The New Carbon Cycle

Companies Looking to Energy Efficiency to Reduce Carbon Footprint

Energy efficiency and reduction in carbon footprints can go hand in hand to save companies money and reduce greenhouse gas emissions.  A growing number of companies are taking steps to conserve and become more efficient to achieve the joint goal of becoming more efficient and reducing their carbon footprint.

Some of the companies are:

• Wal-mart
• IBM
• Clorox
• Johnson & Johnson
• Ingersoll Rand
• PPG
• Toyota
• Owens Corning
• Kimberly Clark
• Starwood Hotels and Resorts

Many of these companies have set energy reduction goals that they have announced to the public.  Some are based on energy intensity or amount of energy used per production or other metric.  Some are straight percentages of a baseline year.

Some have imposed requirements or set goals for their vendors and suppliers.  A means of "greening" the supply chain.  Some of the companies listed above and those listed below have set goals for their supply chain:

• Pepsico
• Steelcase
• Dell
• Intel
• Applied Materials
• Alcatel-Lucent
• American Electric Power

For companies selling products to these companies, energy efficiency improvements can serve to meet these greenhouse gas and sustainability goals and potentially save the suppliers a significant amount of money.

Energy efficiency is becoming a key issue for companies to reduce costs, meet sustainability and greenhouse gas reduction goals, and provide a product to meet customer demands.

 

Harvard Professor Comments on Linking National Cap and Trade Programs

Harvard Professor Robert Stavins, who is an economist who studies environmental issues.  He is the Albert Pratt Professor of Business and Government, Director of the Harvard Environmental Economics Program, and Chairman of the Environment and Natural Resources Faculty Group.  In his blog, he comments on the development of a linkage between national cap and trade programs to allow trading of allowances and offsets across borders.

An interesting view and worth reading.  Stavins Blog

 

Is Tax Depreciation Worth More Than Tax Grants or Credits for Renewable Energy?

While tax grants and tax credits get all the attention, is the value of the accelerated tax depreciation worth more than either a federal tax grant or credit?  This is an interesting question, but one really should look at the combined benefits.  Tax depreciation in effect has a great value to the wind, solar, fuel cell, and other renewable projects.  Almost twice the actual value of tax grants or credits.

Take a $1 million dollar investment in a renewable project that qualifies for the tax advantages, say a solar or wind project.  The tax grant through the end of this year or tax credits thereafter would be worth about $300,000.  For tax depreciation, the depreciation is a five-year schedule even though the asset may last for 20 or more years.  The tax deprecitation value is about $331,500 (depending on the tax rate).  The total tax benefit on the $1 million investment is then about $631,500.  The real story here is the combined value of the tax grant/credits and depreciation.  Certain projects may be able to take the depreciaton in the first year for a limited time, making depreciation even more valuable.

Various structures may be used to pass these tax benefits on to investors or lenders in for example sale/leaseback arrangements.

So keep depreciation in mind when modeling the economics of projects and developing financing strategies. 

EPA Extended Greenhouse Gas Reporting Deadline to September 2011

The U.S. Environmental Protection Agency has issued a final rule that extends the deadline for reporting 2010 data under the Greenhouse Gas (GHG) Reporting Program to September 30, 2011. The original deadline was March 31, 2011. EPA previously announced its intent to extend the deadline on March 1, 2011.

Under the GHG Reporting Program entities required to submit data must register with the electronic GHG reporting tool (e-GGRT) no later than 60 days before the reporting deadline. With this reporting deadline extension, the new deadline for registering with e-GGRT is August 1, 2011.