Lower Carbon = Higher Profit

Carbon emissions signal inefficiency in a system, an energy expert said in Chicago this week, so reducing emissions usually means increasing savings.
"In household after household and small businesses and schools, we've consistently found that carbon- or water-saving operations are good for the bottom line," Daniel Kammen, a professor of energy at the University of California Berkeley, told about 150 people at the University of Chicago's Oriental Institute on Monday.
Kammen is backed up, in part, by a study he published in 2011 in the Journal of Environmental Science and Technology. Kammen and co-author Chris Jones found that a 20 percent reduction in carbon emissions resulted in $2,100 per year in potential financial savings for a household.
"What we found, no surprise, is that actions that save you on carbon almost always save you on money," Kammen said. "Because after all those emissions are a waste."
The savings hinge on a number of actions that reduce waste: change diet, telecommute, take transit, eco-drive, maintain vehicles, ride bike, turn up thermostat, turn down thermostat, reduce flying, trade in vehicles, use compact fluorescent bulbs, line-dry clothes, use Energy-Star refrigerator.
"Average financial savings are frequently greater than $100 per metric ton of CO2e conserved for this set of actions," the authors write. Some of these actions require an upfront investment—$4,800 for the average American household—which the authors say will pay back in 2.6 years and then continue to pay off.
The greatest savings come from changes in diet—$850 per year on average—which entail giving up carbon-intensive meat and dairy products and "non-essential food items." The authors urge a reduction in overeating, from 2,500 calories per day to 2,200, and contend that dietary change will not only reduce carbon and save money but combat health problems associated with obesity.
The authors modeled these changes for about 2,000 types of households in 78 different regions of the U.S.
Dietary change produced the most dramatic effect across all regions, but other changes showed more variability.
For example, they compare a two-person household earning $90,000 in the San Francisco Bay Area (Household A) to a five-person household earning $50,000 in St. Louis, MO (Household B):
The Carbon footprint of household A is dominated by emissions from motor vehicles and air travel. Emissions from household energy are about half of the U.S. average due largely to the relatively clean fuel mix of California’s electricity grid and moderate San Francisco Bay Area climate. The household has essentially no emissions from cooling. Emissions from goods and services outstrip emissions from food due to the household’s relatively high income and low number of household members. The total ∼20% footprint reduction potential modeled corresponds to about $2100/yr in potential financial savings. As could be expected, transportation dominates total carbon footprint reduction potential (8 out of 10 tCO2e/yr total).
The carbon footprint of household B is dominated by emissions from electricity. This is largely a product of high emissions per kWh of electricity in St. Louis and larger than average heating and cooling demands. Emissions from food also outstrip direct and indirect emissions from motor vehicles, due to the large household size. This modest income family has lower than average emissions from goods and services. The household can save $1400 per year and reduce its carbon footprint by almost 3 tCO2e/yr by reducing overeating and waste from food and reducing the amount of meat, dairy, and nonessential food items consumed. Further savings of $500 per year and 3 tCO2e/yr can be obtained by increasing the family’s average fuel efficiency from 20 mpg to 25 mpg, reducing total vehicle miles traveled and practicing fuel-saving driving and vehicle maintenance habits. The household has virtually no emissions from air travel. Carbon footprint savings of 2 tCO2e can be achieved by adjusting the thermostat, replacing light bulbs, and line-drying clothes; however, financial savings are less than $200/yr due to relatively low energy prices in the state of Missouri.
The differences lead the authors to suggest that policymakers tailor policies and incentives to different objectives in different regions instead of trying to craft a blanket policy for all.
Kammen spoke Monday in Chicago at a forum sponsored by the University of Chicago Center for International Studies and other campus groups. He told me in a subsequent email that Berkeley's Renewable and Appropriate Energy Laboratory, which he founded, has also modeled carbon savings for business and industry, with similar results.
Some companies have caught on to the financial value of sustainability—Kammen mentioned Pepsi and Walmart—but most have not because "the data isn't widely out there yet."
Jones and Kammen used the data to build calculators that enable individuals and business owners to compare their carbon footprint to their neighbors and competitors. When faced with comparisons, Kammen said, people will often reduce carbon emissions voluntarily.
For example, the first brewer to use their calculator was Sierra Nevada Brewing Company, which has long emphasized sustainability.
"The next brewer said, 'This data has to be wrong, no one can be this green.' So we provided a little more information, they figured out which brewer it was, and a number of others decided to catch up. They only did it because a peer competitor had done it," Kammen said.
"This process of egging each other on is an area of behavioral economics for which all of these energy teams have been scouring the landscape for behavioral economists who want to play."
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