9. Business Considerations for Technology Solutions

In a 2009 interview, David Cote, the chairman and CEO of Honeywell, commented that technologies his company alone already has “could reduce the U.S. energy bill by 20 percent” if aggressively used.[1] One study from the Rocky Mountain Institute found that, simply by closing efficiency gaps in electricity production across all the U.S., the country would save 30 percent of its energy, or the equivalent of reducing coal-fired electrical power generation by 62 percent.[2]

Some sources of alternative and renewable energy have been providing environmentally clean power for decades. Hydroelectric power from dams and “water wheels” has been a source of reliable electricity for more than a century. Wind-generated electricity has been growing in importance for many years as well, and more recent “wind farms” are growing in prominence as they supply more power to locations around the world. Photovoltaic (solar) electricity is also well established and has been used for many purposes over the years; it also represents one area in which significant advancements in technology are still being made as the capability to efficiently convert sunlight to electricity increases. Even though these solutions are already available, the business considerations for their adoption are not as widely understood.

Other solutions that generate renewable power have been developed and continue to evolve. Hydroelectric power from wave and tidal motion, power from geothermal energy, and fuels such as ethanol, biofuels, and methane from “methane digesters” are all in use today. Developing solutions consume traditional fossil fuels more efficiently, such as through cleaner-coal technology and fuel cells.

Solutions that generate renewable or environmentally clean power are not the only ones to consider for environmental stewardship. Information technology solutions, such as those associated with Green Sigma and different approaches for instrumenting the planet, are being deployed to proactively manage and analyze information so that business leaders can make better decisions. Technology solutions are also emerging to improve the impact on the environment from supply chain operations, such as those that optimize inbound and outbound logistics activities. Other solutions that are diagnostic in nature, such as carbon calculators, maturity models, and facility-efficiency assessments, are playing increasingly important roles to guide enterprises in their decisions.

Beyond information management, diagnostic solutions, and transformation methodologies are a host of point solutions that solve one particular problem. Some of these are already fully developed and available; others are being offered and tested in the marketplace. For example, green building practices are well developed, along with passive and active heating and cooling mechanisms for air and water from solar heaters and thermal cooling devices. Solar lighting can be part of green building designs or can be integrated into an existing facility to make it more energy efficient. Point solutions also come from a growing portfolio of innovative green product technologies, such as green computing and green data centers, energy-efficient appliances and electronics, and hybrid and electric vehicles. Still other solutions that are becoming important include those that improve water handling, waste-water reclamation, and recycling capabilities.

Each of these solutions offers opportunities for individual businesses to consider. A solution that makes sense for one enterprise or in one location might not make sense for another in a different location. Section 2.3.2 of Chapter 2, “Formulate Green Strategy to Complement Traditional Strategy,” introduced many of these solutions in a strategic context, and some are described further here in their operational context. More solutions exist than this book can describe, but collectively they comprise a landscape of available technology to support business operations that any enterprise leader can understand. Figure 9.1 shows one view of this landscape.

Figure 9.1 Solutions landscape that supports business operations

The next section offers a brief overview of these solutions that support environmental sustainability. We identify a number of high-level issues that make sense for businesses to consider as they make decisions to improve their environmental stewardship.

Diagnostic tools such as carbon calculators have powerful potential to give both businesses and individuals insight into their carbon emissions, but the current state of their development is still not mature. One study, whose focus was primarily Internet-based carbon calculators for personal use, concluded that significant improvements are still possible, to give users more accurate and consistent results across different models, provide more meaningful feedback and guidance to help users improve their energy use, and better connect users with a network of others working toward similar goals.[13] Another study that rated 11 calculators for emissions level accuracy from air travel found that only 4 of them performed “very good” or better.[14] Yet another work proposes six different methods for calculating the greenhouse gas emissions from consumer products over their lifetime,[15] each with a different expected level of accuracy. Clearly, before an enterprise chooses to rely on the results of a carbon calculator to make more informed business decisions, it must evaluate the strengths and weaknesses of different alternatives for attributes such as overall modeling approach, model complexity and rigor in capturing details, transparency of calculations, scope of emissions covered, visual appeal and ease of use, and accuracy and organization of results.

