Friday, January 27, 2012

Sustainability Nears a Tipping Point

The majority—70 percent—of executives surveyed by the third annual Sustainability & Innovation Global Executive Study conducted jointly by The Boston Consulting Group and MIT Sloan Management Review said that their companies have made sustainability a permanent fixture on the management agenda. These and other findings—and their implications for companies and lessons for managers—are detailed in Sustainability Nears a Tipping Point, a research report published in MIT Sloan Management Review. This special report follows up on sustainability trends identified in an earlier preview article published in the Winter 2012 issue of the Review.

Several findings indicate that sustainability is gaining ground: About two-thirds of the nearly 3,000 executives surveyed from the commercial sector said that sustainability was necessary to being competitive in today’s market. And nearly one-third said that sustainability activities contributed to profitability—we call the companies that they lead “Harvesters.” This research report details the characteristics that those organizations share in common.

Still, the study’s findings also indicate that sustainability has more ground to gain: for example, while sustainability has made it onto many management agendas, responses indicate that it ranks just eighth in importance among other agenda items. Nonetheless, the study provides evidence that an increasing number of companies are taking sustainable business practices seriously even when the business case for such practices isn’t yet obvious. It is also reveals that many companies are making striking commitments to sustainability and some are already seeing profits emerging as a result.

Find full report [here].

Thursday, January 26, 2012

Tackling Lead Pollution with Fungi

Fungi may be unexpected allies in our efforts to keep hazardous lead under control. That's based on the unexpected discovery that fungi can transform lead into its most stable mineral form. The findings reported online on January 12 in Current Biology, a Cell Press publication, suggest that this interaction between fungi and lead may be occurring in nature anywhere the two are found together. It also suggests that the introduction or encouragement of fungi may be a useful treatment strategy for lead-polluted sites.
"Lead is usually regarded as a pretty stable substance," said Geoffrey Gadd of the University of Dundee. "The idea that fungi and other microbes may attack it and change its form is quite unexpected."

Lead is an important structural and industrial material and, as an unfortunate consequence of its popular use in everything from firearms to paint, lead contamination is a serious problem worldwide. There have been efforts to contain lead in contaminated soils through the addition of sources of phosphorus, an element that enables the incorporation of lead into a stable pyromorphite mineral. But that change had been considered a purely chemical and physical phenomenon, not a biological one. That is, until now.

In the new study, the researchers carefully examined lead shot after it had been incubated with and without fungi. In the presence of fungi, the lead shot began to show evidence of pyromorphite formation after one month's time. That stable lead-containing mineral continued to increase in abundance with time. Minerals found on the surface of lead shot incubated without fungi represented less stable forms as a result of normal corrosion.

"It seems the ability of many fungi to produce organic acids or other substances may be very important in attacking the lead and releasing forms of free lead including lead complexes, which can then react with phosphorus sources to form pyromorphite," Gadd explained.

While not all species of fungus are able to transform lead in this way, it appears that many of them can, he added. It's not entirely clear why some fungi do this, but it might assist their survival in contaminated soils.

The discovery is yet another example of the "amazing things that fungi, and microbes more generally, can do in the environment," says Gadd. "Even metals can be subject to microbial colonization and attack."


Tuesday, January 24, 2012

Green Chemistry and Clean Energy


In December, the University of Massachusetts, Boston (where I work) hosted three leading proponents of green chemistry for a panel discussion of the potential and challenges of the field. John Warner, widely considered the father of green chemistry, is a former chair of the UMass-Boston chemistry department and is currently the president and chief technology officer of the Warner Babcock Institute of Green Chemistry. Berkeley “Buzz” Cue, an alumnus of UMass Boston, retired from his position with Pfizer in 2004 as vice president at Groton R&D Laboratories. He has since founded BWC Pharma Consulting, focusing on green chemistry and pharmaceutical sciences. Richard A. Liroff founded the Investor Environmental Health Network in 2004, where he serves as executive director, following a twenty-five year career at World Wildlife Fund. The event was co-sponsored by our University’s Center for Green Chemistry and the Center for Sustainable Enterprise and Regional Competitiveness.

