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Lush founder on sustainable business: Don't worry, be profitable

Published July 14, 2014
Tags: Packaging, Retail
Lush founder on sustainable business: Don't worry, be profitable

Mark Constantine is not your typical businessman. In his striking floral and tieless shirts, he talks with a passion rarely heard in boardrooms, firing questions back at his interviewer and hyphenating his own thoughts as he muses over what it means to run a green business.

Perhaps that is no surprise. As co-founder and managing director of Lush, Constantine's attitude is fitting for a man who has made a fortune from selling sparkly, wonderfully scented bath bombs to the world.

But you would be mistaken to underestimate the business savvy that has complemented the showmanship that has helped turn 19-year-old Lush into one of the U.K.'s most successful and sustainable retail brands. The company is well-known for its commitment to environmental values and has pioneered the selling of many of its products without any packaging. It has also embraced an approach to supply chain management with such zeal that even the glitter in its products is biodegradable.

Moreover, Lush has eliminated palm oil from its supply chain and Constantine revealed he refused to join the Fair Trade cosmetics label scheme because it was not stringent enough.

Constantine's ethical supply chain roots run back to his early 20s, when he was a major supplier for The Body Shop, working closely with Anita Roddick until she bought out his business.

'The right people' with 'the right attitude'

But when I ask about supply chain management, he is keener to talk about Paulo Mellet, an environmental activist and buyer for Lush who died last month of cerebral malaria contracted while digging trenches for a farmer in Ghana.

Credit: LushDuring his time at the company, Mellet spearheaded a number of environmental campaigns and worked closely with suppliers around the world, including setting up a deal for Lush to buy cocoa butter from a Columbian peace village and helping to buy a nature reserve in Peru.

"If you have the right people and they have the right attitude, it's surprising how brilliant it can be," said Constantine of his departed colleague. "When it gets that good, it isn't something that you can bring into eco-speak."

The company may be in mourning, but Constantine is also keen to remember a colleague driven by his desire to help some of the world's poorest communities. "If we hadn't allowed him to do that, he wouldn't have worked with us," he said. "If you employ passionate and committed people and you give them that free range and they've got a broad enough imagination, things happen that you would imagine are happening anyway, but when you really look into it, they aren't."

Living large (yet responsibly) with Lush

Although Constantine's Body Shop beginnings gave him cutting-edge experience of how a successful green business operates, his move to establishing Lush certainly was not smooth. Using the money he earned from selling his business to the Roddicks, he set up Cosmetics To Go, which was far more focused on funky packaging than ethics. It went bust, and Constantine set up Lush with an initial goal of simply putting food on the table.

He is confident of the brand's appeal now, but in the early days, he wasn't sure if people would hate Lush or find it, well, a bit lush. It was only when he opened a shop on the King's Road that he realized he may have hit the jackpot. "At one time, we were getting 1,000 people per week asking to do business with us," he revealed. Last year the company recorded a group turnover of nearly $621,583, up 11 percent from 2012, and it now has more than 900 stores across the world in 52 countries, all of which are working to embrace some of the highest environmental standards in the retail and cosmetics industries.

There is just one message that Constantine has for other green businesses: Do not be afraid of capitalism. He maintains that his products are successful because they are fun and not too "worthy and brittle."

"I am not utopian," he said. "I like the situation we're in. I like making a profit. For most green businesses, they are capitalists, and I think that for environmentalists, we often get caught up with anarchy and the anti-capitalist movement and that is disingenuous and wrong. It's okay to be a capitalist and it's okay to be conscious of what that does and enhancing people's lives at every level of that."

What the customer doesn't see (and shouldn't have to worry about)

Credit: Chris Chrisss via Flickr"The real art," he argued, is creating a product where customers don't think about ethics when they make their choice, at least not consciously.

But behind the scenes, Lush is fiercely committed to ethical standards, as it seeks to fight a war on waste and over-consumption. Constantine said he shuns three-for-two offers used heavily by Boots, The Body Shop and other major outlets, arguing that they just encourage people to buy more of certain products than they needed in the first place.

Instead, Constantine touts the perfect consumption model for a green business is when a customer keeps coming back to buy more of what they really need. To make its point, Lush campaigned for legal aid for Guantanamo Bay prisoners with a "buy one, set one free" offer.

"If you only give proper value and you don't discount, you just give good service where you really focus on getting the right thing for that person with as much skill as you can, you will be doing more for the environment than more or less anything else you could do," he said. "It's the waste that's the massive issue."

Meanwhile, Lush continues to pay some of the highest corporation tax rates in the country, in stark contrast to the likes of Amazon, Starbucks and Vodafone who have all come under fire in recent years for minimizing their tax bills. And Constantine is urging all businesses to pay the London living wage of £8.80 ($15.07) per hour.

Celebrating the Lush life

Where does Lush go from here? Constantine said he hopes to increase the number of stores back up to the 1,000 mark at some point. He closed down a few in the past couple of years in response to concerns that the level of service may have been declining.

But aside from that, he appeared broadly satisfied with the current performance. "We're doing all right. It's OK," he said. "The problem with people in these green businesses is you spend far more time berating yourselves and worrying about everything than celebrating the successes."

Top image of Lush store by Andrew_Writer via Flickr. This article first appeared at Business Green.



From 'Blue' to green: Utah State learns how to win over critics

Published July 14, 2014
From 'Blue' to green: Utah State learns how to win over critics

Days before the February 2011 Utah State University student referendum, the "green police" were out in force issuing "citations" to students who drove to school or placed recyclable items in the trash.

The citations actually were political leaflets from representatives of the USU College Republicans dressed in satirical law enforcement garb, protesting the “Blue Goes Green” ballot measure that would impose a 25 cent-per-credit-hour fee (averaging about $3 per student per semester) to fund a proposed Student Sustainability Office and administer a grant program for student initiatives to conserve resources on campus. Although the fee was placed on the ballot by a student grassroots movement, the USU College Republicans viewed it as a “socialistic” tax.

“It’s taking my ability to choose away,” Mikey Rodgerson, the group’s president, told the campus newspaper. “We live in a bad economy … and the school has the audacity to propose an AstroTurf fee.”

Opposition to Blue Goes Green was not unexpected. Utah State, with an on-campus population of about 15,000 students, is nestled in the politically conservative Cache Valley in northern Utah where many students, faculty and citizens often view environmental issues with skepticism. Although Cache Valley suffers from numerous unhealthy “red-air" days due to winter inversions that trap local vehicular, fireplace and agricultural pollutants, opposition to solving environmental problems could come from perceptions that it may result in bigger government and unnecessary taxes that threaten personal freedom and economic prosperity.

