Monthly Archives: November 2011

GreenBiz

Method, Deutsche Bank, Bloomberg Among Firms Betting on WindMade | GreenBiz

Would knowing that more wind energy was used to manufacture a cell phone lure you to buy it instead of a similar model made with regular power?

The wind industry hopes so. It’s making a high visibility bet that most consumers will be swayed by a new WindMade label that will start appearing on products in the coming year.

The strategy has plenty of precedents. Remember the iconic “Intel Inside” branding campaign? In the course of a few years, by pasting a simple label on practically every PC, Intel transformed its brand image from just-another-chip-maker to that of an industry powerhouse.

The wind industry is hoping its new label — a circular blue swirl — will make visible wind’s growing, green impact on business and the economy. To that end, WindMade.org, a nonprofit debuted backed by WWF and the Global Wind Energy Council, last week unveiled its first class of companies that will use the mark.

At a press conference in New York, WindMade revealed that — led by the likes of Bloomberg, Deutsche Bank, LEGO and Motorola Mobility — more than a dozen companies had signed on to new logo. (Find the full list at the bottom of this post.)

Companies can qualify to use the mark by documenting that they source at least 25 percent of their power from wind energy. The wind power can come either from company-owned turbines, a long-term power purchase agreement, or by buying high quality Renewable Energy Certificates (RECs) approved by WindMade.

The label will show the precise percentage of the wind energy share in the product. And companies have the flexibility to certify global, regional or facility level operations, a distinction that will be also clearly displayed on the label.

Companies see the label’s potential to burnish their brand’s green reputations. The wind industry, meanwhile, is betting the allure of the mark will drive more companies to opt for wind, spurring demand for wind power, and leading to increased investment in new wind capacity.

“It is Motorola Mobility’s intent through our participation in the WindMade initiative to encourage greater use of renewable energy sources like wind and solar around the globe,” said Bill Olson, director office of sustainability and stewardship at Motorola Mobility in a statement.

WindMade has evidence that consumers will be drawn to the new symbol. In a survey of 31,000 consumers, two thirds “told us they would favor WindMade products, even at a premium,” said Morten Albæk in a statement. Albæk is senior vice president of global marketing at Vestas, the Danish wind turbine manufacturer spearheading the initiative.

Next page: Does the world really need another eco-label?

In the wilds of real-world retail environments, plenty can go awry with eco-labeling, however. There’s growing of confusion over the number of labels. According to Ecolabelindex, 426 labels circulate in 246 countries and 25 industries.

In the organic food space, for instance, a proliferation of standards and authenticating bodies — some independent, some industry backed, others from by government — has left many consumers confused and skeptical. In the UK, despite costly, complex efforts to track the CO2 footprint of select groceries, consumers proved only mildly interested, if at all, in the CO2 “nutrition lable”.

The precedent suggests that consumers may simply tune out from abstract numbers. A sample of the WindMade label a hypothetical product could earn is below.

windmade label

That said, wind energy looks less vulnerable to these sorts of confusion. It’s certainly easier to verify wind content than, say, how sustainably a given fish was caught. And wind energy is less abstract that CO2: windmills are widely recognized, and as an energy source have positive, broad public support.

There’s also plenty of precedent: a growing number of big companies have made renewable energy a public priority. Last year, for instance, Intel was the nation’s largest corporate buyer of renewables, with 1,493 gigawatt-hours of electricity, enough to meet about a third of its total worldwide needs — and equivalent to the annual demand of about 150,000 homes. Kohl’s food markets and Whole Foods stand out for meeting 100 percent of their electricity demand with renewable energy.

Intel’s leadership in renewables begs the question: Someday, will all those Intel Inside labels on computers carry another label showing the chips are WindMade, too?

Until then, check out WindMade’s complete first class of corporate pioneers and founders:

Wind turbine photo via Shutterstock.

View and comment on the original post here: http://www.greenbiz.com/blog/2011/11/22/method-deutsche-bank-bloomberg-among-firms-betting-windmade

GreenBiz

Tiffany’s CEO: How to Keep a Supply Chain Sparkling | GreenBiz

Sitting in his sun-soaked office at Tiffany & Co.’s Manhattan headquarters, chairman and chief executive officer Michael J. Kowalski reminded me of Breakfast at Tiffany’s. In the 1962 classic, Audrey Hepburn coos over Tiffany’s 5th Avenue flagship store, “Nothing very bad could happen to you there.”

It’s a moment few CEOs could resist repeating. Kowalski mentioned it not just to remind me of Tiffany’s enduring image, but to make a point about sustainability. “That’s certainly the spirit our brand promises,” Kowalski said. “We believe in acting in a responsible manner across a range of issues.”

