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Going Carbon Neutral: Does It Pay?

There is a growing trend among businesses to measure, report and neutralize the carbon footprint of their products. The first step to carbon neutrality is a product life-cycle assessment (LCA). This thorough assessment provides a comprehensive view of the carbon footprint of a product throughout its life, but it is worth the upfront time and cost?

In general, LCAs cost between $10,000 and $20,000 but can go up to $50,000 or more depending on the complexity of the product, its supply chain and the availability of information. Although those numbers might sound high at first, keep in mind that the LCA offers new information about your supply chain and energy use that may help you to cut costs. This data can provide your business with a clear view of areas where you can focus your efforts to make real reductions in energy use and carbon reductions. And, as we all know, energy savings equals cost savings. Often the upfront costs of the LCA are paid for many times over through the efficiency gains that are realized as a result of the assessment.

Companies have also recouped some of the cost through the increase in sales and profits that they have seen by participating in carbon neutral product certification, which uses as a baseline for emissions reductions and carbon neutrality the carbon footprint from an LCA. Motorola, for example, launched their MOTO™ W233 Renew carbon neutral phone in early 2009. The company has certified and labeled as such two additional cell phones and a line of accessory products. Retailer and customer demand were strong enough to support Motorola extending these carbon neutral products to markets such as Brazil, Canada and other countries, as well as the U.S.

As for energy savings, Bill Olson, Director, Office of Sustainability and Stewardship, Motorola Mobile Devices notes, “The MOTO™ W388 Renew+, our most recent mobile phone certified, uses post-consumer recycled content plastic and has eco-conscious packaging and energy-efficient performance.”  Motorola has now begun to look at the carbon footprint of its other products.

Going carbon neutral should be especially feasible for those who have already completed an LCA. If the assessment has already been done, a business can complete certification and go to market in as quickly as a matter of weeks. The current political and economic climate indicates that carbon footprinting and labeling will soon be a reality for businesses everywhere. By taking early action your business can gain a first-to-market advantage, augment its sustainability efforts and have a proven platform to address climate change and environmental protection.

Eric Carlson is President of Carbonfund.org, whose CarbonFree® Product Certification Program launched the first carbon neutral product label in the U.S. He can be contacted directly at ecarlson@carbonfund.org.

Eric Carlson
Eric Carlson is President of Carbonfund.org, whose CarbonFree® Product Certification Program launched the first carbon neutral product label in the U.S. He can be contacted directly at ecarlson@carbonfund.org.
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6 thoughts on “Going Carbon Neutral: Does It Pay?

  1. The short answer to your question is “No”.

    As for your opening statement plug that corporations are neutralizing, ecarlson, you are walled up against facts (see Nina Chestney, Reuters, Aug. 12) proving still again the voluntary CO2 offset market continues shrinking.

    Offset prices on the CCX have fallen to 10 cents a tonne from over $7 in 2008, with cheap credits from large industrial projects (as low as $0.50 to $1 a tonne) and so-called exotic credits trading between 7 and 8 euros a tonne.

    Major participants in the voluntary carbon market are shrinking after the United States failed to implement federal cap-and-trade legislation & the market stopped growing last year. Also, widespread agreement among the FTSE 100 that potential risk gaps abound in current american proposed cap-and-dividend or -trade so then your statement that “by taking early action your business can gain a first-to-market advantage” doesn’t even up with comprehensive business analysis.

    Those investing in carbon credits are taking a BIG RISK – see ICSC scientists Tom Harris’ piece on how the “carbon bubble” will eventually burst: http://tinyurl.com/o5gejz

    Again, the market fell by 47 percent in ’09 due to uncertainty about future climate legislation and ongoing delays in regional trading schemes. Analysts at New Energy Finance showed voluntary greenhouse gas emissions offsets credit trading prices had fallen by as much as 76 percent!

    The failure of world leaders like President Barack Obama, Chinese Premier Wen Jiabao, Indian Prime Minister Manmohan Singh and Brazilian President Luiz Inacio Lula Da Silva to reach an agreement lowered expectations that the EU will tighten its emissions- reduction target before 2015.

    In the early stages of the ETS, which was launched in 2005, over-allocation of free permits helped some polluters reap windfall profits.

    Intercontinental Exchange Inc. (ICE.N) has laid off staff, the head of MF Global’s voluntary markets desk departed in June, and EcoSecurities closed its U.S. office and its global head of voluntary and new carbon markets left the company.

    Does it pay? Not at all.

  2. to the previous commenter, I don’t know how the comment relates. The premise of the article is that there’s a trend of measuring and reporting carbon emissions. That’s a fact, with the growing carbon management industry including mandatory emissions reporting to the EPA.

    To turn away from that and comment on the voluntary market as a whole is sidestepping the issue I think.

  3. Can companies reduce costs and improve product margin by doing and LCA? Yes. Does that mean that going the full distance to being carbon neutral (i.e. buying offsets) makes business sense today? No.

  4. The first comment by Tom raises good points – the failure to adopt a cap and trade framework has been a setback for broad adoption of carbon neutrality efforts. Despite political failures, however, the business community continues to move forward – the Walmart supplier scorecard is fundamentally changing the metrics companies measure in producing and distribution of goods. There are many more examples of companies doing the right thing.

    That said, I don’t think that first commenter believes in the generally accepted basic premises supporting carbon neutral initiatives. I’d hazard to guess that Tom is the ED of ICSC – a group opposed to “costly and ineffectual ‘climate control’ measures.”

  5. though the world leadership is failing in its responsibility to reach an agreement to take place post KP, however the businbess organisations have to ultimatly rise to be environmentally responsible for their own sustainability. Now the time has come that businesses can not just continue uverusing resources & polluting ecosystems in the greed of making more profits and promoting use & through lifestyles. It is imaterail whether they are legally mandated (through a KP like international emissions reductions agreemnet)to reduce their carbon footprint? Their actions are subject to social scrutiny and accounatble to the future generations. Carbon footprint certification programs and the processes such as LCA are in the self interest of the businesses. The early they adopt better it is. The prevailing business model – Explore (resources), use (rather overuse), pollute and thgrough (Waste)is certainly not sustainable rather would lead us to the doomsday and thus detrimental to the very human beings.

  6. Carl raises a good point about the ‘growing trend among businesses to measure, report and neutralize the carbon footprint of their products’.

    I think that companies are being pushed to incorporate sustainability aspects in their overall business strategy which is beyond the clutches of a regulated carbon-credits allocation mechanism (read carbon markets).

    With growing concern among customers about the environmental hazards of products, prompt actions from industry stand a better chance of acceptance by markets.
    I believe that this is more important for businesses to understand than to wait for complex legislations to take shape.

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