First Offshore wind firm in US

US Govt. has approved the first offshore wind firm in USA off coasts of MA.

http://news.yahoo.com/s/ap/us_cape_wind

The Natural Step approach towards sustainability assessment

So, we discussed about emissions last time. Hmm, that means we are in trouble, correct? Well, yes in short. How much, is difficult to qualify. And more difficult to quantify is the risk. Everything has a risk. And, financially, we mitigate a risk by buying an insurance. Aha, so what if we walk on the road, we slip on a banana skin like the Thom(p)sons of Tintin, break back, and go to a coma? So, that means one should not walk on the street, and if at all has to walk on the street, buy an walking insurance, correct? No, thats an exagerration of risk. Thom(p)sons did not get paid that much to buy that many insurances.

 Like this, identifying true environmental risk potential and related expenditure (nothing is free, right?) is very complicated and various frameworks have been established to analyze such risk, quantify such risk and identify ways to mitigate such risks. One of them is natural step principle (TNS).

The Natural Step is a non-profit organization founded in Sweden in 1989 by scientist Karl-Henrik Robèrt. The Natural Step has pioneered a "Backcasting from Principles" approach to effectively advance society towards sustainability.The Natural Step has developed, through a consensus process, a systematic principle-based definition of sustainability.

The framework is based on the two fundamental principles of nature -- first and second law of thermodynamics (yup, lets go back to Zemansky - and open the famous blue book one more time). Essentially -- the first law states that -- work and outcome has an equivalence and its not essentially 1:1 and second law states that the entropy (unavailability of the energy) in the universe is progressing towards maximum.

The TNS approach is based on four principles or system conditions.

In a sustainable society, nature is not subject to systematically increasing:

1. Concentrations of substances extracted from the Earth's crust.
2. Concentrations of substances produced by society.
3. Degradation by physical means and, in that society.
4. People are not subject to conditions that systematically undermine their capacity to meet their needs

Thats very good in principle, can it be achievable in practice? Like all theories, the more impeccable they are the more impossible they are. Thus, we try to convert theories into practice by cutting corners i.e. accepting deviations and trying to minimize such deviations. In short, its always about approximations and corrections.

The natural step organization website has more details about these principles.

The practice of these principles in corporate world and thereby achieving the fundamental principle of capitalism i.e. profit can someway be construed to be fundamentals of sustainable finance. These are not the only definitions of sustainability, though. There are others. We just picked one that we see followed decently across financial and MFG sectors.

OK, that means, we apply these principles, get some data, crunch numbers, and produce some wonderful pie charts/ bar charts to take decisions correct? Umm, may be.. but there is more.

Anyhow, we need to run to our work now and drop our kid to school.

Ciao.

What is Emission?

Hello Friends,

Good Afternoon! We wish we could say it is lovely weather today, but its rainy here in Schaumburg, IL. So, we sat at our kitchen table and started writing this blog.We hear about emission everywhere and about related tradings, so we thought , " Hey, lets define what we mean by emission".  Appreciate everyone's input.

Lets first define the term emission:

Direct Emissions

Direct emissions are produced from sources within the boundary of an organisation, such as industrial  processes

Scope 1:

Emissions from the combustion of fuel for energy or fugitiveemissions from the extraction, production, flaring, processing and distribution of fossil fuels.

Scope 2:

Emissions from industrial processes where mineral, chemicalor metal product is formed using a chemical reaction that generates greenhouse gases as a by-product.

Scope 3:

Emissions from waste disposal either as landfill, management of wastewater or from waste incineration.

Indirect Emissions

Indirect emissions are generated in the wider economy as a consequence of an organisation’s activities (particularly from its demand for goods and services) but which are physically produced by the activities of another organisation.

Examples include electricity production, ‘upstream’ emissions generated in the production of goods purchased by the entity and ‘downstream’ emissions associated with transporting and disposing of products sold by the entity.

Fugitive Emissions

Greenhouse gases that are released in the course of oil and gas extraction and processing; through leaks from gas pipelines and as waste methane from black coal mining.

But are these all related to carbon dioxide?Nope, although it plays the major role. So how much major?

Lets look into the graph below for a projection.

