How Much is 3% of Yearly Carbon Emissions Worth?
$780 billion in net profits, according to a new study. A joint report released by World Wildlife Fund and CDP (formerly, Carbon Disclosure Project) and sponsored by the likes of Intel, Sprint and Norfolk Southern, suggests that wise investment in energy policy and management will be a positive addition to the bottom line of corporate America.
The study begins with the premise that US corporations need to reduce approximately 3% of their annual carbon emissions through 2020, meeting the International Panel on Climate Change’s (IPCC) recommendations to avoid irreversible global harm due to climate change.
From there, the report offers a path to that goal which realizes hundreds of billions in saved energy costs: up to $190 billion annually in 2020. There are three main levers used to realize the carbon reductions and energy savings:
Technological Upgrades/Improvements: Approximately half of the projected savings comes from using existing technology to upgrade infrastructure and equipment. Examples of better technologies range from simple LED lighting to installation of renewable resource captures (turbines, solar panels, etc). CDP reports that, on average, capital outlays for energy efficiency pay for themselves in less than 3 years. In addition, 79% of respondents report that such upgrades on average earn more ROI than other capital investments.
Management and Behavioral Changes: While awareness of energy costs continues to grow, the initiative to make simple changes needs to keep pace. Simple practices such as shutting off lights and equipment when not in use, regular maintenance of equipment and ensuring all doors and windows are shut can greatly increase energy efficiency. Required ongoing training for building and facilities managers can be integral in properly utilizing efficiencies already available.
Increased Use of Renewable Energy Sources: This can be done in conjunction with technological upgrades (e.g. switching from diesel-fueled equipment to natural gas or electric run equipment) and confirmed purchases of renewable power from energy providers. Companies can also purchase Renewable Energy Certificates, used to signify and claim the non-usage benefits of renewable energy purchase (tax credits, “green” designations, etc).
Metric tons of pollution reduced and billions of dollars saved, by strategy
Interestingly, the report fails to discuss other direct sources of income that can be made by gaining energy efficiency. Between public and private incentives, there are in fact billions of dollars more to be earned. Public incentives include tax write-offs and credits. Private incentives include private grants and other programs such as Demand Response (a program in which energy users are paid to reduce energy usage during times of high stress on the power grid. Energy Curtailment Specialists is one of the largest demand response providers in North America).
One of the fears behind adjusting business practices and behaviors to be more environmentally friendly is that such changes would be financially crippling to businesses and consumers alike. The WWF-CDP study contradicts this argument and shows that, quite the contrary, new investments in energy efficiency will be financially rewarding. When combined with public and private incentives, investing in energy efficiency can offer hundreds of billions of dollars to corporate America’s bottom line, with the added benefit of enjoying a cleaner and healthier planet.
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