USU President Stan Albrecht, nonetheless, signed onto the American College and University Presidents’ Climate Commitment (ACUPCC) in 2007, requiring USU to achieve “carbon neutrality” by 2050. The university established a Sustainability Council, involving faculty and staff to initiate and monitor energy conservation and carbon emissions across campus to comply with ACUPCC. The student-proposed Blue Goes Green grant initiative, modeled after other universities’ sustainability programs, was an outgrowth of that commitment.

USU students narrowly approved the controversial Blue Goes Green fee, 2,305-1,952. That fall, the first Blue Goes Green-funded projects were unveiled on campus, the most visible including some new bicycle maintenance stations and bike racks to promote cycling to school and new water bottle filling stations to encourage students to adopt reusable bottles rather than purchase bottled water. With each refill, the new fountains display digital read-outs of the number of plastic bottles that have been averted from the waste stream. A small greenhouse demonstration project and a graduate student’s biofuels project also were funded.

A campus-wide online survey was conducted shortly after these initial projects were installed to assess student attitudes about the Blue Goes Green fee. The survey generated over 400 individual student comments. Although most comments were supportive, many were dismissive of green issues and outright hostile. Opponents disapproved of students having to pay for a “liberal” program on campus, especially in the face of budget cuts and escalating tuitions.

“Fees are killing me,” wrote one student. Another added, “Recycling should save students money … you guys found a way to make it cost.” One demanded, “I want to be reassured that the green fee is actually doing something and making a difference.” Another student issued a challenge: “Please do something with it that I will actually benefit from!!!”

The feedback indicated that the Blue Goes Green initiative had a twofold public relations problem: (1) objections about its need and potential efficacy were still festering; and (2) many students had only a modest understanding of sustainability, its importance and what it would take for the campus to conserve resources and reduce its carbon footprint.

A student intern proposed that part of the outreach effort to address these issues should include permanent signage identifying the most visible Blue Goes Green projects on campus to inform students about how the projects fostered sustainability. The question was, what messages would counter critics’ objections and engage and win over busy, hostile and potentially apathetic students about sustainability and its benefits.

As members of the Sustainability Council’s Marketing Work Group (consisting of staff, student interns and faculty), our task was to develop those messages. In addition to addressing student objections, we wanted to create potentially provocative and amusing messages that would sidestep the typically fatiguing doom-and-gloom or preachy messages commonly associated with going green, which we perceived would be a turn-off. Heeding past green-marketing research and best practices, we sought to focus on sustainability’s positive and personally relevant benefits that would resonate with students’ values, needs and aspirations.

Looking at our college audience (and USU students in particular), we charted what values and issues truly mattered to them — grades, balancing school and work, socializing, self-discovery. With about 85 percent of the USU student body being members of Mormon faith, USU students held their religious heritage and beliefs in high regard, valuing self-reliance, independence, freedom, hard work, health and fitness, and marriage and strong families. 

We sought to create messages that would activate and resonate with some of those convictions, demonstrating how sustainability could support them. We brainstormed messages, drawing on facts and pop culture references that could pique student interest. We vetted our ideas among USU students in two marketing classes and the Sustainability Council, and those chosen were posted on signs near 12 Blue Goes Green projects across campus during the fall of 2013. To draw attention to them, a photo scavenger hunt contest was launched over the university’s social media where the first lucky student submitting “selfie” pictures with each sign won a free dinner for six at a local popular restaurant. Here are some selected messages and themes that connect the sustainability projects with USU student sensibilities.

Redefining freedom

To address protests that the Blue Goes Green fee took away students’ “free will,” we illustrated how Blue Goes Green’s encouragement of cycling to school over driving a car actually enhances some freedoms and conveniences that students may not have considered. Signs posted next to two new bike racks read:

“Live Free — Bikes aren’t bound by fuel prices, emissions testing or distant parking. They don’t cause red-air days that limit your plans.”

“Carbon Free VIP — Cycling is always carbon-free, and the best parking is right next to the building.”

Both messages illuminate cycling’s environmental and pragmatic benefits over relying on a car for campus transportation.

Saving another kind of green

The most common objection over the Blue Goes Green fee was that it was a financial burden. One of the Sustainability Council leaders pointed out, however, that the average student’s $3 per-semester fee is equivalent to the purchase of two bottled drinks from the university’s vending machines; using the water bottle refilling stations would save students money almost immediately. Highlighting economics, two of our messages over the new water fountains read:

“Saving you Green with Every Refill — Convenient water bottle-filling stations keep plastic bottles out of the landfill and save the average consumer hundreds of dollars a year.”

“Fill 'er up — One gallon of bottled water can cost more than twice as much as a gallon of gas. Why pay for water when you can fill-up for free?”

Health and physical fitness

USU attracts many students because of its close proximity to outdoor recreation, such as hiking, rock climbing and skiing. Health, fitness and the university’s “Go Big Blue” athletics are deeply rooted facets of campus life. Cycling to school and encouraging the consumption of water leverage those important values. Fitness-oriented messages positioned near the new bicycle facilities include:

“Burn Fat Not Gas — The average bicycle commuter loses thirteen pounds in the first year of adding daily rides.”

“Work-it-out — Cycling burns calories while working the glutes, thighs and calves. Regular cyclists can enjoy the fitness of a person years younger.”

Health-oriented messages used next to water bottle-refilling stations include:

“No High-Fructose Corn Syrup Here — Sweet drinks often contain sugar and high-fructose corn syrup, which contribute to weight gain, type-2 diabetes and high triglyceride levels.”

“H2-Go — Studies show well-hydrated people benefit from increased metabolism and more energy.”

Another of our water bottle-refilling station signs combines health with money savings:

“Free Refills — Thirst-quenching water is calorie-free and, well … free. Stay hydrated. Save calories and cash.”

A common misperception about bottled water is that it is perceived to be better or safer than tap water, although government regulations ensure that both types of water are generally comparable. USU’s water supply comes from municipal supplies charged by nearby mountain snowmelt and springs, which are tested regularly to comply with federal and state standards (PDF). We played up this fact in three signs to assure students of the university’s tap water quality, tying in some pop culture references.

“Smarter than Smartwater — Almost half of the water in bottles is the same as what comes from your faucet. Why pay a premium for what’s already on tap?”

“Greatest H2O on Earth — Logan’s tap water comes from remote wells and springs recharged by mountain wilderness. Annual tests ensure its safety and quality.”

“Go with the Flow — Eight glasses of quality-tested water from the tap could cost less than a quarter per year, or you could pay 8,000 times more for water in a bottle.”

Biking beauty

A common aspiration for college students, especially in Utah among the Mormon faithful, is attracting a mate for marriage. In jest, we allude to this desire for love in a sign near a bike rack:

“Reserved Parking for the Fit & Fabulous — Cycling to school reduces carbon emissions and contributes to good health, personal fitness, and physical attractiveness.”

