Identify Your Sustainability Goals and Green Metrics
So you've been charged with making your function or department or company "greener." Now what? The first question is what are your company's sustainability goals, your green targets? Corporate-wide sustainability goals (at least the public version) are often sweeping, but imprecise, such as Wal-Mart's three sustainability goals:
· To be supplied 100 percent by renewable energy,
· To create zero waste,
· To sell products that sustain people and the environment.
From your broader corporate goals, more precise, function-specific and process-specific goals must be derived. Wal-Mart, for example, has a goal to "reduce the amount of packaging in our supply chain by 5 percent by 2013." This combines business benefits (reductions in material and transportation costs, more efficient use of space) with environmental benefits (reduced use of paper/trees/fuel, reduced transportation emissions, reduced landfill/disposal impact).
The Role of Green Technologies in Achieving Sustainability Goals
We are one of the first to advocate looking at your policies, processes, and practices. But we also recognize that technology plays an equally important role. The selection of technology should be driven by your overall corporate strategy, sustainability goals, and the financial benefits.
Green/clean energy is one of the most vibrant and innovative sectors in the economy right now, with new technologies and approaches popping up left and right. That was dramatically illustrated when we attended the annual Clean Energy Conference (Nov. 2009) in Boston where we saw myriad exciting new green technologies. One company we saw at the conference was Lifecycle Renewables, which uses waste vegetable oil to generate renewable energy on-site at their customers, as they have done with Whole Foods that is the first U.S. company to generate all its electricity needs on-site using recycled cooking oil from its commissary kitchen and stores. Lifecycle Renewables installs and operates the system. There's an example of a clear goal and metric, with a technology ideally suited to helping them meet that goal, requiring only minor changes to operating procedures - the vendor handles all of the logistics of collecting the oil from regional Whole Foods locations as well as maintaining and operating the equipment - and no new hires/skills are needed.
SaaS-like Models Reduce Risks and Upfront Capital Expenses
The risk of new technologies can be mitigated when they are sold as a service, analogous to Software-as-a-Service (SaaS) in the software industry. For example, a number of Solar Energy producers offer Power Purchase Agreements (PPA). Instead of the customer buying, installing, and maintaining their own Solar panels and equipment, the PPA provider owns and operates all of the onsite gear, and simply sells electricity to the customers at predetermined rates. The customer avoids large upfront capital expenses, does not have to worry about plant maintenance, and has guaranteed long-term prices for their electricity that don't rise and fall with the cost of oil or gas.
Another company we saw at the Clean Energy Conference was KGRA Energy, which captures large quantities of waste heat generated at oil and gas wells (both onshore and offshore), industrial furnaces, power generators, and oil & gas pipelines, and converts that waste heat into electricity which is sold back to the plant operator. As stated on their site, "KGRA does not require any investment on behalf of its customers; it designs, builds, owns, operates, and maintains its geothermal facilities. Moreover, the Company sells produced electricity to operators under a long-term, fixed-price contract that will save them money and provide stabilty to their income statement. Where appropriate, excess power generated can be sold back into the grid."
Cut Through the Hype to Understand and Compare Actual Performance
In a new market, vendors' claims sometimes appear incredulous and it's hard to know who to believe. It doesn't help that different vendors use different units and methods of expressing their product performance.
You must do your homework. Within many of the green sectors, there are industry groups that provide standards for measurement which help to normalize performance results, and in some cases they provide certification of test results. For example, the Green Grid provides a common set of metrics, processes, and methods to improve energy efficiency in data centers. The LEED standards from the U.S. Green Building Council help measure the sustainability of buildings. Renewable energy sectors are adopting levelized cost of energy (LCOE) as the standard unit of comparing costs. Certification by independent third parties can also give additional confidence in the actual performance of green products and services.
Some keys to successfully selecting green technology:
· Look for technologies that help to fulfill your company's green strategy and corporate sustainability goals.
· Find approaches that can be justified on their business benefits alone, but also provide large environmental and sustainability benefits.
· Choose business arrangements that reduce your risk, such as buying a service rather than buying and maintaining equipment. This is especially important with younger startups that lack a proven track record. They should be eager for your business and willing to explore a business model that shares the risk.
· Leverage industry organizations, standards, metrics and certification bodies to validate performance claims.
Green is good for business. If you're smart about your goals and how you implement, you can minimize the risks and maximize the benefits.
To view other articles from this issue of the brief, click here.