Time for Better Inventory: We’re Likely Underestimating Sector Climate Emissions

By JAMES CELENZA

The attempt to estimate greenhouse-gas (GHG) emission sources both overall and by sectors is both arduous and difficult. Although it might overtly and overwhelmingly complicate the task assigned, we do need, at some point in the estimation of the supply chain, to acknowledge what some refer to as embodied energy. One key reason why is that we may grossly underestimate the actual real-world GHG emission profile by sector.

Embodied energy is the sum of all energy inputs to produce goods and services. This includes various energy sources used during raw-material extraction, transport, manufacturing, assembly, construction, and disposal. Each might rely at different stages on a variety of energy sources — fossil fuels, wood, water, solar, or wind — with an accompanied measure (often estimates) of GHG emissions.

Embodied energy as distinct from the energy required to utilize the product process such as a car or air conditioner can sometimes account for a substantial portion of the GHG emissions for a particular product or service. This is what physicists call a “complete life cone.”

For example, the GHG emission profile of electric cars should include a schematic of an emissions profile that includes the raw materials extracted and used to make the vehicle, GHG emissions during manufacture and transport of the vehicle to the retailer, the GHG emission imbedded in the safe disposal of vehicles and parts like lithium batteries.

The Ninth Circuit court of Appeals ruled in 2007 that the National Highway Traffic Safety Administration had to take climate impacts into consideration when devising its automobile fuel-efficiency standards.

During the Obama administration, the “social cost of carbon” was pegged by the Environmental Protection Agency (EPA) at $45 a ton. Using this calculus, an average car emits a ton of GHG every two months. To offset the car’s GHG, an annual expense would be added to a car’s price: about $250 a year for the life of the car.

The EPA and other federal agencies used the social cost of carbon (SC-CO2) to estimate the climate benefits of rule-making. The SC-CO2 is an estimate of the economic damages associated with a small increase in carbon dioxide emissions, conventionally one metric ton, in a given year. This dollar figure also represents the value of damages avoided for a small emission reduction is such emissions.

The SC-CO2 is meant to be a comprehensive estimate of climate-change damages and includes changes in net agricultural productivity, human health, property damages from increased flood risk, and changes in energy-system costs, such as reduced costs for heating and increased costs for air conditioning.

The end result of modeling GHG sources is linking, ultimately, mitigation and reduction strategies and policies that reduce or at least slow the pace of overall emissions. This approach has already been battle tested, notably in California, by several large corporations that have adopted various mitigation and reduction approaches internally.

For example, since 2012 Microsoft business unit managers have been required to calculate in the price of carbon emissions in their unit when reporting profits or losses each quarter. Microsoft business units are then charged an internal tax based on each unit’s energy usage. The money is transferred into a common fund that invests in environmental sustainability projects.

Microsoft’s environmental sustainability team inventories the amount of energy each business unit will consume in a quarter; whether from office space, data centers, or business travel. Those kilowatt-hours and gallons of fuel are then converted into metric tons of carbon. The environmental sustainability team proposes projects and plans green energy production.

In three years, the company has reduced its emissions by the equivalent of 7.5 million metric tons of carbon dioxide and saved more than $10 million through reduced energy consumption. Microsoft charged its business units about $20 million for their emissions in 2016.

Investors also appear to be more interested in linking GHG emissions to investment choices. The California Public Employees’ Retirement System, for example, which manages more than $300 billion, has publicly announced support for carbon-pricing efforts in its investment decisions.

At some point we will want to translate GHG modeling to agents, activities, and agencies that can mitigate rising emissions. A way forward is to develop a broad climate policy that ties mitigating impacts from climate change to reductions in GHG emissions and finances mitigation of climate-induced impacts. This would depend on some form of carbon pricing — though the term “carbon pricing” should factor in all prominent GHG emissions.

If the Ocean State adopted a carbon tax or company internal GHG assessment, the generated money could be deposited into a “carbon mitigation bank,” say, the Rhode Island Infrastructure bank. This bank could then help fund critical projects that reduce GHG emissions.

In addition, resiliency projects, such as preparing wastewater treatments plants for flooding, that will be impacted by GHG emissions would receive grants from the mitigation bank.

James Celenza is the director of the Rhode Island Committee on Occupational Safety & Health, an occupational environmental resource center, and a founder of the New Public Transit Alliance and the Coalition for Transportation Choices, groups that stress the role of public transit in addressing climate change.