Climate change has already started changing by eat9932

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OPPORTUNITIeS FOR ReCYCLING AS
A CLIMATe ChANGe STRATeGY
The SeCOND eLeMeNT OF A TWO-PART SeRIeS DeTAILS BOTh The BeNeFITS ThAT
ReCYCLING CAN hAVe ON ADDReSSING The CLIMATe ChANGe ISSUe, AND
The POTeNTIAL OPPORTUNITIeS FOR DIVeRSION eFFORTS IN A CARBON-AWARe
MARKeTPLACe.


BY eD BOISSON AND TONY GeORGIS




     C        limate change has already started changing
              the marketplace by influencing the energy
              we use, products we buy and the waste
     we create. However, it is still unclear for many
     industries how to identify, and more importantly,
     how to quantify and act upon new climate-related
     opportunities. In no other industry is this problem
     more prominent than in recycling. While the link
     between recycling and climate change is abundantly
     clear, the global, diffused nature of recycling’s
     climate benefits complicates measurement,
     ownership and implementation of the policies and
     activities required to fully realize those benefits.
          This is the second of two articles focused on help-
     ing recycling professionals understand climate change
     and the potential opportunities in relation to recycling.
     In our first article, we highlighted five fundamental
     truths (Table 1) that link recycling and climate change,
     and the key questions that remain to be answered in
     deciding the role recycling will play. One of the most



