Corporate Environmental Programs:
How can utility employees participate in greenhouse-gas reduction? Start with sustainable travel programs.
Of the 5,800 million tons of U.S. CO2 emissions in 2002, power generation accounted for 44 percent and transport for 33 percent, making them the first and second largest contributors, respectively, of such emissions in the country.
Utility climate-change-related activities focus on managing the industry's climate footprint in power generation, transmission, and use. These issues are addressed through a number of voluntary agreements with stakeholders and government agencies, but we suggest that utilities should encourage the travel industry to get involved voluntarily by offering "sustainable travel service" products.
The concept is to help corporate travelers calculate the emissions they create on particular flights or with ground travel. For instance, travelers on individual flights round-trip from Frankfurt to New York create 2.3 tons of CO2 emissions. This can be calculated easily using several environmental Web sites.
By purchasing a carbon offset, the traveler can counterbalance the pollution he or she is responsible for creating. Once back on the ground, the "clean" travel concept can be taken one step further. Many travelers now have the option to book hotels certified for their environmental friendliness or to rent fuel-efficient cars.
The small sums gathered from travelers who purchase offsets are pooled and invested in projects in the developing world that reduce CO2 emissions.
Offsetting greenhouse gas emissions is a straightforward process. Specifically, payments from the purchase of carbon offset are used to invest in clean energy technology projects to replace energy from crude oil ().
Such sustainable travel services would allow utilities to report and manage their climate impacts from travel and logistics efficiently and expand the scope and coverage of climate-impact reporting within a broad range of industries.
Utilities would be the primary beneficiaries: Sustainable travel services could mobilize hundreds of millions of dollars for clean-energy investments in the absence of any new regulatory efforts or other policy risk.
Why Utilities Should Get Involved
Utilities already are in the midst of the climate-change policy process. Why should they get involved with this?
First, considering the likely risk from climate change-Swiss Re puts the global economic costs of climate change at $150 billion per year within the next 10 years-efforts like the Carbon Disclosure Project, or shareholder resolutions involving corporate climate-change risks and voluntary trading activities, are likely to increase in relevance.
Second, expanding the coverage of climate-impact reporting to include travel activities is a logical expansion of current efforts and is likely to broaden the base of players that work on solutions. In fact, many corporate sustainability departments already quantify climate impacts of business travel using the WRI/WBCSD GHG Protocol reporting guidelines. Providing business travel-service products that address this issue likely will simplify this data-collection and reporting process.
Third, employees who travel might become more aware of the climate impact of travel, encouraging more climate-conscious travel behavior. Considering that climate impact of travel directly correlates with costs, this could mean that even a small change of actual travel behavior creates immediate cost reductions. Thus, a sustainable travel service becomes a travel cost-management tool, encouraging employees to plan more climate-friendly and less costly travel.
Fourth, a sustainable travel service creates sustainable values. As part of the service, a corporate user of that service obtains emission-reduction credits that can be used for corporate social responsibility reporting, in a voluntary program, for public relations purposes, or both. In addition, the service improves the demand for clean energy, drives innovation in the travel services industry toward sustainability, and reduces climate change.
What Is the Benefit?
Offering such services becomes a no-brainer for travel service providers as soon there is a real demand for such service. As with any other customer-driven product innovation, providing it will increase customer loyalty and sales.
The utility industry's roughly 600,000 employees generate substantial travel. Demand for a sustainable travel service could be all that is needed to encourage travel service providers to innovate and offer such service to all their clients.
What does that mean in numbers? In 2003, 38 million Americans traveled for business, generating 210 million trips, spending $153 billion, and generating roughly 100 million tons of CO2 emissions-equivalent to 5 percent of all transport-related emissions.
Assuming a market potential of 10 percent for a sustainable travel service, U.S. business travel could generate roughly $100 million per year for emission-reduction credit purchases that would leverage clean-energy investments of roughly $1 billion (this calculation is based on the experienced leverage of the value of emission reduction credits to total investment costs).
A number of small-scale initiatives in the United States and other countries already demonstrate the concept, usually without the participation of travel service providers. Just one partnership between Portland, Ore.-based Nike along with Delta Airlines created $25,000 in revenue that was invested into energy efficiency investments within the Portland school system.
Furthermore, a sustainable fuel-card initiative implemented by BP in Australia created sufficient revenue to fund projects that have thus far reduced over 800,000 tons of CO2.
Washington, D.C.-based travel agent UFX Travel/American Express operates the 1-877-MYCLIMATE free call number and offers a sustainable corporate travel management service that includes CO2 accounting, reporting, and management for all trips booked through a business account.
In the absence of any other regulatory incentive, the mainstreaming of supply and demand for sustainable travel services is likely to mobilize significant new resources for clean-energy investments. The energy industry-which has one of the highest burdens to reduce greenhouse-gas emissions-would be a primary beneficiary of such investments. Therefore, utilities are uniquely positioned to stimulate the demand for such environmental services through their own demand for travel management services.
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