Establishing sustainability as a campus value

So far, our signs displayed on the Student Sustainability Office’s Facebook page are getting “likes,” and we plan to create more signs with similar messaging to accompany future Blue Goes Green projects across campus. We want students to seek the signs, get a chuckle, reflect on their messages and muse over how sustainability benefits them personally and aligns with their values and aspirations.

Blue Goes Green intends to become more pervasive across campus by adding a diverse array of high profile, student-proposed projects to encourage more creative and provocative ideas for education, resource conservation and the reduction of the university’s carbon footprint. New student proposals include an array of solar panels on the new business building, solar-powered recharging stations for cell phones and up-close, hands-on demonstration projects for students to interact with solar technology. Blue Goes Green strives to establish sustainability as a student-driven way of life on campus.

While the initial "green police" protests over the Blue Goes Green referendum are destined to become a distant memory as new students come to USU, the litmus test for Blue Goes Green comes in 2016 when the USU Student Fee Board reviews the fee and its outcomes to decide on its future. To date, over 670 universities have signed onto the American College & University Presidents’ Climate Commitment. As universities increasingly take a leadership role in society for climate action, administrators need to be cognizant about how sustainability and carbon neutrality initiatives — funded by student fees or tuition — may be perceived by students and other constituents (faculty, state legislatures, donors, alumni) in the face of dwindling state funding, rising tuitions, growing student debt, increasing cynicism over the value of “liberal” college programs and other pressures facing higher education today.

We share our experimentation with message framing that aligns sustainability initiatives with student values and pop culture to encourage a broader dialogue on how sustainability advocates may engage diverse audiences to move institutions and guide the next generation of society’s leaders onto a more sustainable path.

This story first appeared at SolutionsThe authors thank Jordy Guth, Cathy Hartman, Kristin Ladd, and Isela Phelps for their comments on an earlier draft.




The McDonough Conversations: Who owns sustainability's best ideas?

Published July 14, 2014
The McDonough Conversations: Who owns sustainability's best ideas?

This is the latest installment in a regular series of conversations with William McDonough (@billmcdonough), designer, architect, author and entrepreneur. View previous columns here.

Bill McDonough has long been at the forefront of sustainability-minded ideas and innovations, from green buildings to Cradle to Cradle product certification. Out of those two concepts alone have come countless new companies, products and services, even new business models.

Which raises a question: Should individuals and companies own the breakthrough ideas that will solve the world’s biggest environmental and social problems? Or are they somehow a public good, which innovators can then commercialize?

Such questions have been given currency by Tesla Motors CEO Elon Musk's recent announcement that he would place many of his company’s patents into the public domain. Musk's action rekindled McDonough’s own interest in the topic of sustainability and intellectual property and became the jumping-off point for our most recent conversation. 

Joel Makower: Bill, you were pretty excited when Elon Musk gave away his company’s patents. Why is that?

Bill McDonough: This issue of creativity and intellectual property and ideas are so essential to us now that we need them to spread like fire. We’re at one of those revolutionary moments where climate change is no longer a debate on the merits of science by the overwhelming majority of thoughtful people. I don’t think anybody is sitting back saying, “Well, I don’t know. It’s still up in the air.” It is in the air — for real. And so I think that moment has come, and now there’s a sense of urgency and also an immense amount of creativity needed.

In 1994, when I became dean of the School of Architecture at the University of Virginia, I decided to read everything Thomas Jefferson had ever written. I built a bookcase in my upstairs hall and filled it with Jefferson. I had no idea that there were thousands of letters that had been saved. It filled 1.5 bookcases. That started me on a whole exercise of trying to understand him, but also understand the frameworks that we’re working in now related to innovation and invention. That’s why I’m so fascinated by the language of intellectual property.

Look at the formation of the Patent Office in the United States. I read some of Jefferson’s correspondence and Benjamin Franklin’s on this subject. It’s quite amazing. Franklin, famously, gave away everything all the time — he never patented his inventions. And he made broadsides. I mean, he didn’t just give it away; he broadcast it.  He wanted to “attract the attention of the ingenious.”

So the notion that Franklin just gave everything away and broadcast it in his era — Elon made me think of it.

Makower: So what are you suggesting around sustainable technologies? That everything be given away? Elon’s move makes perfect sense in the context of needing to accelerate the electric vehicle industry and wanting things to be designed around Tesla’s protocols and standards. Does that carry over to anything else or is it a special circumstance?

McDonough: Everything requires a subtle differentiation. You could look at it that way and say it’s in Tesla’s best interest to do that, which is probably true. Elon is a very wise person, so I’m sure he’s doing something that is a benefit to his shareholders at the same time he’s doing something that benefits the planet.

But this kind of thinking has a magical power. If you look at his announcement of the Model S, he said something to the effect that, “We didn’t set out to make the world’s best electric car. We set out to make the world’s best car.”

And so the question becomes, what is the best car for the world? What is the best car for people? And there’s this passion and belief that is driving us to different things and inspiring the teams that do it. It’s really quite something.

Makower: So let’s broaden this out to other technologies for which patents could be either hoarded or given away. Where else does this apply?

McDonough: On a personal level, which is why I’m so stimulated by the question, I am working on a super-affordable house for people in need. And I’m looking at concepts for negative cost of materials.

Makower: What does that mean?

McDonough: It means there are things for which we now pay to avoid a liability that could be converted into an asset. For example, waste streams. Are there things that we now pay for $80 a ton to get rid of that we might be able to use as a benefit to people? That’s why I’m working with the waste industry.

Because we’ve asked the different questions, we’re doing something new. We’re not setting out and saying how can we build the lowest-cost conventional building, or how can we design a standard building for the world. I’m saying all sustainability is local and we want to design things that can be made from materials at hand that suit local culture, that offer dignity and safety. It’s a different set of questions.

At what point would we ever want to protect this when actually it’s the more the merrier? Because what you’re talking about is a concept that wants to spread, as Jefferson pointed out in his correspondence. He had a really amazing bunch of statements. It’s really cool. Let me read part of what he wrote, and think about this in terms of what I just talked about.

Jefferson mentioned that people do not have a natural right to property and that the concept of “stable ownership” is actually the gift of social law. A patent, then, is a social convention to repay and reward inventors for their effort and ingenuity. A trade secret, on the other hand, is not public, and Jefferson references this when he writes:

“If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself …”

What a great line! I think about this often. It’s so gratifying to see the ripple effects of careful thinking. Every day I meet people who have been inspired to action and creativity based on having read Cradle to Cradle and now The Upcycle.

Makower: You’re working with Waste Management on a number of innovations that involve taking things out of the waste stream and turning them into usable assets in the way the circular economy should function. What’s the status of that?

McDonough: Well, Joel, it’s a little bit more than that. We are also working with the chemical industry, way upstream, asking them what’s going into these things — the packaging, etc. — to begin with. When we see, as you and I have discussed, award-winning flexible packages, not one of which is recyclable, we are creating liabilities, not assets. And you have to ask yourself what kind of business would produce a product it can’t sell? Why would we do that?

