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.