Maturity models are also emerging that enable companies to assess their progress toward environmental sustainability and improved environmental stewardship. The Carbon-View offering from Supply Chain Consulting (SCC)[16] (with IBM as the preferred implementation partner[17]) offers one maturity model that includes five phases to maturity: basics, company level, process level, product level, and optimized level. IBM’s House of Carbon is one model whose objective is to assess the different components that make up a firm’s carbon-reduction strategy and map how they impact one another.[18] The Results Group (TRG) is another company that has developed a Green Enterprise Maturity Model designed to help companies establish a roadmap to increase revenue, lower cost, and reduce their carbon footprint.[19] This model includes four maturity levels that include compliers, dabblers, consistent improvers, and enterprise optimizers.[20] The IT Capability Maturity Framework (IT-CMF), from the Innovation Value Institute (IVI) at National University of Ireland Maynooth, provides another toolset that categorizes core business processes into high-level management groupings that cover all the activities in an IT department. Assessments based on those processes help highlight where a company can both fill gaps in efficiency and identify new opportunities to gain extra value from the IT department.[21] In yet another example, the Accenture Green Technology Suite includes a green maturity model to assess a firm’s environmental efficiency based on 300 questions across five key areas.[22]

Renewable-energy technologies such as electricity from photovoltaic solar cells, electricity from wind turbines and “wind farms,” electricity from hydropower, energy from biomass, solar thermal energy, and geothermal energy are now proven solutions whose value propositions and payback time horizons can be calculated with relative ease. As fuel prices remain volatile and risky by traditional standards (and predictions include a high level of uncertainty), the value propositions become more attractive, and the time to break even on an investment in renewable energy sources becomes shorter. Even tax incentives for making these investments are relatively easy to factor into a value proposition.

Today solar cells are being integrated into rooftops, building facades, roadways,[25] and a variety of other constructed surfaces that traditionally remained unused for environmental-improvement purposes.

One significant business consideration for the use of solar cells is the relatively high initial cost for materials and installation. The actual time to break even varies depending on installation and maintenance labor rates, environmental factors such as sunlight intensity and cloud cover, financial incentives available, and cost of supply from traditional sources. The energy payback time is the time it takes for a solar cell or array of solar panels to generate the amount of energy that was consumed during production. In 2000, the energy payback time was estimated at 8 to 11 years;[26] by 2006, technical progress and production efficiencies reduced the time to between 1.5 and 2 years.[27] With a useful life-span of at least 20 years, photovoltaic systems have increasingly attractive value propositions.

Another broad measure of financial attractiveness for solar cells is the point at which grid parity is reached. This is the point at which photovoltaic electricity is equal to or cheaper than grid power. Grid parity is achieved first in areas with abundant sunlight and relatively high grid electricity prices, such as California and Japan. In fact, Japan is already close to achieving grid parity.[28] The U.S. has established a goal of reaching grid parity by 2015.[29]

Financial value is only one measure of benefit from solar cells. The financial trade-offs between using photovoltaic technology and using other sources of electricity from burning fossil fuels are already well understood, but we should not overlook other dimensions of environmental benefit. For environmental sustainability, organizations also should consider the carbon emissions benefit. For example, a company can assess trade-offs between installing a rooftop-mounted solar array and building a “green rooftop” that absorbs carbon from the atmosphere. Similarly, a power station that replaces a grass field or part of a forest area with photovoltaic arrays very likely has a positive net benefit to the environment, but that benefit is fractionally smaller when accounting for the lost photosynthesis from removing plant life.

Solar cells are a scalable technology that can be expanded after an initial investment. Individual solar cells can be wired together into solar panels, and solar panels can be combined into a system, or array, of panels. In this way, investments can be made incrementally over a period of time, and the concept of “self-funding” can be adopted: Savings from an initial investment can fund further electricity production. Solar cells can also be installed locally, close to where the electricity generated is actually consumed, thus avoiding at least some transmission losses (which can average more than 7 percent).[30]

Solar cells are also convenient and can be considered for the supply of electrical power anywhere electricity is needed. Residential and commercial rooftops are obvious places to consider installing solar panels, but remote, rural locations are also good candidates because grid power might be unavailable there. Solar cells can be found in applications that range everywhere from power stations that supply large amounts of electricity to the grid, to small, stand-alone devices such as emergency telephones, novelty items (perhaps battery-free calculators), and toys. Early applications that still exist today include spacecraft: Renewable and perpetual energy sources are critical over the lifespan of a mission that could last many years.

Businesses can also scan the legislative environment for incentives that might lower the cost of adopting solar technology for electricity generation. Countries that are further ahead in adopting this technology are also the ones with aggressive incentives, such as Germany and Japan.

Although they are not completely free of maintenance requirements, solar panels and arrays have relatively low ongoing operating costs. Of course, surfaces need to be cleaned periodically so that maximum sunlight can reach the solar cells, and the usual maintenance of other electricity delivery systems applies as well. Another advantage, in addition to a decades-long lifespan, is that a solar array is highly recyclable, so nearly all materials can be reused.[31]

Photovoltaic technology is one of the most widely applied renewable energy sources for electrical power, and it can be used across a broad range of applications. However, it is not the only source of electricity from environmentally friendly, renewable sources.