That Tiffany’s has not only survived but thrived in the 50 years since the movie was made was never a sure thing. In recent decades Tiffany and the broader jewelry industry have had to navigate through a series of environmental and human rights challenges that could have easily have proven fatal to their brands’ reputations.

Over the past 20 years — a period roughly coinciding with Kowalski’s career at Tiffany — the industry has faced blood diamonds, conflict gems and dirty gold. The scope of these challenges has been, arguably, tougher than at any time in the industry’s history.

And few, if any, were at first prepared to respond these crises, Kowalski reflected. Indeed, jewelry’s allure has almost always been unconnected to its origins: “For a long time, neither jewelers nor their customers knew or cared very much where or how these things came from,” Kowalski said.

That’s no longer the case, of course. Just how much this reality has been turned on its head in the 15 years since Kowalski was appointed president (he was promoted to CEO three years later) was evident when we caught up recently to discuss one the latest of the environmental challenges facing big jewelers: The simmering controversy over a proposal to extract copper, gold and other precious metals from an undeveloped site in coastal Alaska.

Even in resource-rich Alaska, the Pebble Mine, as the project is known, has become a lighting rod, pitting developers against local and far-off environmentalists. The site sits at the headwaters of Bristol Bay (home to Sarah Palin), and is part of the watershed that supports the world’s largest run of sockeye salmon, a renewable resource critics of the project say would be imperiled by mine runoff. The mine could potentially become North America’s largest open pit operation, given how big the find looks.

Mine developer the Pebble Partnership and other proponents of the project point to the financial gains and jobs growth promised by the venture. The Pebble site is estimated to hold many hundreds of billions of dollars worth of gold and other precious metals. The Pebble Partnership is a 50:50 joint venture between a subsidiary of Anglo American and Northern Dynasty Minerals.

While project approval is still being hotly contested, Tiffany is steering clear. Along with a growing roster of its peers, the company has signed the Bristol Bay pledge, vowing not to buy gold from the mine, were it built, and expressing “their opposition to the proposed mine, and [recognizing] the Bristol Bay watershed as an ecosystem of international significance.”

“We’re not geologists, but in our experience with mining over the past 20 years, we have reached the conclusion — as have many NGOs and local Alaska residents — that the risk is simply too great,” Kowalski told me. “Despite the best of intentions, the location of this mine is so inherently problematic that it is simply not worth the risk of a catastrophic event.”

Tiffany is also a signatory to the No Dirty Gold campaign, a broader industry-wide commitment requiring, among other things, that gold be mined with the consent of nearby communities, with humane labor practices, while protecting the environment.

The roots of Tiffany’s engagement on theses issues, stretches back to the early ’80s when, for purely commercial reasons, Tiffany broke with long-standing sourcing practice. At the time, most companies bought finished jewelry, polished gems and refined metals from middlemen, Kowalski explained.

Tiffany began to shift towards directly owning and managing more stages of its manufacturing process. The motivation wasn’t green, though. The company was growing quickly and faced challenges assuring the flow of top quality raw materials. “Our goal was to improve quality, manage the budget better, and capture more profits in the middle stages of the production chain,” said Kowalski.

The focus soon proved invaluable in other areas, as well, as concerns about blood diamonds, or conflict diamonds, began to flare in the early 1990s.

“Blood diamonds weren’t remotely on our radar screen — or the industry’s — when the stories first surfaced,” Kowalski recalled. “Starting in 1992, as we committed to cutting and polishing our own diamonds, we were buying directly at the mine head,” explained Kowalski, “So we could identify exactly where more of our diamonds were coming from, at a time when the public was rightly horrified by the atrocities going on in Sierra Leona and elsewhere.”

Today, quality and cost control remain top priorities for Tiffany’s supply chain operations. “We are without a doubt the most vertically integrated jeweler in the world,” said Kowalski. “That’s been a strong profit driver, but it’s also allowed us to exercise leadership on CSR issues.”

Reaching complete, 100 percent control over all the metal and gems moving through its factories and store is an elusive goal though. Even as the share of goods it can track back to raw materials grows every year, “There is never perfect certainty,” Kowalski said.

“We’re not all the way there, ” he said, “but we’re confident that over time, with respect to diamonds in particular, we can identify the mine of origin, and obviously therefore attest to the social and environmental conditions at those mine sites.” Tiffany abides by the Kimberley Process Certification Scheme, a multilateral agreement to curtail the trade in conflict gems.

Soon after the blood diamonds crisis, precious metals became the next hot spot on the company’s radar, and the next focus of supply chain improvements.