So, yes, we are working with the waste industry — Waste Management and others — to understand the global flows of these materials and start to ask, “What if they were assets instead of liabilities — by design?”

Makower: So, what’s the output going to be? Are you going to come up with new materials or new processes?

McDonough: New uses for existing materials and new material strategies. More uses for what we currently call waste. For example, I think we’re going to see more and more materials that are organics going to methane production and then going to composting and soil.

Makower: Are you going to give these technologies away, like Elon did?

McDonough: Well, to the extent that we develop anything worthy of giving away, sure. But I think the main thing would be, for example, giving the idea itself away, as we are doing when we discuss these matters. The ideas will develop value if they inspire and are used.

In other words, what if we could take polymers from our products and we looked at them and said, what if they were an asset? What if we collected them and used them for something that has to do with building parts, like roofs or something? Then we make them safe and fireproof and we find ways that people can have a roof over their head very affordably.

That’s an idea, and if I have ways of doing it that are really clever and utile, why wouldn’t I want to throw that out there? Because I don’t know that that’s where I want to make my living, running that as an enterprise. But someone else might want to, and they’re going to come up with clever things that allow them to get a commercial position. In the meantime, it’s just an idea, and it can spread. Ideas themselves become only valuable monetarily if they are commercially manifested.

Elon Musk needed a social structure to protect the commercial ingenuity of Tesla in order to have something commercially valuable to give away. Genius. We must all curate the ideas, ensure that they are carefully manifest, and the release them. This notion of a competent gift is important, but it is also interesting that this should be limited to one generation, as Jefferson and Franklin understood. The purpose of the patent is to document the what idea is, give the “idea” away, and make it freely available to the curious and ingenious, and let the inventor benefit for 17 years to repay and reward his or her effort and expense in bringing the invention to the world. We also use trademarks to assist in defining and preserving the quality of our brands in the marketplace. 

Makower: There have been attempts in the past to share sustainability-minded intellectual property, such as GreenXchange. But they haven’t really taken off. In fact I think GreenXchange may not even be around anymore. What do you think needs to happen for this idea of sharing intellectual property to become more common than it is?

McDonough: Well, like so many other things, I think it’s going to be money and success. And a fundamental understanding of the notion of competition.

The Greeks worried about the fact they were killing each other off in the city-states and warring. They realized that as a cadre, as a cohort, they were putting themselves at great risk by constantly fighting. But when the Olympics allowed them to get physically fit, work off some of their aggression on each other, they were quite fit when the Persians showed up.

So it’s about competition, as in the Latin root com petare, which means "to strive together." When we think that way, different things happen. And the curiosity allows for new ways of approaching problems, which causes more innovation, which may give someone a commercial advantage.

Makower: Is that why you gave away Cradle to Cradle certification by putting it into the public domain?

McDonough: Yes, because it’s going to be better for it. Cradle to Cradle will get bigger and it will be available to more people. Why wouldn’t we want to do that? We’re shifting commerce from “How much can I get for how little I give?” to “How much can we give for all that we get?” I think the culture of giving versus the culture of taking becomes fundamental to this question of intellectual property.

I’m really excited about the collaboration tools we have, the opportunities we have to move things so much faster. That’s what I’m spending my time on now: the big disrupters.

What will they be — the big material disrupters, the big energy disrupters, the big water disrupters, the things that are so obviously cool that they’re going to matter? Then the question is, how do we make sure they’re integrated in society in ways that are effective and benefit the most people?

Ideas are gifts. They are uniquely humanizing. As Jefferson wrote:

“Ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation.”

Top image by Weekly via Shutterstock



GreenBiz Forum 15

Event Date: February 17, 2015 - February 19, 2015
5402 East Lincoln Drive
Scottsdale, AZ 85253
United States

Scottsdale, AZ — Success is all about the power of partnerships — internal, external, supply chain, NGO, public-private, and more.

The tasks are simply too big to go it alone. The 2015 GreenBiz Forum brings together GreenBiz Group, The Sustainability Consortium, and ASU's Walton Sustainability Solutions Initiatives. We leverage our vast networks, insights and domain expertise to bring you the brightest thinkers and most influential leaders. You'll get an unparalleled in-depth look at the key challenges and opportunities facing sustainable business today.

The Forum is framed by the annual State of Green Business report, the eighth annual edition of GreenBiz’s acclaimed accounting of key sustainability metrics and trends. The report, combined with the high-wattage stage presentations, workshops and networking opportunities that have become hallmarks of GreenBiz events, makes the 2015 GreenBiz Forum an unforgettable event.

Visit the GreenBiz Forum 15 website.

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Website: GreenBiz Forum 15


5 lessons on climate change financing

Published July 11, 2014
5 lessons on climate change financing

After returning from a week of meetings of the Climate Investment Funds in Jamaica, we can’t say that we saw much of the beautiful country, but we did get a glimpse of some hot topics in climate change financing.

The CIFs — two multilateral climate finance funds designed to help developing countries pilot low-carbon, climate-resilient development — have been called a “living laboratory” for climate finance. Because they are one of the largest international climate finance funds and have been in operation for six years, other emerging funds can learn from their experiences. In particular, the Green Climate Fund — expected to become the main vehicle for securing and distributing global climate finance — can benefit from the lessons coming out of the CIFs experience.

Here are a few takeaways from last week’s meetings that provide lessons for the GCF:

1. A quick start can help get money to the countries and projects that need it, but the devil is in the details.

As experts noted throughout the meetings last week, the CIFs got off the ground relatively quickly in 2008 by relying on multilateral development banks to work with countries to develop investment plans and channel funding. However, they have had to work out many important details as they’ve gone along, including criteria for what makes a project worthy of CIF funding and guidelines for measuring results. Swift action to get funds flowing where urgently needed must go hand in hand with systems that allow for details to be fine-tuned as time goes by. These details are critical for ensuring that money is used effectively.

2. Learning is valuable, but the costs of learning can be a deterrent.

Recently, the CIFs Trust Fund Committee considered using a range of evaluative tools (such as impact evaluations) to find out what’s working and what’s not. The hope was that these tools would help the CIFs generate better outcomes by spreading knowledge and learning, and replicate and scale good practices. Indeed, WRI research on the World Bank also suggests that taking an evidence-based approach can help ensure meaningful results. However, the Trust Fund Committee made a judgment that the costs associated with such learning processes were too high.

3. Whether you call it “transformation” or “paradigm shift,” have a clear theory of change.

The recently completed evaluation (PDF) of the CIFs, overseen by an Evaluation Oversight Committee made up of the five Independent Evaluation Departments of the MDBs, provides much food for thought on the CIFs experiment. Sometimes CIF projects have an obvious transformational goal — for instance, several investments in concentrated solar power, including a $750 million CSP investment plan for the Middle East and North Africa, are expected in aggregate to result in cheaper CSP technology globally.