An enterprise must consider many factors in evaluating energy production from wind turbines over other renewable sources. For example, businesses that own and operate large areas of land, such as ranches, farms, or oil fields, are good candidates if construction of a wind farm would not impede other operations. Regardless of the type of business, determining whether electricity can be effectively generated from the wind involves the speed of the wind and available space to deploy wind turbines.

Another consideration is aesthetics. In one example, the Cape Wind project in Massachusetts was delayed for years primarily because of aesthetic concerns.[32] Acres of wind turbines lack the high-tech look of photovoltaic, solar cells, and wind turbine operation is not completely silent. In fact, some claim that the noise, consisting of both audible and inaudible low frequencies, can make people physically ill.[33]

Adverse environmental impact from wind turbines is another consideration that businesses must account for. The danger to birds is one of the main complaints against wind turbines. One study from 2005 concluded that wind farms could damage the populations of some bird species if they are not carefully located.[34] Still, a consensus has developed that wind farm and ornithological interests can coexist as long as relatively simple steps are taken, such as mapping and avoiding migratory and feeding paths.[35] In fact, methods have been devised to monitor wind turbines for bird and bat collisions.[36]

The British Wind Energy Association claims that the average wind farm pays back the energy used in its manufacture within three to five months of operation.[37] This is a remarkably short period of time, given that the lifespan of a wind farm is measured in decades. Some payback time estimates are longer, at about 1.1 years.[38]

Clearly, electricity generated by harnessing wind energy using turbines is a clean, renewable source that can provide an alternative to burning fossil fuel. After the useful life of a wind farm has been reached, the land can easily be returned to its original state by removing the turbines, and material from the turbines themselves can be recycled.

Unlike photovoltaic technology and wind turbines, whose technology is basically the same for large- and small-scale electricity production, hydroelectric power uses different technologies, depending on the scale of energy production and the environment available. The different technologies include dam and reservoir systems, water wheels for smaller scales, tidal power, wave power, and ocean current power, among others.

One common technology is the dam and reservoir system, which usually requires a carefully chosen site, takes up a large land mass, and stores significant water volume. For businesses that own and operate such systems, one advantage of dams is that water can be released through the turbines at certain times to manage demand with supply. But in the U.S., where hydroelectric power accounts for about 10 percent of the total supply, most of the good sites to locate large hydro plants (at least, with dam and reservoir systems) have already been taken.[41] Another familiar technology is the water wheel, which can be used in smaller-scale electricity generation and can effectively deliver power to remote locations where water reliably flows.

Although hydroelectric power already supplies part of the planet’s electricity, the potential for businesses to independently pursue initiatives that develop power in this way is limited to where waterway access is possible and where communities allow water to be used for this purpose.

Other means of extracting power from moving water exist, and some are still developing. For example, researchers are exploring ways to generate electricity from the water movement in ocean tides,[42] waves,[43] and currents,[44] but solutions such as these are not yet widely available commercially.

Clearly, many methods are available for converting biomass to usable fuel, but not all are suitable for any business—or even economically practical today. For example, businesses in rural locations that generate moderate amounts of organic waste can use methane digesters to generate biogas and fertilizer, both of which likely will have local demand either on-site or from other businesses. Methane digesters are a relatively simple technology solution that consists of a container that holds organic waste in a manner that allows natural bacterial digestion to occur in the absence of oxygen.[46] Some businesses have made significant capital investments in solutions that generate biofuel on a large scale, often with government support or legislation. For example, Brazil’s economy includes business operations that convert a portion of the country’s sugar cane crop into ethanol, to reduce its requirement for fossil fuels.

One consideration that impacts a broad group of businesses is that, as the availability of biofuels grows, products that consume fossil fuels can be converted to run on biofuel. Virtually any engine, machinery, or heating device that currently burns fossil fuel can be converted or redesigned, with varying degrees of configuration change, to consume biofuel instead. As supply increases, machinery and products are converted, and demand for biofuels rises, distribution systems will adapt and adjust to the change. Brazil’s government created legislation years ago to facilitate the transformation of automobile service stations so that they can accommodate both fossil and biofuel distribution.

One of these devices includes solar collectors for heating water, with circulation established by natural convection or forced pumping. This approach runs water through pipes that are built into a solar collector plate, heated by sunlight. It can be used on a small or large scale, with solar collectors installed in arrays to heat larger volumes of water. Some of the more advanced collectors will focus or concentrate sunlight to achieve higher water temperatures.