The speakers discussed the potential for green chemistry to make production processes and final products safer in a variety of sectors, and to reduce waste and the use of toxic substances. At the same time, green chemistry can save companies money by reducing the need for costly chemicals, reagents and solvents, lowering insurance and legal costs, reducing waste disposal costs (which can exceed $5 per kg for some toxics), and saving energy. In the pharmaceutical industry, Buzz Cue noted that the ratio of waste to final product, called the E-factor could often reach 50 or 100. Applying green chemistry principles has the potential to cut this by a factor of 5 or 10. Pfizer has reduced the E-factor for Viagra from 108 to 8. Given that more than 1 billion kgs of pharmaceutical drugs are produced each year worldwide, the savings can quickly mount into the millions of dollars.

John Warner has developed a set of 12 principles that have become the cornerstone of green chemistry, and there are at least three common elements with the potential for substantial environmental benefits and cost savings: (1) simplifying the overall process, reducing the number of steps, and hence the need for solvents and reagents, and the attendant risks and energy use for heating and drying at each step (2) switching to safer processes and chemicals, frequently based on aqueous (water) solutions instead of organic chemicals (3) continuous process production with real time monitoring and control and (4) recycling chemicals used in the process.

The presentations and discussion got me thinking about the relationship between green chemistry and clean energy. There are some important similarities in the approaches:

1. It’s the economy, stupid! However important the health of the planet and our bodies are to us, the key to corporate adoption is making an effective business case. Advocates of clean energy and green chemistry have to demonstrate that investments meet the usual RoI hurdles (though they are frequently much less risky than investments in the core business, but that’s another story). For clean energy and green chemistry, there is plenty of low-hanging fruit, but cost is also a barrier for more systemic change.

2. Business model innovation is as important as technological innovation: The environmental benefits, and other co-benefits, need to be monetized, sometimes requiring creative business models. A lot can be done with existing technologies, but various market and non-market barriers exist, which business model innovation can help overcome.

3. The lean production principle: it’s usually cheaper, more reliable, and environmentally better to improve the core production process rather than add on “end of the pipe” solutions.

4. Simplicity can require complexity: Einstein invested a lot of brains and sweat to arrive at E=MC2. Simple, elegant solutions that save money and reduce environmental impacts are not always easy to find, and often require substantial investments of time and money in chemical science and process engineering.

5. Systemic perspectives: analyzing an entire production system from raw materials to disposal of final product, using life cycle analysis, can help identify ways to cut costs and reduce use (and waste) of energy, water and chemicals.

6. Don’t go it alone! The industry needs to collaborate to address some larger institutional and regulatory issues. FDA regulations, for example, can hinder process changes in the pharmaceutical industry, so the sector has formed a group to work with regulators. In a similar way, the clean energy sector has to work with regulators to facilitate distributed power (e.g. for net metering) and to establish standards and protocols, for example, for carbon measurement and for smart grid software.

Only one of the twelve principles of green chemistry is explicitly about energy efficiency, and it suggests that reactions be designed for ambient temperatures. The call for renewable feedstocks and to maximize atom efficiency also relate to energy use, but overall, the principles are mostly focused on questions of toxicity, hazards, and waste reduction. Given the energy intensity of the chemical sector, from the feedstocks to production, distribution, and waste disposal, waste reduction inherently saves substantial amounts of energy.

There is a lot of room, however, to explore the relationship between green chemistry and energy efficiency more closely. Energy use generates its own waste, of course, from particulates to carbon dioxide and SOx and NOx, but while these create environmental and public health issues, they are not considered particularly toxic, and are not the focus of green chemistry. Moreover, the chemical and pharmaceutical industries buy their energy-intense feedstock materials from other firms upstream on the value chain, over which they have little direct control. The larger companies could perhaps learn something from Walmart’s experiences in pressing suppliers and customers along the value chain for action.

Green chemistry could also learn a lesson from the energy arena about the potential for end use conservation and efficiency. The green chemistry principles seem to take final demand for products as given, rather than look for ways to reduce production. There has been increasing attention recently to the over-prescription of some types of drugs, and large quantities many drugs are discarded for various reasons. Chemicals used for agriculture could be reduced with organic and other alternative practices. The problem here is that while utilities are frequently given incentives for end-use energy reduction, most industries don’t see a good business model in reduced sales and production. One exception is Monsanto, which finds it profitable to sell GM seeds that are matched with lower volume but proprietary chemical pesticides and herbicides.