16     RR |   September 2009
important truths is that recycling is a mate-
rials management strategy for manufactur-         Table 1 | Five truths that link recycling and
ers. The magnitude of greenhouse gasses
(GHG) embedded in the products we buy                       climate change
can be nearly 10-times greater than the
GHGs emitted collecting and processing            1. Recycling is mainly a materials management strategy – It supplies raw
recyclables. While recycling, as a materials         materials for manufacturing more efficiently than mining and forestry.
management strategy, can provide climate          2. How you measure matters – Most current greenhouse gas (GHG) inventories
benefits on a great order of magnitude,              miss recycling because its benefits are spread across the manufacturing,
the market has only just begun to try and            electric utility and transportation sectors.
quantify and recognize those benefits. This       3. Benefits are global – Approaches that are bound by states or countries miss
article will focus on this and other op-             important recycling benefits that occur in other countries.
portunities recycling presents in a carbon        4. Transportation impacts are not the most critical – Reductions in
aware marketplace.                                   manufacturing GHG emissions usually far outweigh emissions related to
                                                     local waste management activities.
                                                  5. Climate change is a game changer, but important questions remain
Climate change                                       unresolved – The specific opportunities for recycling professionals will
initiatives                                          become clear over the next several years.
There are many climate change initiatives,
or policies, being adopted or considered at
the local, state, federal and international
levels. Since the international community       by ICLEI Local Governments for Sustain-        the U.S., including such consumer-
first embraced climate change initiatives       ability.                                       focused initiatives as Terrapass and the
with the adoption of the Kyoto Protocol,              Within the U.S. there are now regu-      Carbon Fund. These consumer-based
local and state governments in the U.S.         lated, as well as voluntary, climate change    initiatives sell carbon offsets to individu-
have pursued similar initiatives. Most          initiatives. The most significant regulatory   als and companies who want to reduce
recently, the U.S. House of Representa-         initiatives are California’s Global Warm-      their carbon emissions. Companies use
tives passed the Waxman-Markey Clean            ing Solutions Act, also known as Assembly      the funds from the offsets to construct
Energy Solutions Act (House Resolution          Bill 32, and Congressional HR 2454,            GHG reducing projects, such as refores-
2454), which would regulate GHG emis-           which could become the national govern-        tation and wind turbines. The Chicago
sions for several industries within the U.S.    ing climate policy. Although the Senate        Climate Exchange (CCX) also offers
While many climate change initiatives are       has yet to act, the Waxman-Markey bill         a voluntary, but binding, mechanism
regulatory in nature, several others utilize    has the potential to become law in 2009        for companies in the U.S. interested in
voluntary reduction agreements.                 or more likely 2010. Other regulatory          reducing their emissions. The companies
      Internationally, the Kyoto Protocol,      climate initiatives in the U.S. include the    agree to specific emissions reductions,
which was first signed in 1997 and began        Western Climate Initiative (WCI) in the        and the CCX acts as a formal exchange
operating in 2005, is the most widely           Western U.S. and the Regional Greenhouse       for trading carbon offsets and allowances.
adopted and standardized initiative to          Gas Initiative (RGGI) in the Northeast.        Each of the voluntary initiatives offers
reduce GHG emissions. It was negoti-            RGGI focuses on the energy and electric        varying standards for what projects are
ated among countries participating in the       utility industries, while Waxman-Markey,       considered to reduce carbon emissions;
United Nations Framework on Climate             WCI and California AB 32 involve broader       however, none currently offer a recycling-
Change and was the first to create legally      markets and several industries.                related carbon offset.
binding limits on GHG emissions. The                  These initiatives aim to reduce GHG            Several protocols exist for the quan-
most visible result of the implementation       emissions through regulating specific in-      tification, measurement and verifica-
of the Kyoto Protocol is in the European        dustries’ emissions and utilizing a cap-and-   tion of GHG emissions and reductions.
Union, which created the Emissions Trad-        trade system. State or federal governments     These protocols act as the accounting
ing Scheme (ETS). The ETS provides a            create a cap-and-trade system by limiting      standards for emissions and offsets.
market to trade emissions throughout the        or placing a "cap" on the amount of emis-      Consumer-based initiatives typically have
EU, as well as between industries. Carbon       sions allowed by an industry or sector.        their own protocols and standards for a
is currently trading at about $20 per metric    Then tradable emissions allowances are dis-    specific project’s emissions reductions,
ton of carbon dioxide, which equates to         tributed (at no cost or sold) to the related   such as the standard for measuring and
approximately $20 per 110 gallons of            industries. If a regulated company reduces     verifying a landfill gas collection system.
unleaded gasoline consumed. While the           its emissions below the capped amount, it      On a national basis, the Climate Reg-
Kyoto Protocol has not been ratified in the     can sell its excess allowances to others who   istry is quickly becoming the standard
U.S., locally, the U.S. Council of Mayors       are over their cap. These initiatives also     protocol. It is used by California’s Air
Climate Protection Agreement adopted            include the opportunity for non-regulated      Resources Board to measure emissions
the protocol with more than 900 mayors          industries and projects to create carbon       and reductions and is the basis for draft
signing the non-binding agreement. In           offsets that can be sold to other companies    regulations, which are currently out
addition, more than 700 U.S. cities have        in order to reduce their emissions total.      for review by the U.S. Environmental
adopted, and are implementing, the Cities             There are also several voluntary         Protection Agency (EPA), and would be-
for Climate Protection Program operated         climate initiatives currently operating in     come law under Waxman-Markey's bill.
                                                                                                                  RR   |   September 2009     17
     Recycling opportunities in cap and trade:
     Emission allowances versus offsets
     Emission Allowances: Allowances              are primarily used in voluntary carbon            as a business-as-usual process to
     represent the right for a carbon-            markets (i.e., Carbon Fund), with some            reduce emissions, which could
     regulated company or entity to emit          potential and limited application in              violate the additionality require-
     a specific amount (in tons) of GHG           regulatory markets (i.e., Waxman-                 ments.
     emissions. If companies need more            Markey) and must meet specific                 •	 Double counting: Assigning
     allowances, they must purchase them          criteria to qualify.                              ownership and specific reductions
     from a company who emitted less                    In short, it is doubtful, but not           could be difficult because recy-
     than their cap.                              out of the question, that recycling               cling reduces emissions through-
         Recycling can reduce energy use          will gain offset status. Current                  out a supply chain. Several
     and, in turn, embedded emissions.            opportunities for offsets do not                  components in the supply chain
     This creates the opportunity for the         exist (with composting being the                  can make claims to the same
     company to sell more of its tradable         one exception where offset landfill               reductions.
     emissions allowances and earn                emissions are not already regulated).          •	 Verifiable: Emission reductions
     additional revenue.                          However, depending on future                      are diffused in reduced mining,
                                                  regulations and voluntary protocols,              forestry, processing and manu-
     Carbon Offsets: GHG reducing                 recycling may have some long-term                 facturing-related activities and in
     projects, such as renewable energy,          potential for offsets. Recycling,                 many different locations. Reduc-
     energy efficiency and reforestation,         though, faces several issues in                   tions will be difficult to quantify
     create carbon offsets (on a per-ton          achieving offset status:                          and verify with a high degree of
     basis). These offsets are then sold to          •	 Additionality: if cap-and-trade             certainty for any particular recy-
     individuals or companies to reduce                 regulations are passed, recycled            cling collection program.
     (i.e., offset) their emissions. Offsets            raw materials could be utilized