In fact, a 5mW power plant constructed in only seven months was successfully tested in Nevada; a series of mirrors focuses sunlight to heat water and generate electricity. Solar thermal power plants such as this one concentrate sunlight to heat water and drive electricity-generating turbines. The technology for solar thermal electricity plants has existed for many years and was tested on a large scale in California’s Mojave Desert in 1981, where 1,800 mirrors concentrated sunlight into one area and generated steam to drive a turbine.[47]

Methods to heat buildings using solar energy are often divided into passive and active systems. Passive systems are sometimes not considered technology solutions: For example, a properly placed tree provides shade or a well-positioned window provides sunlight at the appropriate time of day, to allow for passive temperature control. The passive use of thermal energy from sunlight is low cost, and many building designs already incorporate it. Active systems are more complex. They can use heated water from solar collectors, or use dense material such as rocks to store heat until it is needed for environmental temperature control. Active systems require an initial investment and ongoing maintenance as well. One key consideration for businesses in this area relates to the trade-offs between solar heating systems, whether for water or environmental control inside facilities, and other options, such as photovoltaic electricity generation, to operate traditional heating, ventilation, and air-conditioning equipment.

Geothermal energy from heat stored in the earth is not widely used in most areas because it is economical only where appropriate geological activity is present and communities allow it to be developed as useful energy. For example, much of the thermal activity at Yellowstone National Park in Wyoming is protected and cannot be exploited for business purposes. California, however, is home to one of the largest networks of geothermal power plants, generating enough electricity to power a city the size of San Francisco.[48] Supplying less than half a percent of the world’s energy,[49] geothermal solutions are ones that businesses can exploit only when the opportunity is available.

Technologies that supply renewable energy, reduce carbon emissions, and support environmental stewardship are only one part of the portfolio of point solutions available to businesses as they identify opportunities to improve their operations. A second group of solutions focuses not on energy generation, but on efficiency.

Holistic perspectives on Green Data Centers that support enterprise IT needs are driving new advances. For example, one framework from IBM describes the Green Data Center concept with five key principles. The first principle is to begin by understanding energy use and diagnosing a company’s technology landscape, to identify opportunities for improvement so that transformation actions are soundly based on the current state. Another principle, when the opportunity exists, is to plan, build, and upgrade to energy-efficient data centers. This can involve significant investments in new hardware and potentially even new computing facilities because data center overhauls are not always possible. Migrating to an improved solution over time is often more feasible. Next, innovative solutions that aim to increase efficiency should provide cooling. Companies can also implement virtualization to improve resource utilization and information availability. Finally, companies should manage and measure performance with energy-management software[53] so that they can achieve further efficiency over time.

Although the technology of green computing and green data centers is advanced and its benefits are well understood, the business objectives for transforming from legacy technology to efficient computing platforms that improve environmental stewardship should be clear. In a 2008 study by The Enterprise Strategy Group, Inc., nearly half of senior business executives indicated that their organization had a green initiative or program underway in the area of data centers, IT power, and cooling. A larger number, 70 percent, indicated that cost reduction from reduced energy consumption was a metric closely tracked to measure success of green initiatives. Thus, there is still a significant potential for green computing to move higher on business leadership agendas as these percentages rise.[54]

Beyond green computing and green data center technology, a new portfolio of green product technology is emerging that can help businesses across all industries improve their environmental stewardship.

For example, when compared to traditional automobiles that consume fossil fuels, the manufacture and delivery of a hybrid or electric automobile might consume a similar amount of energy. However, because these vehicles partly consume ethanol or electricity that potentially comes from renewable energy sources, the individuals and companies that use them have a net positive impact on the environment. The circumstances are similar for energy-efficient appliances and electronics. When ice cream company Ben & Jerry’s started testing more environmentally clean freezers in 2008,[55] the company improved its position as an environmental steward and reduced its carbon footprint. In another example, when Avis offered hybrid vehicles in its rental car fleet and advertised “For a green time call[el],”[56] it improved its position as an environmental steward, as did the customers who rented and drove those automobiles. Other products enable existing devices to be retrofitted so that they are more efficient. PowerDown software, a free download designed at the University of Liverpool, is one example that allows computer “retrofits” so that they power down and conserve energy after a period of nonuse. An average PC can be left on 24 hours a day but generally is used only 40 hours a week, so savings can be significant.[57]