Hmm.. so, we are not going to have any problems, correct? That's what the graph says, right? Well, not exactly in either direction. The answer is yes and no. And it is not a consulting speak per se. It is strictly a mathematical analysis of state functions. How do you control your interdependent variables and reduce the number of axioms to come with a statistical projection is very important.

OK, thats essentially a very basic definition. We will now go out. Stay well, friends.

The state of green economy in US

Friends,


We all hear about green economy everywhere. But how do we quantify that? From our experience we are finding green business has two major components - business of tangibles/semi-tangibles and business of intangibles which includes both service and financial trading. It is real and making money.

Under tangibles we may consider green products that either save energy or provide better sustainability to a corporate organization. In some cases, it becomes both. Also, we may consider renewable energy production to be under tangibles. Simply from energy production perspective, US is focusing significantly into renewables /green energy. For example, by 2015 US renewable energy generation is expected to reach 35 Giga Watt/ Year. By 2020, the green industry is predicted to grow to a size of $1.5 trillion. Today, US leads the world in geothermal energy production and rank fourth in solar energy production. Considering global perspective, renewable energy production is growing globally at a rate of 25 Giga Watt/Year. Europe is ahead of us on this but from net numbers perspective US is not that far behind. So, it has crossed the initial hype curve or probably at the end of the hype towards materialization.

Moving to conventional energy business, Smart Grid and Smart Meter techs are taking great strides. The target of this sector normally is to come out of the volumetric domestic consumer billing into demand response rate billing model. Companies like Sempra/ GE are pretty proactive in this market. A subset of this business is selling intelligent meters, programmable communicating thermostats etc. If we may digress to Europe once, their potential target is to convert 1/2 a million households per year into intelligent meter model to achieve energy savings. In USA, just to give an example, CA probably is targeting to implement smart meter by 2012-2013 ( I would recommend to recheck these dates for accuracy). So again, this is materialized and has a scope of investment. American Gas Association in 2009 reported that about 45 million residential customers in 36 US states are being served under non-volumetric rates which is a major stride towards green economy.

Then moving to intangibles now, first service -- and consulting. that includes traditional IT, CSR, compliance advisory (WEEE/ROHS), Meter Data management, traditional upstream/midstream/downstream operational efficiency and Smart Grid (especially in infrastructure security space). In fact, 2009 Carbon salary survey for NA and average consulting/management/engineering job salaries stated are around starting 6 figures, which is good.

Lastly, financials and trading. If we refer to indices like CELS in Nasdaq we can see the size of the market and the regular trading volumes. Also, other interesting indices could be RENIXX, Credit Swisse, ALTEXGlobal, ISE Green Energy Index etc. Just like the way, a normal household nowadays investment a part of their portfolios ( regular salaried families) into BRIC/Russel 2000 etc., such cash flows are moving to these indexes too to some degree.

The last market is traditional collar transfer from blue/white to green and supporting personnel job market - trainers, change management, administration, LEED certified professionals, lawn service providers, state and local policy jobs etc.

To summarize, it is a growth market and still to be defined. Our sincere hope, this will create a sustainable purchasing power in the hands of the majority of the population. In that case, it will help retail too.

IMF Climate Finance Plan

Looks like The International Monetary Fund (IMF) has published proposals for raising the $100 billion/year called for in the Copenhagen Accord to tackle climate change in developing countries – proposals it says could help forge an international climate change deal.
I will try to put more data as I learn about this.

WEEE and ROHS

Over the years, we have worked on providing ROHS and WEEE advisory services as part of Corporate Product Information Management for our North America Clients who sell products in Europe. We thought to share some of our observations. We have made some assumptions such as we have agreed upon a legal definition of producers with us and we know about the cross territorial B2B transactions.

First, the directives:

WEEE:

In January 2003, the European Union adopted the Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment [Directive 2002/95/EC] (the “RoHS Directive”) and the Directive on Waste Electrical and Electronic Equipment [Directive 2002/96/EC] (the “WEEE Directive”). The objective of these Directives is the protection of human health, and the environmentally sound recovery and disposal of WEEE. There is also a focus on enforcing the proper risk assessment in design cycles, and on improving the environmental performance and life cycle management of the electronics industry as a whole. The main provisions of the WEEE Directive state that from August 13, 2005, producers are required to finance the collection, treatment, recycling and recovery of all WEEE. Pursuant to the RoHS Directive, as of July 1, 2006, EEE (Electrical and Electronic Equipment) may no longer be sold in the EU (European Union) if it contains lead, cadmium, mercury, hexavalent chromium, polybrominated biphenyls and polybrominated diphenyl ether, subject to certain limited exemptions.