However, CIF projects do not always present clear logic about how they will address barriers to impact and replication. There is also a question as to whether each individual project seeking funding should be transformational on its own, or whether building a portfolio of complementary projects will drive broader transformation. What the evaluation pointed to was the need for clear theories of change during the investment planning phase.

4. Consider your risk appetite early on.

Investing in innovative activities to address climate change entails taking a certain level of risk — in testing new approaches, there is a potential for failure as well as high rewards. However, due to its funding structure, the CIFs have been limited in using the full range of tools at their disposal due to the varied risk appetite of different contributors. Because of this arrangement, the CIFs have tended to shy away from risky private sector projects and riskier instruments such as equity investments. The CIFs have spent a lot of time considering this issue, and they are just now making progress to overcome this limitation through their new Enterprise Risk Management Framework. Much of the time spent fixing this problem could have been avoided with sufficient consideration to this issue early on.

5. Results can’t be achieved without strong partnerships.

Climate change affects businesses, communities, government and more, so it cannot be addressed without a range of actors stepping up. The CIFs have engaged global stakeholders since the outset, including civil society groups, indigenous peoples and private sector actors. This collaborative approach was evident during the CIF’s Partnership Forum, which took place alongside decision-making committee meetings last week. As countries and MDBs work together to roll out projects on the ground, its emphasis will shift to engagement with national stakeholders. Together, these stakeholders can help strengthen the design and implementation of investment plans and help build broad-based support.

As an experiment in climate finance, the CIFs will continue to generate valuable lessons. It’s important to learn from this “living laboratory” in order to secure and deliver finance to help communities fight and overcome the challenges posed by a changing climate.

Learn more about distributed energy systems at VERGE SF 2014, Oct. 27-30. This article originally appeared at World Resources Institute and is reprinted with permission. Top image of Tanzanian farmer in field affected by drought by CIMMYT via Compfight.




How UNC is creating a renewable energy future

By Laurie Guevara-Stone
Published July 11, 2014
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Tags: Renewable Energy, Renewables, More... Renewable Energy, Renewables, Schools
How UNC is creating a renewable energy future

The University of North Carolina's 17 campuses, extending from the mountains to the coast, are as diverse as the state's terrain. However, they all share one thing: recognition of the importance of greater adoption of renewable energy on their campuses. UNC, the nation's oldest public university, is embracing modern technologies to fulfill its commitment to the state's environmental health and the efficient use of energy.

UNC recently sent a team to RMI's eLab Accelerator to learn how it can employ more renewable energy on its campuses. The UNC team believes that energy-related innovations transcend ideology, representing a broad range of benefits for the state and all of its citizens. That belief is founded on three ideals.

1. UNC has the responsibility to implement energy solutions that meet current demands, address future market conditions, are technologically and environmentally relevant and position the university to operate cost-effectively.

2. The role of higher education is to pursue curriculum and research opportunities that look to the future, addressing the issues and opportunities of the state as a whole. The state university setting, with its educational and research missions, is ideal for collaborations with public and private entities to stimulate innovation in emerging technologies and techniques.

3. Current and future UNC students demand that the university pursues a sustainable energy future. North Carolina's youth see the multitude of impacts that energy has on our past, present and future. The university owes it to them to lead by example, so that their imaginative and entrepreneurial minds can help realize the full economic potential of North Carolina's energy future.

"At eLab, our team from across several University of North Carolina campuses had the unique opportunity to convene amid many of the nation's forward thinkers on energy and sustainability," said Ged Moody, sustainability director at Appalachian State University, part of the UNC system. "This focused time together, combined with the expertise on hand, enabled the team to advance its ideas beyond our expectations."

The timing of Accelerator was perfect, as at the end of this month Appalachian State University will host the third annual Appalachian Energy Summit, bringing campus leaders from across higher education in North Carolina together to share best practices on sustainable energy issues. UNC currently spends about $1,000 per student per year on energy. Its financial goal is to save the state $1 billion over 20 years.

Long history, sustainable future

Besides saving the university money, implementing more renewable energy on its campuses can help the university reach many other Energy Summit goals, such as transforming and stimulating the North Carolina economy through support of green energy business infrastructure and creating jobs in the new energy economy.

Other goals include educating students to be leaders of tomorrow through active and demonstrative pursuit of energy initiatives, positioning the UNC system as a national leader in sustainability education and in reducing fossil fuel reliance and creating a culture of environmental and economic sustainability across the UNC system.

Credit: William Yeung via FlickrThe UNC team went into Accelerator focused on solar PV as a potential valuable source of energy for the UNC system. This viewpoint was strengthened during the four-day event. Yet the team learned that the North Carolina utility and regulatory environment presents challenges to emerging renewable energy business models and that solar energy as a grid resource is largely undervalued. The team also came away with the knowledge that given the current tax-credit business models and the UNC system's capital availability, building and financing large-scale renewable energy resources will require external sources of funding.

During Accelerator, the UNC team developed a list of funding options, identified primary team members, met and built relationships with utility representatives, further developed their project vision, and came up with a plan for next steps. "Since eLab, our team has met every two weeks," Moody explained. "We're evolving ideas into actions that will one day benefit all citizens of North Carolina." Although they understand this is difficult work, they realize that it is also extremely important work, and that the UNC team is developing techniques that will serve it and the state of North Carolina well into the future.

Top image of the Old Well at UNC Chapel Hill by William Yeung via Flickr. This article first appeared at RMI Insights.

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GM, HP, Walmart and others demand simpler buying of renewables

By Heather Clancy
Published July 11, 2014
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Tags: Procurement, Renewable Energy, More... Procurement, Renewable Energy, Renewables
GM, HP, Walmart and others demand simpler buying of renewables

A blue-chip group of companies today is announcing a set of principles aimed at making it easier for companies to buy more renewable energy. It aims to solve what has become a vexing problem for companies seeking to increase their clean-energy purchases: moving utilities and other energy providers to make clean power more widely.

One reason there has been such a dramatic uptick in on-site solar and fuel cell projects is because it is still extremely difficult for businesses to source clean power for existing energy needs.

Between complicated contracts, lengthy negotiations and antiquated regulations, companies such as Walmart, Mars and Sprint have been stymied in their attempts to get beyond renewable energy certificates to shift at least some of their power purchasing agreements to solar, wind and other renewable generating sources.

"It represented a major effort on our part in an area where we aren't experts, which his energy production," said Kevin Rabinovitch, global sustainability director for Mars, who is looking for economically sound ways to move away from RECs.