The affect of climate                             how, and to what extent, recycling activi-     tion through education and awareness.
change initiatives on                             ties will receive credit for reducing GHG
                                                  emissions. However, there are significant
                                                                                                 The opportunity to transform the market
                                                                                                 to understand the significance, and role,
recycling                                         hurdles facing the recycling industry before   of embedded GHG emissions may be the
Legislative initiatives, such as Califor-         it can be adopted by policymakers as a         most important opportunity facing the
nia’s AB 32, and the Waxman-Markey                strategy to reduce emissions. The key will     recycling industry. If policymakers and
bill could have the greatest affect on the        be documenting the embedded emissions          manufacturers understand the significance
recycling industry, and hold the potential        reductions, provided by recycled raw ma-       of embedded emissions and the value re-
to help transform the way the public views        terials, through focused lifecycle analyses    cycled raw materials provide, carbon offset
recycling. While the recycling industry will      that are specific to the actual operations     status, quantification of emissions reduc-
not be directly regulated by either of these      and markets used by recycling programs in      tions and set-aside funding will all soon
initiatives, there is a chance for recycling to   practice, rather than broad studies based on   follow. Climate change offers the solid
greatly benefit from their implementation         generalized assumptions (e.g., EPA’s Waste     waste and recycling industries a unique
in the future. Even though specific recy-         Reduction Model – WARM).                       opportunity to permanently change market
cling related carbon offset opportunities do                                                     perceptions about the industry.
not currently exist, using recycled raw ma-
terials represents a significant opportunity
                                                  Options for recycling                          Seek partnerships with industry and
for the recycling industry. Using recycled        advocates                                      emissions regulated entities
raw materials can result in a dramatic            Currently, there are no opportunities for      By partnering with emissions regulated
reduction in energy use and emissions thus        recycling to immediately and directly bene-    entities, the recycling industry can begin
driving increases in demand and possibly          fit from climate change initiatives, through   identifying and quantifying the most ben-
the prices paid for recyclables. Companies        carbon offsets or documented/accepted          eficial recycled raw materials opportunities.
and manufacturers may look to recycled            emissions reductions related to recycling      Working with companies to develop and
materials as an opportunity to reduce their       raw material use (other than composting).      implement refined lifecycle study protocols
own emissions then sell excess allowances         However, the future holds several options      will provide the quantification necessary
on the market.                                    to help promote and increase recycling         to support future emissions reductions and
      However, the question remains: How          including:                                     carbon offset status for recycling.
much of a marginal reduction do recycled
materials provide to manufacturers and            Market transformation                          Pursue carbon offset status
how will it be measured and allocated?            Documenting and publishing the GHG             Current protocols, such as those developed
Through climate bill regulations, policy-         emissions benefits of recycling beyond the     by the Carbon Registry, Carbon Fund,
makers ultimately hold the key to defining        landfill will support a market transforma-     CCX or Terrapass, do not specifically
18      RR |   September 2009
recognize recycling as a carbon offset activ-
ity (other than composting). However,              Beyond WARM - Lifecycle analysis and
climate change initiatives, protocols, offsets
and legislation are continually evolving and       accounting of emission benefits.
growing. This offers the recycling industry
an opportunity to begin working with the           If U.S. GHG emissions are analyzed from a systems point of view, with
existing protocols, such as the Climate            embedded emissions, 29 percent of all U.S. emissions are related to the
Registry, and policymakers to identify and         provision of goods, such as harvesting raw materials and manufacturing
quantify the potential for creating recycling      products. Manufacturers who switch to recycled raw materials will likely
offsets that could represent new revenue           reduce GHG emissions, but where and by what amount?
streams or cost reductions to industry.            This difference between emitting sources and embedded emissions highlights
                                                   the need to fully integrate recycling into climate policies, thus paving the
Pursue funds created by climate policies           way for recycling programs to monetize emission reductions. In order to
and emission allowance sales                       accomplish this, lifecycle analysis protocols for documenting specific emission
Whether with California’s AB 32 or the             reductions, related to recycling, is a necessary prerequisite. At a minimum,
Waxman-Markey bill, millions of dollars            a recycling protocol must provide a practical, standardized methodology for
will be generated from the sale of emissions       documenting:
allowances under cap and trade. A por-                •	 Emissions in collection, processing and transportation to markets
tion of these funds will likely be set aside          •	 Emission reductions in manufacturing process related to the use of re-
to support renewable energy, reducing                    cycled raw materials (e.g., electricity, natural gas, fuel, steam, etc.)
customer costs and other GHG emissions                •	 Emission offsets related to mining, forestry and related materials process-
reduction projects.                                      ing activities.
     Recycling advocates should actively                                     U.S. GHG Emissions: Industry View
pursue the funds created by legislation and
emissions allowances, as they could greatly
benefit the recycling industry. These funds
could then be used to drive the market                                                                       Residential 5%
transformation strategies and adoption of
                                                                                                             Commercial 6%
recycled raw materials resulting in reduced
GHG emissions.                                                                                               Agriculture 8%