So, what are WEEE specific product categories? For details, click here.

1.Large household appliances

2.Small household appliances
3.IT and telecommunications equipment
4.Consumer equipment
5.Lighting equipment
6.Electrical and electronic tools (with the exception of large-scale stationary industrial tools)
7.Toys, leisure and sports equipment
8.Medical devices (with the exception of all implanted and infected products)
9.Monitoring and control instruments
10.Automatic dispensers

So if you make/build/kit/sell any of the above in EU, you are under WEEE directive.

WEEE Exemptions (by category):

Lighting Equipment:

• Household lighting fixtures
• Filament light bulbs, including halogens

Electrical and Electronic Tools:

• Some Large-scale stationary industrial tools. You should contact WEEE Register Society Ltd. to determine if EEE is exempt.

Medical Devices:

• Implanted or infected products

 Other exemptions:
•Equipment solely for Military and National Security purposes - Product must be specific to this market.
•Equipment covered by other existing waste directives such as the End of Life Vehicle (ELV) - Automotive Products.
•Something that is part of equipment outside the scope of the WEEE directive such as equipment which is integral to:
              •Aerospace/Aircraft Products
              •Surface Transportation Products (aircraft, trains, boats, etc.)

ROHS:

The Directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment 2002/95/EC commonly referred to as the Restriction of Hazardous Substances Directive or RoHS was adopted in February 2003 by the European Union.The RoHS directive took effect on 1 July 2006, and is required to be enforced and become law in each member state. This directive restricts the use of six hazardous materials in the manufacture of various types of electronic and electrical equipment. It is closely linked with the Waste Electrical and Electronic Equipment Directive (WEEE) 2002/96/EC which sets collection, recycling and recovery targets for electrical goods and is part of a legislative initiative to solve the problem of huge amounts of toxic e-waste.

Following are the six categories against which ROHS is measured.

1.Lead (Pb)
2.Mercury (Hg)
3.Cadmium (Cd)
4.Hexavalent chromium (Cr6+)
5.Polybrominated biphenyls (PBB)
6.Polybrominated diphenyl ether (PBDE)

What is the current Market State?

Following is an excerpt from the UN report which can be found here:

In the explanatory memorandum of the WEEE Directive, the amount of EEE arising as waste was estimated in 1998 for the EU15 at 6 million tonnes. The new estimate of the current WEEE arisings across the EU27 is between 8.3 and 9.1 million tonnes per year for 2005. This increase is due to expansion of the EU, growth in the number of households and inclusion of items that may have been excluded previously (B2B). A number of forecasting assumptions were applied which predict that by 2020, total WEEE arisings will grow annually between 2.5% and 2.7% reaching about 12.3 million tonnes. The average compositional breakdown for the
EU has been calculated and shown in the figure below:

Lets tackle the first question: How do you abide by WEEE mandates?

The Need:

1.Producers must register in every EU country.

2.Producers, or WEEE compliance schemes acting on their behalf, will be required to report data on the amount of EEE which they put onto the market.

3.Producers will be required to report this data annually to the Agencies. It will be an offence not to do so.

Within the registration section comes the following:

Note: These will vary from country to country so please refer to the implementation plan and the actual governmental links.

vEMC's:

“Visible Environmental Management Costs” means the costs of the environmentally sound management of WEEE from private households arising from EEE placed on the market prior to 13 August 2005. vEMC are not taxes or levies. WEEE Register Society Ltd., the National Registration Body for producers, has determined the vEMC per category and subcategory of EEE. This was done with consultation with the electronic and electrical industry.

The vEMC’s displayed to consumers cannot exceed the actual costs of recycling and are assigned for recycling activity and are not diverted elsewhere. The vEMC’s are calculated on the basis of the estimated number of electrical and electronic appliances that will be recovered and will be subject to change as more information becomes available.

To clarify “producer recycling fund”- PRF - has the same meaning as “visible environmental management costs” – vEMC.

The vEMC’s are inclusive of VAT.


Producer responsibility (some topics only): Make sure you take proper legal counsel.