“Around 1995, we began receiving a fair amount of unsolicited mail asking us to take a position, to oppose the New World gold mine that was planned right outside of Yellowstone National Park,” said Kowalski. “As with diamonds before, at that point, we didn’t have any visibility to our gold or silver supply chain.”

Tiffany came out publicly in opposition of the New World bid, while also overhauling its supply chain for gold and other precious metals. In 2004, it opposed another proposed project, a gold mine in the Cabinet Mountain Wilderness in Montana.

Today, all of the gold and silver used in Tiffany’s U.S. operations come from a single mine: Bingham Canyon, owned by Rio Tinto, at a site not far from Salt Lake City. Ore from the mine is refined in New England, under Tiffany’s supervision.

For all the changes in environmental practice that Kowalski has overseen, Tiffany remains publicly shy about its green agenda. “We’ve been very cautious in this respect,” said Kowalski. “We believe it’s something that our customers expect of us: the knowledge that Tiffany has acted in a responsible way in the sourcing, in the processing, of what you buy from us.”

It’s an approach that, Kowalski hopes, means Tiffany’s signature robin-egg blue brand will never be tainted with charges of greenwashing.

Photo courtesy of Tiffany & Co.

NRDC OnEarth

Meet the Change Makers: PUMA’s Sustainable Track Record | OnEarth

The sportswear giant is first out of the starting block with an aggressive effort to track environmental performance

PUMA has a long history of winning in dramatic style. At Beijing’s 2008 Olympic Games, Jamaica’s Usain Bolt savored his world record-setting victories in two sprints by holding up his golden PUMA track shoes in a victorious archer’s pose. In 1970, Brazilian soccer legend Pele drew TV close-ups when he interrupted the opening whistle of the World Cup to bend down and tie his PUMA soccer shoes. For the exposure, PUMA reportedly paid $120,000. Decades earlier, some of the first-ever spiked track shoes helped Jesse Owens sprint to quadruple gold-medal success at the 1936 Berlin Olympics. The shoes came from PUMA’s forerunner, founded in Germany in 1924. All along, PUMA has remained a formidable contender in the devilishly competitive business of sporting gear. While continuing a tradition of high-profile athletic endorsements, a steady stream of alliances with leading designers — including Jill Sander, Philippe Starck and Alexander McQueen — has helped the German company resurrect its brand in the U.S.

The man credited for its resurgence, and for driving sales to $3.6 billion last year, is Jochen Zeitz. Appointed to run PUMA in 1993 at age 30 — at the time, this made him the youngest-ever chairman of a listed German company — Zeitz, a German native, has also distinguished the company as a sustainability pioneer, especially in the self-assessment and publication of its environmental impact. In 2008, he established a foundation to support innovative, sustainable solutions that balance conservation, community, culture and commerce. Last year, 48-year-old Zeitz worked with Anselm Grün, a Benedectine monk, to co-author Prayer, Profit & Principles – Monk and Manager, a book about how to confront pressing social and environmental issues.

Earlier this year, PUMA published the results of the first ever “environmental profit and loss” statement (EP&L) released by a major corporation. Building on the convention of corporate sustainability reporting, triple-bottom-line assessments, and more recently initiativesto report greenhouse gas (GHG) emissions, PUMA’s EP&L attempts to put a dollar value on environmental damage not typically captured by standard financial measures. For the exercise, PUMA assessed the cascade of impacts caused by producing shoes and sportswear: from raw material production, such as cotton farming and oil drilling, to raw material processing, involving leather tanneries, the chemical industry and oil refineries.

Working with accounting giantPricewaterhouseCoopers and data firmTrucost, in May PUMA pegged the ecological costs of its operations for GHG emissions and water use at $124 million for 2010. Of the total, $9.5 million is due to PUMA’s direct actions, and the remaining $115 million are incurred in the chain of suppliers that deliver finished goods to the company. The approach is controversial. Critics have argued the system is too abstract to trigger meaningful change. But by putting a dollar value on the environmental impact of its production process, Zeitz contends PUMA is playing a “catalytic role” in helping to shift the way companies measure and record their costs, and ultimately reduce them. OnEarthcontributor Adam Aston recently spoke with Zeitz, who now serves as chief sustainability officer of PUMA’s parent company, PPR Group, as CEO of its Sport & Lifestyle Group, as well Chairman of the Board of PUMA about how the EP&L can help improve sustainability.

The corporate sustainability report is, for most companies, the most detailed assessment of their environmental impact. At PUMA, you took the process considerably further. What’s the benefit?