Apply emissions reduction strategies to                                                                      Industry 19%
the recycling industry                                                                                       Transportation 28%
Recycling professionals have already begun
analyzing and implementing climate                                                                           Electric power industry 34%
change initiatives to understand, identify
and promote best practices throughout the
industry. By internally adopting initiatives,
such as a GHG inventory, the recycling                                       U.S. GHG Emissions: Systems View
firms and organizations are aligning them-
selves with climate change strategies.
     The industr                                                                                             Provision of goods 29%
     y will also be in a better position to
persuade policy and decision makers if they                                                                  Provision of food 13%
have begun documenting emissions and                                                                         Appliances and devices 8%
estimating their beneficial emissions reduc-
tions throughout supply chains. Finally,                                                                     Building HVAC and lighting 25%
some of these initiatives will help recyclers
identify inefficiencies in operations that                                                                   Other passenger transport 9%
could lead to reducing costs and emissions.                                                                  Local passenger transport 15%

                                                                                                             Infrastructure 1%
The road ahead
Climate change is presenting challenges
                                                   Source: U.S. Environmental Protection Agency, 2008
and opportunities to most, if not all indus-
tries in the U.S. The recycling industry is
in a position to significantly benefit from
these initiatives in the future, but there       the level of success recycling achieves in             recycling, and the role of embedded
are major hurdles to overcome in realizing       climate change initiatives and policies.               emissions, are too great for climate
those opportunities. The following are              •	 Although hidden by current measure-              initiatives to ignore. By refining emis-
some of the key issues that will determine             ment approaches, the potential of                sion inventory standards, consumers,
                                                                                                                      RR    |   September 2009   19
        policymakers and industry can make          •	 The market must be transformed to          slowed considerably since that time. In the
        more informed choices with regard to           understand the role embedded emis-         most optimistic scenarios, climate change
        climate change and carbon regulation.          sions plays in climate change. Only        may offer an opportunity to transform the
     •	 Recycling and manufacturing indus-             then will recycling be accepted as         market in a way that could transcend previ-
        tries must develop and agree on stan-          one of the most effective strategies       ous growth cycles and potentially result in
        dard lifecycle analysis, and accounting        in reducing GHG emissions. The             a truly institutionalized, global recycling
        protocol, for the quantification of the        transformation is already beginning        economy – a vision that advocates have
        GHG emissions reductions related               with such companies as Timberland          pursued for decades.
        to recycled raw materials. This may            and Walmart, who are attempting to
        prove to be the most difficult, compli-        quantify the embedded environmental        Ed Boisson is a senior solid waste con-
        cated task involved with deriving value        impact of their products with green        sultant at R. W. Beck, Inc. He can be
        for the recycling industry in climate          labeling.                                  contacted at (415) 499-0919 or eboisson@
        change initiatives.                                                                       rwbeck.com. Tony Georgis leads R. W.
     •	 Climate change legislation, protocols     While the climate benefits of recycling are     Beck’s Utility Sustainability Services. He
        and frameworks are continually evolv-     compelling and defensible, it will be a dif-    can be contacted at (303) 299-5207 or
        ing and growing to include new op-        ficult path to fully integrate recycling with   tgeorgis@rwbeck.com.
        portunities and industries. Recycling     climate initiatives and legislation. Recy-
        advocates must become involved in         cling professionals will need to work dili-     Reprinted with permission from Resource
        the implementation and policy discus-     gently to ensure climate initiatives provide    Recycling, P.O. Box 42270, Portland, OR
        sions that are taking place to shape      mechanisms to allow recycling firms access      97242-0270; (503) 233-1305, (503) 233-
        future protocols; this includes voicing   to the emission reduction value they create.    1356 (fax); www.resource-recycling.com.
        that legislation embrace incentives for   Recycling in the U.S. saw unprecedented
        recycled raw materials.                   growth throughout the 1990s, but it has




20      RR |   September 2009

								
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