Notes on David Smukowski’s Speech on 10/12/2010

·         The reason why China has such pollution issues is because we outsourced our issues when things became to expensive here. 

o   Single child law causes Chinese people to be very concerned about their environmental future.

·         You need to look at the environmental impact of the entire life cycle of your product or service.

·         If you abandon profitability there is very little chance of success.  You will lose support if you come at things from an idealistic perspective and don't take financials into account.

·         Read “Collapse” by Jared Diamond.

o   The Mayan civilization was the most complex and sophisticated of its time.

§  It collapsed in 9 months. 

§  The anology is that our world leaders most likely do not think that the world will collapse in “9 months,” but we need to be aware that it can happen

o   Past societies collapsed for the following reasons:

§  Deforestation and habitat destruction

§  Soil problems

§  Water management problems

§  Overhunting

§  Overfishing

§  Non-native species

o   Today we also face:

§  Climate change

§  Buildup of toxic chemicals

§  Energy shortages

§  Full utilization of earths photosynthetic capacity. 

·         What is sustainability to business:

o   A pro-active approach to ensure the long-term viability and integrity of the business by optimizing resource needs, reducing environmental….

·         Types of capital

o   Intellectual

o   Financial

o   Asset

o   Natural-resources, biological systems and ecosystems

o   Social-social resources

·         We need to be careful what we measure and how we talk about it. 

o   University of Washington is ranked very high in sustainability, but they did nothing through policy to achieve this

·         Life Cycle Assessment

o   Also knows as life cycle analysis, eco-balance, and cradle-to-grave analysis

§  The investigation and evaluation of the environmental impacts of a given product over its life.

o   4 Phases of LCA

§  Goal and scope

·         Cradle to grave

o   From manufacture cradle to use phase and disposal phase

·         Cradle to gate

o   An assessment of a partial product life cycle from manufacture cradle to the factory gate

·         Cradle to cradle

o   End of life disposal step for the product is a recycling process

·         Gate to gate

o   Is a partial LCA looking at only one value-added process in the entire production chain.

·         Well to wheel

o   The efficiency of fuels used for transportation. Oil well (or corn field) to vehicle.

§  Life cycle inventory

§  Life cycle impact assessment

§  Interpretation

o   Economic metrics

§  Working with cost as a unit provides designer and companies a good guidline.

§  Major disadvantage-lack of hard data concerning environmental costs and profits, difficult to convert environmental impact in dollars.

·         There was an example included that demonstrated that the formula only takes product retirement into account and no environmental cost incurred during the product’s operational life….or before…or after.

o   Economic assessments

§  Key element of product development process

·         Referred to around here as a “business plan”

§  Since environmental impacts occur pre=product and over an entire product life-cycle, and well after the product is useful…

§  Thus: economic implications of the environmental impacts should also be assessed.

§  Four methods for economic assessments are:

·         Total cost accounting

·         Life cycle costing

·         Full cost

·         ….

o   Life-cycle costing

§  Product’s entire value chane from a cost perspective.

·         Research and development phase through conclusion of a product’s life.

·         Other types of costing generally look only at the production process with focus on cost control.

§  Product’s costs are committed before the product is in the production phase.

·         The majority of control management can exert over production and other costs is during the design phase of the product’s life-cycle.

§  Product costs post-sale.

·         Life-cycle costing focuses on reducing costs throughout a product’s life. (such as capital, labor, material, energy, warranties, customer service, marketing , and distribution costs)

o   Total cost accounting

§  Total cost accounting

·         Introduced in the late 1980’s with the introduction of CAA, CWA, RCRA, CERCLA

§  The method typically focuses on in-company assessments of cleaner production investments.

§  Special attention to hidden, lss tangible and liability costs.

·         Liability costs are fines due to liability for things as future clean-up, health care and property damage.

·         Less tangible costs are e.g. consumer acceptance, corporate image and external relations.

§  Risks and hidden costs associated with a product or activity. (READ LIABILITY)

o   Environmental life-cycle costs

§  Environmental life-cycle costs

·         Costs caused by the environmental impact of the product

§  The most common method is to use standard costs factors, e.g., the costs a company has to incur to clean waste water, dispose of waste

§  Environmental life-cycle cost accounting is much narrower than the preceding approaches.

·         It only looks at the cost related to environmental aspects-a subset of total costs.

o   Full cost accounting

§  Additional category of costs

·         The social costs related to production, use, and disposal which are not accounted for by any of the life-cycle actors or participants.

§  Societal cost accounting or full cost accounting could be used to treat topics such as ozone layer depletion.