We’re moving away from the traditional sustainability report. Such reports are fine for senior management to chart broad efforts. But from the perspective of designers or buyers trying to understand the impact of their decisions on the environment, that approach isn’t specific enough.

That’s where the EP&L comes in. Used across the entire supply chain, it offers a better tool to look at product development and design decisions, to understand the impact of what raw materials we use, how the materials are processed, where our products are made, how they’re shipped, how we package, stock and sell them, and how we dispose of or recycle them.

What variables did you measure in your first EP&L?

The first two we focused on were carbon and water. In the next phase, to be announced shortly, we aim to add other environmental indicators, such as the precursors of smog and acid rain, waste reduction and land use impacts. Eventually, our goal is to track about 90 percent of our environmental impact. Beyond that, the final 10 percent, I think, will just get too complicated.

In phase two, we plan to assess the social impacts in sustainability, such as changes in standard of living, security and health of the communities where we and our contractors have impact.

Finally, in phase three, we want to broaden the scope to look, holistically, at the economic positives of business. If we’re truly comprehensive in this effort, we shouldn’t just look at negative things. The fact is that companies also do good things — creating jobs, paying taxes, fuelling economic growth, increasing wealth and improving quality of life. That’s also something that we want to start valuing.

What surprised you in your evaluation?

The real eye opener was how much of our impact happens so early in the supply chain. That’s when most of the carbon emissions are created and most of the water is consumed.

We estimate that over half of our carbon emissions happen in the production and processing of raw materials, in the raising of cattle for leather and treating that leather, for example.

That means that the second you decide what raw materials to use in your product, you’ve set in stone the bulk of that products’ environmental impact, no matter what happens later.

How are you using the EP&L findings to alter the way you do business?

These numbers show you where you can start to turn your product development in a better direction, by looking for alternative materials, investigating how they’re made, where and by whom. So the findings are influencing product design and development day-to-day, as well as manufacturing, sourcing, even marketing to a point. We’ve begun to share these findings with our suppliers, to help them understand why we’re strict about certain materials or processes.

Are consumers starting to see these changes?

In some cases, yes. For example, to cut the amount of cardboard in our shoe boxes, we worked with Yves Behar to create Clever Little Bag. It’s a design that cleverly combines a reusable bag with a cardboard frame. The approach does away with about two-thirds of the paper used in regular boxes — this saves trees, of course, but also huge volumes of electricity and water, given how paper is made. And since it has a built in handle, the design also eliminates the need for an extra bag at checkout. That makes it more convenient for the consumer. The process of designing this required that we coordinate with our suppliers in Asia to ensure the new approach didn’t cause troubles with how our shoes are packaged at the plant, then shipped and distributed.

Given that you don’t own most of the factories that supply PUMA sportswear, is it a challenge to push through these kinds of sustainable design decisions?

While we don’t own the factories or suppliers, we are deciding who our manufacturers will be, who our raw material suppliers are, where we buy our raw materials from, and so on. We have the ability to tell a factory: “Stop buying from that supplier.”

But, of course, there are cost implications. The full costs that we identified in our EP&L exercise are borne by all of the participants in our supply chain. Though we’re at the end of that chain, PUMA doesn’t pay the full cost of that EP&L.

That’s a reason we’re working to educate our suppliers. If we identify that the footprint of cushioning in our shoes, for example, is predominantly with the chemical industry, we can say to that industry and its suppliers: “Okay, guys, what can you do to shrink your footprint?” It’s got to be a joint initiative.

Do you worry that these efforts will drive up prices, and that higher price tags could turn off consumers?

Look, very little that we buy today is truly sustainable, but this effort has to start somewhere. I believe that brands have significant power to change consumer behavior. Consumers are starting to understand that, ultimately, we’re living on one planet and we have to look after it. There’s a natural survival mode that kicks in, where we are starting to realize that things are broken and we’ve got to change it.

For PUMA, the key is that we don’t over promise, and are very transparent and true to what we do, with honest communication about what we’ve accomplished and what we haven’t. Communicating these efforts is important: we don’t want to lose our customers’ trust by getting it wrong. Nor do we want to sell a greener product that is ignored.

We’re trying to sell a solution that is desirable in many ways­ besides its environmental impact — its design, materials, and its style. This effort has to include the consumer. Otherwise it’s not going to change things.

What have been the greatest challenges in deploying this method?

It’s not totally black and white, for sure. Data collection is a challenge, given how many suppliers feed materials into our products. But it can be done if the rules are set, and everybody plays along.

Then, of course, is the question of valuation. For example, there is not just one method of measuring the value of water or the cost of carbon.