Telecommuting and “in lieu of travel” solutions that help companies more efficiently use (or even eliminate) energy for travel include traditional ones as well as emerging technologies. One solution from IBM enables people to meet, communicate, and collaborate in three-dimensional, virtual environments that simulate actual in-person experiences.[58] An enormous number of product technology advancements have been made to improve environmental stewardship in recent years. The newly developed and other enhanced products directly improve environmental impact, and their use will continue to grow as procurement practices adopt environmental considerations in decision making. Enterprises should consider the portfolio of available product solutions that improve environmental impact as they evaluate their inventory of energy-consuming equipment, machinery, and appliances. Moreover, after identifying opportunities, companies can accomplish the necessary transformation over a deliberate period of time using a roadmap with key milestones. In some cases, the most sensible action might be to continue using existing equipment until its useful life ends, but then replace that equipment with its higher-efficiency counterpart at an economically feasible time.

Of course, green buildings should incorporate environmentally conscientious construction supplies and should be constructed with energy efficiency in mind. Energy efficiency includes optimal use of insulation, heating, ventilation and air-conditioning equipment, and water-conserving technology. Green building designs recognize that natural lighting is highly efficient wherever it is possible, using such devices as skylights and even mirrors to direct sunlight into appropriate areas.

A robust body of work already describes green building solutions and approaches to increasing efficiency and reducing environmental impact. C. Lockwood points out, “A substantial body of experience and a set of tested standards have made ‘green’ a realistic choice for most building projects.”[59] Many of the books available are both prescriptive, to explain methods and tools that support improved environmental stewardship, and descriptive, to illustrate examples from existing buildings that have achieved meaningful results. These works emphasize how to take action in tactical ways. Some of these focused works include such books as Kibert’s Sustainable Construction: Green Building Design and Delivery[60] and Werthmann’s Green Roof—A Case Study.[61]

Previously in Chapter 3, “Green Strategy Supports Operational Improvements,” Section 3.1.1, we discussed that companies are extending their influence throughout the lifecycle chain by creating innovative recycling programs that help retain customer loyalty while also improving the environment. We also showed that legislative action is playing a role in recycling through take-back programs. Numerous recycling solutions have already been developed to process materials such as glass, plastic, metals of all kinds, rubber, paper products, and used oil. Some recycling solutions reprocess materials by melting and reforming metals and glass so that new products can be manufactured with little or no noticeable difference from products made with virgin materials. Other solutions cleanse and grind recyclable materials so that they can be formed into products such as insulation, surfboards, or flooring for playgrounds and athletic facilities.

The combination triangle/number labeling now found on many products and their packaging is well understood and has made recycling efforts more effective as a result. Some recycling solutions are not as widely known, though. The IST Energy Corporation offers a mobile Green Energy Machine (GEM) that converts waste into energy and can process up to 3 tons of trash a day,[64] while producing enough energy to power and heat a 200,000-square-foot building housing more than 500 people. Other solutions include plasma arc gasification devices that “vaporize” waste, generate combustible gas as part of the process, and produce byproducts that are useful in such areas as roads and construction.[65]

The solutions and approaches to recycling are too numerous to mention here, as are the products made from recycled materials. However, all businesses should identify sources of waste generated across the enterprise and seek to not only reduce those wastes, but also find ways to turn the waste back into useful resources. Some business models actually take on recycling responsibility for many organizations and gain better economies of scale. For example, TerraCycle, Inc., places bins for collecting recyclable materials at companies such as Petco, OfficeMax, Home Depot, and Best Buy, with hopes to ultimately cover 10,000 locations.[66] Another consideration for businesses to proactively explore is to understand how products can be manufactured so that they are ultimately easier to recycle or can include more recycled raw material content. This consideration turns traditional “design for manufacturability” (DFM) into “design for recycling” (DFR). For example, the U.S. Tile Company earned the Cradle to Cradle (C2C) certification for healthy and sustainable product design from MBDC for its line of clay roofing-tile products produced in the U.S.[67]

Of course, not all the solutions being developed and offered are equally proven in the marketplace, and cautious business judgment is still appropriate for emerging solutions. Companies can mitigate risk through a number of familiar approaches: launching small-scale pilot projects, sharing financial risk and reward with business partners, and testing different solutions on a small scale before making larger decisions on where to invest. Organizations should also decide how close they want to be on the innovation frontier in different areas: to be fast followers or to be late adopters of developing green solutions. For example, no standard, agreed-upon way exists for measuring the carbon footprint of products across industry boundaries, nor are universal standards available to measure optimal water management for different industries. Yet many businesses are making investments in targeted point solutions in these areas and are clearly becoming better environmental stewards.