commonly reported as CO2e.
Understanding how your business uses energy is the starting point in managing carbon emissions. Non-utility related emission sources, such as on-site fuel consumption, vehicle fleet fuel usage, business-related travel and manufacturing processes each represent other significant sources of carbon and other greenhouse gases (GHGs) that contribute to the carbon footprint. The plan of action developed by Dell was three pronged: apply energy conservation solutions to increase operational efficiencies, invest in renewable energy sources and purchase offsets to neutralize remaining carbon emissions that were not already offset by the first two prongs of the plan.
Duplicating success
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With a qualified, in-house or third-party energy manager, any business can have the same success as Dell. The key is to cosider a few simple ideas when tackling sustainability goals.
Shrink energy demand
Through a system of facility audits, businesses can identify areas of improvement such as energy consumption practices, equipment and building construction protocols. Once the audit has been performed, developing a plan of action that creates energy efficiencies and energy reduction opportunities is important for creating sustainable business practices.
It can be a simple change, like turning the thermostat up or down by a degree or two, or significant, such as retrofitting an entire facility with automation systems that regulate the temperature and lighting in response to ambient heat and natural light. Since 2006, Dell projects have saved more than 22 million kilowatt-hours (kWh) and 13,500 metric tons of CO2e on an annual basis. Payback on these projects has averaged about four years.
Think renewable
Another key element of Dell’s carbon neutrality plan is its increased investment in renewable energy. While many companies have dedicated energy managers who are involved with or manage the company’s energy procurement, many don’t. This is why businesses might want to hire an outside energy consultant to help. These consultants can explain to businesses the feasibility of incorporating a portion of renewable energy into their load, while considering the optimal quality of the product at the most cost-efficient price. At Dell’s Round Rock, Texas, headquarters, 40 percent of its power now comes from Waste Management’s community landfill gas-to-energy plant located in Austin, Texas; the remaining 60 percent of Dell’s demand is supplied by wind farms located in West Texas. Dell also powers its Twin Falls, Idaho, site with 100 percent renewable energy. Incorporating renewable resources There are a few things a company should consider when trying to add renewable sources into their energy load. What options exist for companies to directly purchase renewable energy from their electricity provider?
If no options exist, companies should lobby for their provider to offer green energy options. When sustainable power programs exist, they must determine the costs of converting to green power and whether there is any cost to convert to green energy. Usually, there is a cost to go green. At current rates, the green premium ranges from US$0.005/ kWh to US$.02/kWh. But, such a green premium can often be only temporary— especially when the green power pricing is fixed over a long period of time. If a company can purchase green power at a fixed price over a long term—say ten years—it will usually find that the price of standard power will eventually exceed the green power price, sometimes in as soon as four years. Dell has benefited from this situation through its purchases of Austin Energy’s Green Choice© electricity product.
Will companies need to invest in renewable energy credits (RECs) in order to go green at sites where green power options do not exist? For every megawatt-hour (MWh) of electricity generated by a renewable energy source (wind, solar, etc.) there is an environmental attribute that is created based upon the avoided environmental impact of releasing emissions into the atmosphere. That environmental attribute is called an REC. Investing in a specified amount of RECs allows the purchaser to offset the emissions from its purchase of the same amount of standard power. Through REC purchases, Dell was able to off-set the balance of its carbon emissions that is associated with its electricity consumption. The price of greening up your energy load through the purchase of RECs will depend on your purchase volumes, generation type, geography and vintage. At press time, RECs pricing ranged from US$3.00/MWh to US$10.00/MWh.
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Should a company purchase carbon offsets to clear their carbon footprint balance sheet? Organizations like Carbonfund.org make it possible to invest in carbon offsets to correct for the carbon emissions that businesses cannot eliminate by reducing energy consumption, incorporating renewable energy into their load or purchasing RECs. The idea behind carbon offsets is to counterbalance a defined amount of CO2e emissions with investments in carbon-reduction projects, research and outreach programs in areas such as renewable energy, energy efficiency and reforestation. To offset its direct emissions and its emissions associated with employee travel, Dell partners with Conservation International on a habitat and forest preservation initiative in the Republic of Madagascar. The company will help protect more than 591,000 acres of tropical forestland threatened with destruction, preventing more than 500,000 tons of CO2e from going into the atmosphere over the next five years.
The lesson
There are a variety of ways to make a positive impact. Taking the time to properly assess how your company can reduce carbon emissions is worth the investment. Large corporations, even the biggest players in the technology industry, are making the changes necessary to protect the environment. Everyone can contribute with a little help from the experts. The Earth, and its growing population of green conscious consumers, will thank you for it.
John Battista, one of five founding members of Advantage IQ, has served in many roles throughout his years with the company. Battista has been involved in product development, overseeing the supply management team, and working closely with clients to find utility supply solutions in line with their individual risk tolerance. Most recently, Battista was promoted to vice president of client relations. In this role, he calls on his extensive experience in energy supply and demand, and his understanding of the unique needs of clients to serve and maintain Advantage’s expansive client base.