For us, this meant being on the cautious side when it came to valuing environmental costs, generally opting for the higher cost estimate. So, for carbon, we take its social cost, around $90 per metric ton, many times the cost of a ton of carbon offsets in EU markets. The higher social cost of carbon reflects estimates of the future costs of climate change. [For background on how this value is calculated, check PUMA’s Greenhouse Gas Emissions Valuation Model.]

Are you open to sharing these methods with your peers, to help them spread?

Yes, absolutely. For those that are serious and want to associate themselves with what we are doing in an open manner, we will also be open with them. We have already had a number of requests from the automotive, chemical and beverage industries, as well as from one of our competitors.

Sidebar – Truth Squad: A more environmental balance sheet

Why would a public company such as PUMA bother to report costs it isn’t required to? After all, tracking down water-use and carbon-emissions data for far-flung factories manufacturing countless products is a costly, complex effort, demanding time from top management at PUMA and its partners.

The goal is to turn transparency into a competitive advantage. In fact, while PUMA’s particular EP&L methodology is unique, it’s one of an emerging set of related standards for corporations to recognize, measure and report the non-financial impact of their activities. “Call it triple bottom line or sustainability accounting or CSR [for corporate sustainability reporting], dozens of standards are being developed that attempt to capture elements of companies’ environmental impact,” says Alisa Valderrama, a finance policy analyst at NRDC’s Center for Market Innovation. Some of the leading players in these efforts include Global Reporting Initiative (GRI), the Carbon Disclosure Project and CERES.

PUMA’s first effort, recording water and carbon costs on a profit and loss statement, may sound like a trivial bookkeeping shift, but the company is going a step further than most: Puma is not only disclosing impacts, but working to integrate what they learn into their bottom line. This means going beyond getting management to trim disproportionately high environmental costs. In the long term, such efforts can also help reduce the “material” risks to financial performance that companies are required to report. Energy shortages or toxic spills at a sub-contractor are examples of risks that could dent the annual returns of a company like PUMA. Lastly, share price could eventually benefit since some studies suggest that fuller disclosure of non-financial factors correlates with better investment returns.

“PUMA’s efforts sophisticated, a really holistic example,” Valderamma says. “This is costly, hard stuff: assessing your toll on the environment is not as easy as counting widgets coming of the assembly line.”

Yet she is frustrated with the broader state of reporting, because until such voluntary standards are incorporated into mainstream accounting and financial practices, their impact will be limited. “You want to get to the point where this is no longer rare and voluntary, but commonplace and expected, where Wall Street analysts are asking about EP&L in quarterly calls,” she says. “That will be the bellwether of real market change.” — Adam Aston

Global CCS Institute

From fighting coal plants to fighting for carbon capture and re-use: Q&A with Laura Miller (Part II of II) | Global CCS Institute

Yesterday we heard the start of Laura’s story, and the progression of the Texas Clean Energy Project. This is the second and final part of the Q&A with Laura.

You have a competitor that’s following a similar technology path?

Yes, that’s Hydrogen Energy California (HECA). They’ve gone through a complete transformation. One of the original backers, BP, dropped out after the Gulf spill.

Like us, HECA also got Department of Energy (DOE) money as part of the Clean Coal Power Initiative. They got $408 million, we got $450 million. They’re also at 90 per cent capture. Their original design, I think, was using petcoke, rather than Wyoming coal.

When the project nearly died, in an effort to keep it alive, DOE went out and solicited other companies to come in and take it over. SCS Energy, in Concord, Massachusetts took over HECA in September.

I joked when I called the head of HECA because they have the same tax problem that we have right now in congress. I called the man who was negotiating to buy the project, the chairman of the company, and I said, “Hey, I hear that the project now is modelled after our project, that we have the same configuration,” and he said, “Yep. We like to tell everyone we meet that we taught you guys everything that we know.”

Is there sufficient demand for urea and CO2 to repeat this model in other facilities?

Right now, the United States imports about five million tons a year of urea and the US domestic production is 3.5 million. When we go online, we’ll be boosting urea domestic production by 20 per cent.

There’s obviously a finite amount of urea that can be produced worldwide, but the beauty of the syngas is that it makes lots of other products. You can make methane out of it, you can make ammonia out of it, you can make gasoline out of it. The Germans used coal gasification to fuel their entire war effort during World War II.

We picked urea because we did a very thorough look at the different markets for various products that could be made from a syngas and decided that urea was a profitable strong market because of this imbalance between domestic output and international production.

The plant has taken longer than you anticipated. What have been the delays?

We’ve had some shifts in the ownership of the project. Summit always builds for owners – so far, gas, solar and wind projects, never coal. We contract to do a turnkey power project, we build it, we hand over the keys, they give us a success fee, we move on to the next power project.