•All producers are required to comply with to the requirements of Articles 16, 17, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 40 and 41 of the Waste Management (Waste Electrical and Electronic Equipment) Regulations 2005 (S.I. No. 340 of 2005).
•Finance the take back of WEEE from private households and other users (Article 16 and 17).
•Be responsible for the collection of WEEE (Article 19).
•Ensure that any collection point and recovery facility carrying out the treatment of WEEE complies with the technical requirements as set out in the Sixth Schedule (Article 20).
•Adhere to the obligations for the treatment requirements of WEEE (Article 21).
•Achieve specified recovery rates depending upon the category and type of the WEEE arising (Article 22) and to maintain documentary evidence of progress on these targets. Producers can obtain this documentary evidence from their waste management contractors.
•Maintain and keep records of all treatment and recovery data, including specific weights in and out of treatment facilities, for a period of at least 6 years (Article 23).
•Prepare a WEEE waste management plan and provide it to the EPA, at least once every three years (Article 24).
•Producers are obliged to inform waste management facilities of the appropriate re-use and treatment information for the products it places on the market after August 13th 2005, including a list of dangerous substances and the location of such substances in each product (Articles 25 & 26).
•Producers are also obligated to mark their product with the appropriate marking identifying that the producer of the EEE has registered with the Registration Body in accordance with their terms and conditions (Article 27 & Ninth Schedule).
•Producers must not use design features or production processes that make it difficult to reuse or treat the WEEE unless such designs have overriding environmental and/or health and safety advantages (Article 40).
 •Obligations under Article 41 on the Reuse of EEE

The Implementation Plan:

Well, the following is how we have done this for major high tech clients and you can have an entirely different approach:

         1.Identify Stakeholder/Project Champion within the organization.

         2.Identify Change Management Person.
         3.Identify Policy Adviser/ Legal Councel (this person could be external, too).
         4.Develop Charter/Implementation Plan.
         5.Implementation Now takes two parallel paths.
                  1.First, the legal/policy registration establishment.

                 2.Intra Organization Product Structure/ Product Lifecycle/Information/Governance Model    Implementation. 

In both 5.1 and 5.2 there are several intermediate steps, and we intend to explore them later in detail.

However, there are some lessons learnt that we would like to share with you.

Define your product. Yes, and this is irrespective of any directive. This is for your own business. The product information and product configuration should be defined at enterprise level. If you are a multi-country organization and your supply chain spans across territorial and language boundaries, choose a product information management software that at least has the following:

          Capable of storing product definition in a hub and spoke structure.

          Has somewhat cross language data cleansing capability.

          Open Source B2B Compliant - and that means from transaction point can out-of-box support  Rosettanet, EDI, HL7, ebXML etc. Please note B2B commerce is extremely important in WEEE/ROHS Implementation so this is a critical need.

          Can provide you a real time 360 degree view of your business against that given product definition.

Enforce Discipline. That means data governance. Keep a very small focus group from various parts of your organization responsible for all product definition/inclusion/exclusion. The less people can touch the definitions, your compliance efforts will be minimum.

Market yourself. It is not about compliance and obligation any more. Unless you market yourself to be an eco-friendly company and that too not in a proactive manner, you are loosing the race. Conduct co-develop,co-market campaigns with your suppliers, 3PL providers.

Reporting. The most important part of any compliance implementation is record keeping, timely reporting and analytics. WEEE/ROHS is no exception. All known PLM products/PIM Products Like Oracle/SAP/Agile/Team Center/ Windchill have excellent reporting capabilities. Furthermore, you can get a demo reporting software at here, too.

Lastly, we will provide you some links which you can leverage to get an understanding of what these two compliances are about. If you would like to explore more, feel free to comment in the blog. The blog is for academic purposes. We do run a small consulting endeavor in this aspect, but we want to keep the blog to be for academic exchanges only. So lets debate and learn from each other.

The links are here:

http://www/ec.europa.eu/environment/waste/weee_index.htm

http://www.buyusa.gov/europeanunion/weee.html

http://www.rohs-news.com/

http://www.weee-forum.org/

To conclude: so far we have demonstrated some very introductory concepts of WEEE/ROHS and how compliance is to be implemented. However, for a successful business we need to associate this with the financial improvement of the organization. We intend to demonstrate that in one of our future blogs i.e. how this would help any organization at a business strategic level.