Big names, big clout

But a dozen big-name companies fed up with by their own struggles is seeking to change the conversation with the Renewable Energy Buyers' Principles. This manifesto of sorts is meant to spur utilities, along with state and local regulators, to consider new procurement models that will help businesses large and small meet corporate clean energy goals.

The list of initial supporters includes Bloomberg, Facebook, General Motors, Hewlett-Packard, Intel, Johnson & Johnson, Mars, Novelis, Procter & Gamble, REI, Sprint and Walmart. Together, these companies need more than 8.4 million megawatt-hours or renewable energy to meet their existing commitments. Apparently, several more signatories are waiting in the wings.  

Walmart started its goal of 100 percent renewable energy several years ago. These solar panels were photographed at Walmart in 2010. (Credit: Walmart via Flickr)

"If we can buy renewable energy for less, we can operate for less, and we can pass on the savings," said David Ozment, senior director of energy for Walmart, which aspires to source 100 percent of its electricity needs through renewables. To that event, the retailer already has invested in more than 250 on-site solar projects, as well as fuel cells and utility-size wind turbines.

But few companies have the wherewithal — or interest — to become an energy generator, and that was one of the biggest motivations for the principles. "We're big believers that when groups of companies who are major market players come together, it can change markets," said Marty Spitzer, director of U.S. Climate and Renewable Energy Policy for World Wildlife Fund, which along with the World Resources Institute helped orchestrate the creation of the principles. The Rocky Mountain Institute was also involved in defining and refining them.

The six-item wishlist for easier clean energy procurment

These companies seek six specific things from the marketplace:

  1. Greater choice in options to procure renewable energy
  2. Cost competitiveness between traditional and renewable energy rates
  3. Access to longer-term, fixed-price renewable energy
  4. Access to projects that are new or help drive new projects in order to reduce energy emissions beyond business as usual
  5. Increased access to third-party financing vehicles as well as standardized and simplified processes, contracts and financing for renewable energy projects
  6. Opportunities to work with utilities and regulators to expand choices for buying renewable energy

During a conference call to discuss the principles, Amy Hargroves, director of corporate responsibility and sustainability for Sprint, said one of her company's primary reasons for becoming involved was the "overwhelming" lack of standardized contracts or alternatives the telecommunications company has surfaced after several years of research.

Credit: OiMax via Flickr

"We don't have a full-time team to wade through all these options. We don't have someone to manage a power facility," she said. "How can we make this easier for smaller companies?"

Some companies, such as eBay, have accelerated their adoption of directly procured renewable energy by addressing state regulatory hurdles head-on. That's what the company had to do in Utah, where it was part of a group of companies that successfully lobbied for the introduction of legislation that now allows businesses to buy power directly from energy project developers. This wasn't possible before. Google and Apple are involved with similar evangelism in North Carolina, where both have substantial data center footprints.

What's notable about the new principles published this week, however, is that they focus on shifting existing relationships — not just on serving big new projects or facilities. "We need this for both new and existing loads," Spitzer said.

Letha Tawney, senior associate for WRI, said some utilities, including Duke Energy, Dominion Virginia Power and NV Energy, are taking small steps in the right direction by offering to broker large renewables purchases but many other utilities are still blind to the need for renewable energy products that serve businesses. "This is news to them," she said.

Right now, the group's initial focus is U.S. energy procurement although global concerns will be layered into the language of the principles over time. You can expect both WWF and WRI, along with the companies behind the Buyers Group, to bring this dialogue to as many energy commissioners, governors' offices and utility executives as they can reach to build awareness and catalyze change. "These buyers are looking for sellers," Tawney said.

Learn more about new energy systems at VERGE SF 2014, Oct. 27-30.

Top image of solar panels and wind turbines by sollafune via Shutterstock.

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Sea level rise cuts across political divide in Norfolk, Va.

By Christina DeConcini and C. Forbes Tompkins
Published July 10, 2014
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Tags: Climate, Policy
Sea level rise cuts across political divide in Norfolk, Va.

While the climate change debate continues in some quarters in Washington, the impact of sea-level rise cut across political divides at the "Rising to the Challenge" conference last week in Norfolk, Va.. Members of Congress and Virginia mayors from both political parties joined military and state and local officials to discuss the challenges sea level rise presents to the Hampton Roads area, as well as how to promote federal, state and local action.

Democratic U.S. Sen. Tim Kaine of Virginia, Republican U.S. Representatives Scott Rigell and Robert Wittman and Democratic Representative Robert Scott, Norfolk Mayor Paul Fraim (a Democrat) and Virginia Beach Mayor Will Sessoms (a Republican) joined Rear Admiral Jonathan White, Deputy Under Secretary of Defense John Conger and Alice Hill, senior advisor on the National Security Council. All called for coordination with all levels of government to move from technical discussion of sea-level rise to working policies.

"We cannot afford to do nothing. It is time to act," Sessoms said, underscoring that the impacts of climate change are not a political issue, but a backyard issue threatening communities in Virginia.

The front lines of sea level rise

Coastal communities in southeast Virginia are at the front lines of sea-level rise. Sinking land and rising seas have combined to produce the fastest rates of sea-level rise along the U.S. East Coast for the Hampton Roads region, comprising Virginia Beach, Norfolk, Hampton, and 14 other localities in Southeast Virginia. Sea levels have risen more than 14 inches (PDF) since 1930.

"Since it's our highest probability, highest impact threat, why don't we address it as such?" asked Norfolk's Director of Emergency Preparedness and Response Jim Redick when discussing the significance of sea-level rise. Hampton Roads is the second-most affected by sea-level rise in the nation, and has the second-largest population center at risk from sea-level rise. Norfolk officials estimate the city will need at least $1 billion (PDF) in the coming decades to replace current infrastructure and keep water out of the city's homes and businesses.

Military is speaking up

Sea-level rise also threatens the region's numerous major military facilities, including Naval Station Norfolk, the world's largest naval base and the most vulnerable such base to rising seas, according to Rear Admiral Kevin Slates.

Credit: The Official U.S. Navy Page via Flickr"This is a matter of national security," said the National Security Council's Hill. "It's a mission-readiness issue."

Rising seas also pose a threat to the region's economic health — about 46 percent (PDF) of the Hampton Roads economy comes from U.S. Defense Department spending.

This unique threat to the region has led the Department of Defense to partner with local and state government, local businesses and the community to work together on strategic, long-term regional planning on coastal resilience.

When pressed by panelists on how much sea-level rise the area will confront in the future, White explained that we can prevent the worst consequences if we address the root of climate change and "stop putting CO2 in the atmosphere."

Bipartisan voices

The conference was the latest in a series of events demonstrating that climate change need not be a partisan issue. A report called "Risky Business: A Climate Risk Assessment for the United States," released June 24 by former Secretary of Treasury Hank Paulson, former New York Mayor Michael Bloomberg and entrepreneur Tom Steyer, provides a comprehensive valuation of financial risks the United States faces from climate change.