In this case, we developed the project and then Babcock & Brown became the owner of the project in 2008. But they had to give the project back to us because in the economic downturn, they went bankrupt and couldn’t afford to build it.

That was, obviously, a big setback and we kept the project going even though if we’d have been a gas plant, we just would have stopped working on it and moved onto the next project until we found a new owner and the economy improved.

But we have a strong philosophical belief that if coal’s going to be used in this country for power production in the future, it’s going to have to be done this way – in an incredibly clean way – and the time is now while the world is trying to find ways to reduce carbon emissions We decided it was worth holding onto the project because we thought we had a good business model and that if any of these projects was going to succeed, ours had a good chance to succeed.

Are you bearing the full development cost of the project now?

We added one key investor in the project, and it’s Clayton Williams out of West Texas. Had he not entered the project, we probably would not have been able to continue. He came in at a really critical time just before we got the DOE award, putting in money along with Summit.

Williams is a very colourful oil man in West Texas—a real character and a sweet man. He just turned 80, and he ran for governor against Ann Richards some years back.

Knowing oil, he immediately saw the value of the CO2. He understood how we put this together and how it could work and how it could be attractive to investors and so he became a minority owner.

Since then, we’ve talked to other investors, who will need to put up about $1 billion for financial closing. We have a checklist of things that these investors need to see in order to make their final decision and we’ve been, one by one by one, checking off all those milestones. Now we’re down to just a handful of things that need to be completed.

What’s done, and what remains to be completed?

Here are the milestones we’ve already passed.

We kicked off the front-end engineering and designing in June of 2010 and we finished it in July 2011. We got our air permit in December of 2010 with no opposition. That was a very big milestone for us.

We got our record of decision from the Department of Energy, which puts us in compliance with the National Environmental Policy Act. We have pre-sold all of the urea, CO2 and sulfuric acid. And we are about to sign our interconnection agreement that will connect our project to the state’s electricity grid.

What about the electricity?

Ah yes. Last but not least, we have sold all of the electricity to the city of San Antonio.

CPS Energy in San Antonio is the largest municipally-owned utility in the country, led by a CEO named Doyle Beneby. He’s been incredibly visionary in terms of where he wants the utility to go. He is shutting down one of his old coal plants early and buying all of our power, and building solar farms and wind projects.

Working with the mayor of San Antonio — who notably is the youngest mayor of a big city in the country, by the name of Julian Castro – they have joined up, so that every single power deal that they’re making is for green power, and includes an economic development component requiring companies they do business with to create jobs in San Antonio.

We, as an example, are opening an office in San Antonio for customer relations, and for media. And we’re forming a carbon management advisory board with environmentalists, industry experts and scientists on it, to be on the inside of our construction process so that they learn how the gasification process and carbon capture work. Then they can go out and tell people that clean coal with carbon capture does exist.

You’ve gone from fighting coal to selling a very complex coal project, and have been successful at both. How have you been able to sell others on the vision of this plant?

It can be difficult. It’s so funny. I was at a dinner party and someone asked me what I’m doing since I left being mayor, and I said, “Oh. I’m building a carbon capture power project that uses the carbon for enhanced oil recovery in the Permian Basin.”

The guy literally closed his eyes. And he said, “Oh. Wow. Huh.” and then he turned to a person on the other side of him to find more interesting conversation.

Whenever that happens, I always say, “But, I want you to know, I’m going to save the polar bears and make the planet safe for your grandchildren.” Sometimes that gets their attention.

The irony is that I’ve always been a communicator who used my communication skills to win journalism awards and get elected mayor of Dallas, but you start talking about gasification and compressed CO2 and everyone just goes to sleep on you.

It can be too abstract for the public to connect with. How do you get around that?

When I was fighting TXU’s big coal plant proposal, I kept losing in all these debates with them because they’d bring their engineers in to talk about how coal gasification didn’t work, and carbon capture didn’t work.

The most important thing I did at that time was to go to Tampa, Florida, where I had been told there was an advanced IGCC – gasification — plant operating. I had to fly there to go touch the plant, to be able to come back to Dallas, and stand up to them in the debates and say, “You are not being truthful. Gasification works, and it’s working in Tampa, Florida, and I saw it.”

They said, “Well, but that plant has a history of problems. And they use a very specific high-quality Appalachian coal. It’s the only kind of coal that can be used in gasification, and otherwise it just doesn’t work.”

So I said to them, “Really? Well, look at this,” and I opened my hand in the debate to show what looked like a shiny, black rock. I said, “Since you keep telling me this, the first question I asked the plant manager in Tampa is what kind of high-quality Appalachian coal do you use? He said, ‘We use pet coke from Houston”.