·         Because nobody is directly responsible for such issues, they are typically not taken into account in TCA and LCC. (Water, Air, Landfill)

§  The monetarization of waste streams and emissions

·         “willingness to pay” to avoid negative environmental effects.

·         Policy and liability

§  Difficult to estimate the current and future social costs associated with specific products.

§  To do costing

·         Four steps as in lca, except that the outcome is a single numberical monetary value

§  Life cycle costing

·         For example, a mercury thermostat……

·         ……

o   Very important issue:  cost versus value

§  Cost does not equal Value

§  Focusing on “costs” only will limit…..

·         Examples

o   Boeing-Infrastructure designed to move waste-1995

§  3.6 billion pounds of waste

·         Scrap

·         Cardboard and wood

·         Air emissions

·         Wastewater

·         Paper

·         Garbabe

§  61 mission pounds of product

·         206 airplanes

§  Waste to product 65:1

§  16 month cycle to build a/p

§  3 million sq. ft. final assembly

§  $17.53/share

§  Market Cap 17B

o   Boeing-Infrastructure eliminated (Lean and Green) -2006

§  Pounds

·         Recycled or rotable

·         Garbage

§  75 million pounds delivered

·         398 Airplanes

§  Waste to product-minimal

§  Cut light energy 90%

§  6 week cycle to build a/p

§  2 million sq. ft. final assembly

§  $100/share

§  Market Cap $76B

o   Environmental waster=economic waster

§  Both green

§  Both good for the bottom line

§  Borrowing from physics Mv=mV; eW=Ew

·         ING Headquarters Building Case

o   538,000 Square foot bank

o   All plants fed with roof rainwater

o   Every Office natural air and light

o   HVAC totally passive

o   Within 5km of employes homes

o   Minimal parking

o   92% less energy than comparable

o   Absenteeism dropped 15%

o   When 1% of a buildings upfront cost spent, 70% of its lifecycle costs are committed- Joseph Romm

·         Trees

o   Absorb or evaporate 1500GPD in rain to avoid runoff and flooding

o   Paper=2% of world trade

§  2.5% of industrial production

§  US=$132 B Industry

§  10% filed, remainder discarded or recycled

§  Offices discard 200 pounds/employee/year

§  Use increasing 5X faster than population

o   Asia growth in paper 3X US

o   Trees-Closing the loop

§  400M wooden pallets/year

·         NYC recovered 50,000/month saved $500k/disposal

·         Germany: reusable pallets, barcodes and cooperage

§  Paper recycling fiber

·         US47%, Holland 96%, Japan 52%

§  Process

·         Wisconsin ban paper to landfill; GB packaging designed zero discharge paper mill… became lowest cost producer.

o   It saved money by using recycled paper and not building it in the traditional place or way.

·         Ink soluble at 130F, reused in ink cartridges

§  Hemp and grasses have higher fiber content than wood

o   Changes can be used as an economic advantage if you can figure it out before your competitors. 

o   Energy

§  97 Quadrillion BTU’s flowed through the US in 2002

·         27% Transportatoin

·         23% Residential

·         33% Industrial

·         17% Commercial

o   System Losses

§  Power Plant losses up to 70%

§  Transmission and distribution loss up to 9%

§  Motor, drive train and pump loss up to 37%

§  Pipe and throttle loss up to 53%

o   Optimize systems

o   Use gravity

o   Localize power

o   Alter energy

·         Denmark Wind

o   Denmark ahs 3115 MW wind power/5m people

§  600Watts per person (home use 2000W)

o   Government promotes wind turbine cooperatives

§  Members/owers live within a certain distance of the site

§  100,000 danish families owned wind turbines or shares in wind cooperatives……

·         Agriculture

o   Agriculture methods have lots of wastes and inefficiencies

§  20% of products unusable before end consumer

§  Distribution, handling over longer distances

o   In 30 years nitrogen use increased 645% yields decreased (this is a lie)

o   1/3 of grain fed to livestock,

o   Hothouses replacing once a season/stocked harvests

o   Farmers markets and co-ops flatten the supply chain

o   Solardryers save energy, reduce bugs

o   Crop waste to ethanol for oil substitute

o   Organic farming and eliminating slash burns replenishes soil carbon and …..

·         Its not easy-Example-Global warming

o   Major greenhouse gases are:

§  Water vapor…..

·         Methane is really bad stuff and he has a big slide about a bunch of gasses that can lead to global warming. 

·         Rice is really bad and California is guilty of this in a big way.