Hi. This week we are looking at climate change in business. In this lecture, I want to continue with our discussion about carbon footprinting. And we're going to do this using an example. Remember that a company's carbon footprint is its emissions of greenhouse gases, over a year, expressed in carbon dioxide equivalents. The best way to go through this lecture is to have my mini-case, called Paradise Slice Pizza Company, handy to refer to. The example I am going to use is quite simple. It'll show you the basic process for computing a carbon footprint. Once we have the carbon footprint computed, we'll talk about how it can help you improve the sustainability of your company. Here's the situation. You've been asked by a friend who owns a small pizza restaurant, to compute the company's carbon footprint. The restaurant is the Paradise Slice Pizza Company. Your friend already does a lot of recycling and as much as possible he buys ingredients locally. But he still worries that he could be doing more to make his business environmentally friendly. You explain to your friend the sort of information that you'll need and he collects information about energy use and water consumption from last year's bills. He also takes a guess at how much trash gets thrown out by weighing a couple of trash bags and counting the number of bags put into the dumpster every week. Now this isn't very scientific, but sometimes you just have to do what it takes to get the information you need. It's probably healthy to think of carbon footprinting as trying to get close to the correct number. If we just get close to the right number, we should have high enough quality information to make some good decisions. Here's a table that shows the various sources of greenhouse gas emissions for the company, the quantity of each source used over the past year, and the units that the numbers are measured in. Now these are not emissions, these are the quantity of electricity, natural gas, and so on used by the restaurant. The information that we need is not how much we paid for electricity or natural gas, but the quantity that we used. That's what determines emissions. The amount of fossil fuel are the resource that we use. If your company wants to compute its carbon footprint it needs to have a way to collect and save this data. Once the data's collected the next step is converting the quantities into greenhouse gas emissions. We do that by finding the appropriate conversion factors. There are a number of sources for these conversion factors. In the United States, the US Environmental Protection Agency has a detailed list. I'll post a list that you can use as a reference in the resources for this course. Here's a tricky part about these conversion factors. They're given an all sorts of units. You have to make sure that the units of the conversion factor exactly match the units that you've used to measure the quantities of the various resources consumed. We really have to have apples to apples and oranges to oranges or we're going to get nonsensical results. If you do a carbon footprint you're going to get really good at using the Internet to convert from pounds to kilograms and BTUs to kilowatt hours and so on. In this example Ive done all those sort of unit conversions for you, but I'll mention things to watch out for. In this table with the purple header, we have the conversion factors. Notice that all of them are in kilograms of carbon dioxide. Remember that the convention is that carbon footprints are expressed in metric tons of CO2. There are 1,000 kilograms in each metric ton. So putting everything in terms of kilograms of CO2, will let us pretty easily convert into metric tons when we get all done. Now that we have the conversion factors we compute emissions by multiplying the quantity of the fuel, or the resource, by its conversion factor. The table with the blue and bright green header shows these calculations. When we do the multiplication we get 1,668 kilograms for natural gas emissions, and 7,349 for electricity, and 6,571 kilograms of CO2 for gasoline. And then 344 for water and 2,724 kilograms of CO2 for waste to the landfill. We can add all these up and the total emissions are 18,658 kilograms of CO2 equivalence. But remember that the convention is to express carbon footprints in metric tons or 1,000 kg units. So Paradise Slice's carbon footprint is 18.7 mt CO2e. Usually the sources are combined into scope one, scope two, and scope three. So that's identify the scopes of each source. I'll have you work on this and then show you the answer. Remember that scope one is fuel combusted in company equipment or vehicles, scope two is purchased electricity, and scope three is everything else. Here are the scopes. I hope you got something like this. Combing them we have a much simpler table with the same 18.7 metric tons CO2e result. Now what do we do with this information? If your friend wants to reduce the restaurant's carbon footprint he should begin by looking at the two largest sources of emissions, electricity and gas for the delivery car. This is where the carbon footprint really helps you. Without the carbon footprint you might have thought that all of the gas, the natural gas, to run a pizza oven was a main source of carbon emissions. Maybe some time a more efficient pizza oven would be a good investment, but we can see from our carbon footprint that a relatively small improvement in conserving electricity or gasoline could have a big impact. We've already talked about lighting systems being a good first place to begin to conserve energy. This could be the most cost effective place for your friend to find improvements. Let's do a rough analysis of what the savings might be. Let's suppose that about half of the electricity is used for lighting, and on average the bulbs consume about 50 watts. I'm using this number because over time people replace old light bulbs with more efficient light bulbs. Let's suppose that by replacing the existing set of light bulbs with LEDs the average wattage drops to 20 watts. Now instead of using 8850 KwH of electricity we'll be using a little less. Here's a calculation of how much less. If half the electricity is used for lighting, that'd be 4,425 KwH per year. The average wattage of the lightbulbs is reduced from 50 to 20%. Then we'll only need 40% of the electricity to run those light bulbs, 40% is the ration of 20 to 50. So 40% of 4,425 is 1,770, that's how much electricity the more efficient light bulbs will use to do the same job as the old ones. This means that total electricity consumption falls from 8,850 KwH to 4,425 kilowatt hours for the non lights, plus 1,770 for the lights, so now it is 6,195 KwH per year. We can use our electricity conversion factor to figure out the carbon emissions associated with this lower consumption of electricity. We multiply the 6,195 KwH by the conversion factor of 0.8305 and get 5,144.95 kilograms of CO2 or 5,145 kilograms. So changing the light bulbs reduces the scope two emissions from 7,349 to 5,145. That's about 2,000 kilograms or over two metric tons. That's a lot. We were really able to shrink the restaurant's carbon footprint. Of course we didn't look into the cost of the new bulbs or how much the electricity bill would go down. But we know from previous lectures, that usually these are really good investments. Now the gasoline used in the delivery car was the other big source of emissions. When I created this problem I assumed the car was driven 16,245 miles per year and got 22 miles per gallon which is just a teeny bit better than the national average. Should the owner think about getting a more efficient car? It's great to reduce carbon emissions, but you'd have to save a lot of gas to justify replacing a car. Financially it just may not make sense. But this is something that we can analyze using our lessons about net present value. This was a very simple carbon footprint, but the mechanics can be applied to more complex situations. Is our answer exactly right? Probably not, because we made some assumptions and some of the quantity estimates were educated guesses. But the relative magnitudes of the sources of emissions is probably right. That provides guidance about where we can most effectively make changes. Spending lots and lots more time fine tuning these numbers is probably not nearly as beneficial as using these admittedly rough estimates to begin to make some changes. We don't want to let perfection get in the way of doing good. So, Paradise Slice has a carbon footprint of 18.7 metric tons of CO2, but has some good options for reducing its footprint. Thanks. And now we get to talk about one of my favorite topics, context based sustainability.