Then, I turned to the audience, and I said, “That’s basically sludge off refineries in our own backyard.”

So then the debates turned because then people said, “Oh my God, they haven’t been telling us the truth about what’s technologically available.”

My point is that offering real-world examples – when people can go and see and touch the cleanest coal plant in the world, which ours will be – it will really move the debate. Until then, it’s just conversation.”

Check out the original post here:
http://www.globalccsinstitute.com/community/blogs/authors/adamaston/2011/11/04/fighting-coal-plants-fighting-carbon-capture-and-re-use

Global CCS Institute

From fighting coal plants to fighting for carbon capture and re-use: Q&A with Laura Miller (Part I of II) | Global CCS Institute

Laura Miller seems an unlikely champion for a project that’s on track to become the first financially self-sufficient carbon capture and sequestration project in the United States.

After all, it was only five years ago that Miller, then Mayor of Dallas, emerged triumphant in a David-vs-Goliath showdown with energy developer TXU to block the construction of 11 new coal plants in Texas.

Once Miller learned about the proposal that, along with seven others proposed, would double the number of coal plants in Texas, she cobbled together a coalition of three dozen cities, counties and school districts to block the deal. Following a marathon process, Miller’s coalition was instrumental in getting TXU to retreat from its plan. Embattled by critics, TXU became a buyout target as its stock dropped, and the new owners negotiated with national environmental groups to build eight of the 11 coal plants.

After her term, Miller was asked by a variety of environmental groups to carry the anti-coal flag. Convinced that simply obstructing new coal plants wasn’t a solution to the climate challenge, Miller instead went on a mission to learn about alternative technologies.

Her odyssey ended at Summit Power Group, a Seattle, Washington based developer that’s developing a carbon capturing, coal gasification power plant with a new kind of business model. Summit’s so-called ‘poly-gen’ plant will make money by selling CO2 and other by-products for multiple uses.

It will sell CO2 to the oil patch for enhanced oil recovery. And the plant will convert some of the extra syngas it produces into valuable chemicals. Taken together, Summit believes it can build and operate a coal plant with 90 per cent capture that makes money, without a price on carbon.

Miller has spent the past four years pushing plans to build the 400-megawatt Texas Clean Energy Project in Odessa, not far from the New Mexico border. When completed, TCEP will be the cleanest coal-fueled power plant in Texas.

In an era where cancellations of CCS projects in the US are outnumbering successful start-ups, TCEP has come a long way. Despite the bitterly polarised politics around energy, Summit’s $2.4-billion project won bi-partisan support in Texas’ state-house.

Its secret? Summit’s process offers something to supporters of both green energy and fossil fuels. It captures and reuses CO2 emissions, which pleases the Greens, and it sells the CO2 to the oil industry, which boosts oil recovery from ageing wells. In December, TCEP was granted an air permit with no opposition.

In September, Miller and I met in New York. She was in town for ClimateWeek, where she took part in a roundtable discussion hosted by the Global CCS Institute. More recently, we caught up for a longer talk about her project. What follows is Part 1 of our conversation. Part 2 will be published tomorrow.

Would you characterise your personal transition as one of being anti coal to pro coal within certain conditions?

When I left being mayor, the environmental community asked me to go out and teach other mayors how to fight dirty coal. And I said, “You know, I think it would be more worth our while to go out and build the cleanest possible coal-fuelled plant in the world and then raise the bar”.

So for four years, all I have done is work on what we believe and what a lot of the environmentalists believe is going to be the cleanest coal plant: 90 per cent carbon capture, extremely low emissions on all the other pollutants.

Given recent cancellations of CCS projects in the US and Europe, your project is a stand out. What’s holding things back?

There’s a lot of uncertainty around where these projects fit in, which makes it harder for the private sector to move forward. Even some Greens are luke warm in their support for CCS, wanting to spend more time on promoting renewables. And a lack of popular conviction on climate issues means it’s safe for politicians to go slow.

In the face of this indecision, our saviour is really enhanced oil recovery. There’s a growing appetite for the CO2 in Texas and other oil-producing states, regardless of climate discussions, or a price on CO2.

We have the ability to take all this CO2 that we can capture off the industrial projects and sell it to bring more oil out of the ground out of wells that already exist.

Summit was awarded $450 million from the DOE to scale up this process, and one of the reasons we got the award was because of our financial model to sell CO2 and other products.

Are you vulnerable to the backlash against renewables energy funding simmering in the US Congress?