While the report delves into agricultural, health and other climate impacts, it specifically calls out threats to coastal communities from sea-level rise and storm surges. It warns that within the next 15 years, higher sea levels alone likely will increase (PDF) the average annual cost of coastal storms along the eastern seaboard and Gulf of Mexico by $2 billion to $3.5 billion.

That risk was evident at the June 30 conference in Norfolk. "What is the cost if we don't do anything?" Sessoms asked. "I think we're going to see some numbers that are going to be staggering."

Sessoms's concern echoed testimony June 18 from four Republican former EPA administrators before the Senate Environment and Public Works Committee on the urgent need for action on climate change. The former administrators also voiced their support of the Environmental Protection Agency's plan to regulate greenhouse gases from existing power plants.

Moving from diagnosis to prescription

The "Rising to the Challenge" conference showed that on the local and state level, there is strong bipartisan support and agreement that the problem of sea-level-rise facing Hampton Roads, its citizens, property and assets is urgent. It demands action and commitment to work together on solutions. "We have to move from endless diagnosis to prescription," Kaine said.

The engaged community in Hampton Roads is united by a sense of urgency and poised to grapple with this threat. We hope leaders in Washington and elsewhere are watching this example of elected officials doing what they are meant to do: Working together to respond to their constituents' problems.

Top image of Norfolk beach by Doug Miller via Flickr. This article originally appeared at World Resources Institute and is reprinted with permission.

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Food waste is so yesterday — think biogas instead

By Rachel Cernansky
Published July 10, 2014
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Tags: Cities, Food & Agriculture, More... Cities, Food & Agriculture, Waste Management
Food waste is so yesterday — think biogas instead

This story originally appeared at Yale Environment 360

In February, trucks from Waste Management, Inc. started working new routes in Los Angeles County, California. Waste Management collects food scraps from restaurants, grocery stores, hotels and food processing plants, takes them to a company facility in Carson City, and grinds them into a slurry. That liquid is taken to a Los Angeles County wastewater treatment plant, where it is mixed in with sewage — one part food waste to nine parts human waste — and processed in an anaerobic digester

The end result? Biogas that can be burned as fuel — a benefit that may encourage the Los Angeles County Sanitation District to expand the initiative into a full-scale program after two years. 

The facility is hardly the first sewage treatment plant to take in food waste, and it certainly won’t be the last. Efforts to recycle food waste are growing nationwide, and many are doing it the traditional way, by collecting and composting food scraps. But there is increasing interest in sending food waste, particularly from commercial sources, to facilities that use anaerobic digesters to convert the food into biogas. 

About 15 wastewater treatment facilities in the U.S. are engaged in this practice — a small number, but that’s up from one or two about a decade ago, according to the American Biogas Council. Following the lead of Europe — which is increasingly either composting its food waste, incinerating it, or processing it in biodigesters — more U.S. cities are trying new ways to harvest energy from food that otherwise would have rotted in landfills and emitted methane, a powerful greenhouse gas. 

"Whether the food waste is diverted to traditional composting sites or goes to an anaerobic digester, I think that's a good use of that resource,” said Mark Hutchinson, an agricultural extension professor at the University of Maine. “We no longer consider it to be a waste product — it's something we're trying to manage as a resource." 

According to the American Biogas Council, about 860 sewage treatment plants in the U.S. produce biogas using anaerobic digestion, in which bacteria break down the organic matter in an oxygen-free environment and produce biogas composed primarily of methane. That gas is generally burned on site to help power the facilities. (Another 381 plants have anaerobic digesters but are flaring the gas.) 

Some facilities — including the Carson City plant and treatment plants in West Lafayette, Indiana and Des Moines, Iowa — have started taking in food waste to "co-digest" with sewage in tanks or large digester “eggs.” In addition to biogas, anaerobic digesters produce decomposed organic matter than can be used as fertilizer. 

In 2002, California's East Bay Municipal Utility District (EBMUD), which serves Oakland and Berkeley, became the first sewage treatment plant in the U.S. to digest food waste with wastewater and produce biogas. And in 2012, the utility district became the first to generate, on-site, more energy than it needs through anaerobic co-digestion. In the last fiscal year, the facility produced about six megawatts of power and made about $1 million by selling surplus electricity to the Port of Oakland via the grid operated by Pacific Gas and Electric. 



New York City, as part of an ongoing pilot program, sent tons of food waste from Brooklyn and Staten Island to a waste transfer station, where it was pulverized into a slurry. It was then sent to the Newtown Creek wastewater treatment plant in Brooklyn and processed in an anaerobic digester to produce biogas for the facility. The city — which is now scaling up the collection and composting of food scraps — is evaluating the effectiveness of the Newtown Creek project. 

Bridget Anderson, the Department of Sanitation's acting deputy commissioner for recycling and sustainability, is hopeful the project will continue. "We want to keep the material as close to New York City as possible,” she said. “And obviously, creating renewable energy is another beneficial use that we wanted to explore besides composting." 

Connecticut and Vermont have banned commercial food waste from landfills. In Massachusetts, new food waste disposal regulations will go into effect in October, requiring any business that disposes of at least one ton of organic material a week to either donate the food, send it for composting or anaerobic digestion, or ship it to animal feed operations. State agencies awarded a $100,000 grant to a wastewater treatment plant in Boston Harbor to study the impact that co-digesting food waste will have on its operations. 

The state also is talking with businesses about creating markets for the compost and digestion products. "Let's say you're a large college that produces a lot of this material — we want the college to be able to go out and say, 'Where can I best get rid of this stuff at the best price?'" said David Cash, commissioner of the Massachusetts Department of Environmental Protection. "Or maybe they want to figure out how to do it themselves on campus.” 

Waste management companies and cities are interested in anaerobic digestion because it provides another outlet for the growing amounts of food waste they're trying to keep out of landfills. The addition of some food waste is beneficial to anaerobic digesters at sewage treatment plants because more organic matter means more energy production. Since food waste is richer in organic matter than manure or sewage, it generally produces several times more methane per unit of volume. 

"It's been an evolution of having these digesters and flaring the gas, to putting that gas to good use, to now moving into, 'I want to actually generate more gas,'" said Chris Hornback, senior director of regulatory affairs for the National Association of Clean Water Agencies

Recycling food waste may be relatively new in the U.S., but it's common in other countries, particularly in Europe. In Germany, residential food waste is mainly composted, with more than a quarter of it biodigested first, according to David Wilken, head of waste, fertilization and hygiene at the German Biogas Association. Most industrial and commercial food waste is broken down in biodigesters. 