Four years ago, when we proposed this project, we had no plans and no need to ask for any federal money because we had a good business plan. Not only will we sell electricity, we’ll also get revenue from the CO2 we sell for enhanced oil recovery. And lastly, we also make a whole lot of urea fertiliser. We’re planning more than just a power project. We call it a poly-gen plant.

The focus of the renewable controversy right now is on a large government loan that was made to a company that took the money when it was financially troubled and subsequently declared bankruptcy. We, on the other hand, have a cost-share agreement for the $450 million in which we only get the money as a 50 per cent cost reimbursement after we spend private funds during construction.

And construction won’t begin in 2012 until all of the private money is committed up front. So there is no risk like there is with the loan guarantees. And at $2.5 billion in capital costs, the $450 million federal award only accounts for 18 per cent of the total cost of our project.

How long do you expect the project to take?

Back when I started I was optimistic that we could start construction within a year, by end 2008, or maybe 18 months at the most – but then, I knew nothing about the power plant construction business. Well, it’s four years later, and we really are close to being ready to break ground, but I’ve learned that things work more slowly in the power sector than elsewhere.

And there’s an irony here. Erle Nye, the former chairman of TXU — but who wasn’t responsible for the coal build-out I was fighting, that was his successor John Wilder — as soon as Erle heard that I was involved with this project, he said, “Babe…” — because he’s old school — “Babe, you’re a very impatient woman, and you’re going to be frustrated because building a power project takes a lot of patience, takes a lot of time.” And I said, “Oh, no, no. We’re going to get this done right away”.

So here I am, four years later. Erle occasionally sends me an email and congratulates me when we get another milestone for our project.

What are the roots of this project and of Summit Power?

Let me start with Summit. The brilliance of this project comes from Don Hodel and Earl Gjelde, who founded Summit Power Group. Don was Energy Secretary for Reagan, and Earl was his number two. Then Don became Interior Secretary and Earl was his number two there again. In time, they left Washington DC and started this company. Previously, they’ve built natural gas plants and solar and wind.

They were interested in figuring out a way to use coal for national security reasons. They knew, because they have built a lot of plants, that you couldn’t finance a power plant with very low emissions that also captures carbon. That’s been the weak link for other CCS projects, I think: they were proposed with the confidence that there would be a price on carbon, which would help CCS become financially viable.

But Earl and Don did not favour cap and trade or a price on carbon. Because they’re political conservatives, and from the start, they thought that you’d need to put together a business plan that is financially viable without that kind of safety net.

So the genius of this project, in my opinion, is that they came up with a financial plan that made this power plant more than just a provider of electricity. They wanted other revenue streams to make it more profitable.

They wanted to create multiple by-products that would bring the project maximum revenue.

How does the process work?

You take the coal, you make a syngas. Then, with the gas, you make multiple products. You burn the gas to make electricity, but you also take quite a bit of the syngas and make urea fertiliser. So you have a separate manufacturing facility on the site next to your power generation.

The process also removes almost all of the bad sulphur. And we’re using a low sulphur coal to start with. We capture more than 99 per cent of the sulphur and put that into a separate manufacturing facility on the site to make sulphuric acid, which is also sold. Sulphuric acid is used in the farming community and by industry.

Finally, we capture 90 per cent of the CO2 off the syngas, compress it into a liquid form and put that in a pipeline and move it to oil producers, who send it down into wells to drive out more oil.

How do the economics break down?

Originally, we modelled that the project would generate a third of its sales from power, a third from urea, and a third from CO2. But because the economy isn’t getting much better, and construction prices aren’t getting any lower, we’ve decided that we’d make a little bit less electricity and make more urea, to improve the financials of the project.

The shift means that we’ll boost urea output to 720,000 tons per year, up from 500,000. That will drive urea to over 40 per cent of our total sales.

The irony of all this, and the reason why it’s so hard to build a power plant that captures carbon, is because the least profitable revenue stream we have is from electricity. You get much better returns on your CO2 and your urea than you do on your electricity.

But the point of building this project is to show the world that you can build a power plant that captures this carbon. Hopefully, after these first few get built and people see that it’s possible to do a privately owned and funded project like this, you’ll see improvements in efficiency as you do with any new product, and this super-clean model will become the standard, and it won’t need any government assistance to be replicated worldwide. That’s the dream, and we are close to helping it become a reality.

Thank you Laura. We’ll pause here for now and return tomorrow with Part 2 of this Q&A.

Read part 2 of this interview here.

* Fighting Goliath: Texas Coal Wars is a film, narrated by Robert Redford, that documents the efforts by Miller and others to block TXU’s project. You can learn more about the documentary at FightingGoliathFilm.com, or view the full film here.

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