The continent has roughly 14,000 municipally operated biogas digesters, with nearly 9,000 in Germany alone. In Denmark, most food waste is incinerated for energy recovery along with other household garbage, according to Ioannis Bakas, a waste expert at the Copenhagen Resource Institute

Elsewhere in Europe, composting is common, but anaerobic digestion is on the rise. It's growing quickly in the U.K. as well as Sweden, which last year declared a lofty goal: At least 50 percent of organic waste should be recycled by 2018 — using either composting or anaerobic digestion — and 40 percent of the energy should be recovered. As a result, said Asa Stenmarck of the Swedish Environmental Research Institute, "There is a switch toward anaerobic digestion. It is, however, hard to get the economics to work, so this is also to some extent depending on subsidies from the government." 

Government assistance has a lot to do with why anaerobic digestion has taken off in Europe. But as Patrick Serfass, executive director of the American Biogas Council, points out, it’s also meant that operators haven’t necessarily had to figure out the economics. “Projects get developed that are dependent on those incentives, and they’re not forced to innovate as much as the U.S. market has been,” he said. “That sort of innovation is what helps biogas projects in the U.S. to achieve profitability and helps make the market, even though it's smaller, more nimble.” 

For example, New Hampshire-based Neo Energy is developing anaerobic digestion projects specifically for food waste in Massachusetts and Rhode Island. In Central Florida, a Harvest Power facility co-digests sewage and food waste from nearby businesses, including Disney World, and extracts phosphorus from the waste to form a crystal called struvite, which is sold as a fertilizer additive. 

Recycling food waste is steadily growing in the U.S. A 2012 survey conducted by BioCycle Magazine identified 183 communities in 18 states offering curbside food waste collection. 

Experts agree that anaerobic digestion is growing quickly, but not necessarily at the expense of composting. “You can't draw a box around these two and call them exclusive,” said Scott Beckner, an integrated waste management specialist at California’s Department of Resources, Recycling and Recovery. “We're seeing both increase at an even pace. Anaerobic digestion is really picking up right now. Composting facilities are figuring out new technologies to meet local needs.” 

The cost of building an anaerobic digestion system ranges widely, depending on the size of the plant, the feedstock, types of end-products produced, and other variables. It’s not cheap. Last year, the Lewiston-Auburn Water Pollution Control Authority, a relatively small sewage treatment plant in Maine, finished installing a $14 million anaerobic digestion system. DC Water in the nation’s capitol, meanwhile, is spending an estimated $500 million on a new anaerobic digestion system modeled on Norwegian technology, but it also expects to recoup those costs. The utility expects to save $16 million a year in operational costs and $10 million on its electricity bill. The new Lewiston-Auburn system is expected to save the plant $600,000 a year through reduced energy costs and lower volumes of solids to dispose of. 

The anaerobic digesting process is more complex technically than composting, and digesters — especially pre-existing ones — can be easier to operate when the feedstock is predictable, which residential food waste is definitely not. The bacteria that break down the organic matter during digestion also prefer a moist environment, and it's hard to control the ratio of liquids to solids in residential food waste. 

“Biosolids” remain after the anaerobic digestion process, and some are used as fertilizer. But detractors of sewage sludge recycling object to that practice and to adding food scraps to co-digestion tanks. "The residuals (biosolids) from sewage treatment plants should never be used as a soil amendment” because they contain a mixture of pathogenic and industrial pollutants, said Caroline Snyder, professor emeritus of the Rochester Institute of Technology and founder and chair of Citizens for Sludge-Free Land

Despite such concerns, the wave of innovation in food recycling and anaerobic digestion is picking up speed globally. Said Serfass, “We're seeing Europeans looking to how we're innovating and creating new products in the U.S.” 

Top image of the Biogas Train Amanda near Linköping station, Sweden, by Barbarien

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Is Shell guilty of climate 'double think'?

By Robert Kropp
Published July 10, 2014
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Tags: Business Operations, Energy & Climate, More... Business Operations, Energy & Climate, Finance, Supply Chain
Is Shell guilty of climate 'double think'?

Much has been made of the impact of the Carbon Tracker Initiative's 2011 report on stranded assets on the fossil fuel divestment movement that has spread throughout college campuses in the US. The movement has more recently spread to other organizations, such as the Unitarian Universalist Association; and in response to growing investor demand, even mainstream investment firms such as BlackRock are now offering fossil fuel free investment options.

UUA's divestment resolution provides for retaining “investments in fossil fuel companies with which it is engaged in shareholder actions seeking environmental justice.” And engagement by sustainable investment organizations has thus far remained a priority for many. In March, engagement by As You Sow and the wealth management firm Arjuna Capital resulted in ExxonMobil becoming the first oil and gas company to report on stranded assets.

In its response, Exxon denied that global society possesses the will to keep temperatures from increasing by more than two degrees Celsius, and therefore none of the fossil fuel reserves currently counted as assets will be left unburned. “Exxon to World: Drop Dead,” Oil Change International stated in response.

In May, Royal Dutch Shell responded to shareowner concerns on the issue, and adopted the same position as Exxon: “there is a high degree of confidence that global warming will exceed 2°C by the end of the 21st century,” the company stated.

Along with Energy Transition Advisors, Carbon Tracker has produced a report concluding that “Shell’s approach is based on dismissing potentially weaker demand for its oil due to tougher climate policies, technological advances and slower economic growth.”

In its report, the think tanks argue, Shell has chosen to highlight the conventional reserves on its books, although “its growing unconventional and deepwater portfolio...will be more capital intensive, have longer lead times and extended payback periods.” Shell's report also focuses on relatively short-term reserves, although “adding existing discoveries extends that period to 25 years, and possibly longer.”

In addition to joining Exxon in denying that global temperatures will not exceed 2°C, Shell also “dismisses the likelihood of political action on climate change, ignoring the growing list of national and regional emissions measures being legislated and the growing calls and potential for greater energy efficiency worldwide.” The next international climate change conference is scheduled for December, 2015, but in acknowledgment of the urgency of the issue, UN Secretary-General Ban Ki-moon has organized a summit of world leaders at the organization's New York headquarters in September.

“Over the next 10 years, we estimate that Shell could invest some $77 billion in high-risk, high-cost projects,” the report states. “If Shell invests the proceeds from its producing assets into resources such as these, it will be at a progressively greater risk to changes in demand caused by measures to cut pollution.”

“With this combative stance, Shell has missed an opportunity to explain to its shareholders how its capital expenditure plans are resilient to the impending energy transition,” Anthony Hobley, CEO of Carbon Tracker, stated. “Acknowledging the seriousness of the climate challenge whilst at the same time asserting no effective action will be taken until the end of the century is as classic a case of Orwellian double think as you are likely to find.”

Rather than dismissing low-carbon outcomes as unlikely, the report concludes, Shell's long-term energy outlooks ought to more seriously consider the implications of a 2°C climate scenario.

This article originally appeared on SocialFunds. Top image of Shell station in Jacksonville, Fla., by Rob Wilson via Shutterstock

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