Green chemistry can also be used directly for clean energy purposes. My son’s first internship was in one of Professor John Warner’s labs at UMass-Boston, testing various kinds of non-silicon PV cells for their efficiency and longevity. Chemistry is also key to biofuels production, from algae to cellulosic ethanol, and to identifying catalysts for fuel cells. There is active investigation of direct air capture (DAC) of CO2 using chemical processes, though costs are currently prohibitive. For market reasons, the large pharmaceutical and chemical companies with substantial research budgets have not focused their attention and resources on applying green chemistry for clean energy and climate mitigation purposes, though this is huge potential in this area.

Monday, January 23, 2012

Renewable Energy’s IPO Misses Target—Is This Bad News for Biodiesel?


The first IPO of 2012

Renewable Energy Group Inc. (REGI) went public this week in what was the first big-name biofuel IPO of 2012. The biodiesel firm's public offering was billed as a litmus test for the market, which might not be as hot as REGI expected. The company raised $72 million in its IPO, less than the $124 million it was shooting for according to its S-1.

REGI sold 7.2 million shares at $10.00 a piece after offering 7.3 million at $13.00 to $15.00. Yesterday the firm's stock jumped up to $10.29 at one point. It's since dipped back to $10 even. Still, as the first IPO in the U.S. this year, it's already outperforming last year's offerings. According to Bloomberg, stocks that debuted in 2011 lost an average of 4.2 percent as of Wednesday.

REGI, based out of Ames, Iowa, is the biggest biodiesel producer in the United States. It's an interesting case for biofuel IPOs because, as compared to a number of firms who filed S-1 forms last year, it's a large company with a lot of revenues. The midpoint of REGI's IPO price range values the company at $401 million, compared to revenue of $557 million in the first nine months of 2011.

That's a huge difference from the past set of biofuel firms to go public. Advanced biofuel firms like Amyris, Codexis, Gevo, and Kior all have smaller revenues and a long way to go before becoming profitable. They've also lost momentum since going public: Gevo's stock has dropped about 58 percent since its offering in February 2011, while Amyris has dropped about 34 percent since going public in September 2010.

Meanwhile, REGI was cash flow-positive by the fourth quarter of 2010, and accounts for a huge portion of U.S. biodiesel production. Profitability has been helped by Congress last year reinstating a $1-per-gallon blender tax credit. REGI also switched to using animal fats for up to 90 percent of its feedstock in 2009 after soybean oil prices doubled.

With a number of other firms waiting in the wings to see if IPO conditions are right, the big question is how REGI's IPO performance reflects on the biodiesel market. There are two ways of looking at it. First, with a giant producer like REGI missing its targets while the stock prices of next-generation firms have dropped, it's easy to take a negative outlook on biodiesel. REGI's case also highlights the fact that, at its essence, first-generation biofuel producers are squarely in the commodities business. Because REGI has shifted away from the established, albeit expensive, soybean market into animal fats, cooking oil and inedible corn oil, the firm has a more difficult time making long-term contracts at fixed prices. Profitability at REGI relies on being able to hedge effectively.

On the other hand, the biodiesel market continues to grow, helped by the 1 billion gallon federal mandate handed down for 2012. REGI is growing rapidly, and the infusion of cash from its IPO is at least partially slated to help increase its production capacity.

REGI's offering does highlight the fact that, despite the promise of low- and zero-cost feedstocks, it's going to be some time until next-generation biofuels catch up.

Thursday, January 19, 2012

Higher Gas Prices: Ethanol Subsidy Expiration Could be to Blame

The expiration of ethanol subsidies from the federal government last month may already be driving up gas prices at the pump, according to AutoblogGreen.

Earlier this week, Bloomberg reported an increase of 12 cents to $3.36 a gallon to filling station prices – the first three-week increase in gas prices since October.

Autoblog says that the rise could perhaps be blamed on Congress. The legislature failed last year to add an extension to subsidies of corn-based ethanol that had been in place for 30 years, allowing the $0.45 per gallon of production payout to expire on December 31, the web site reports.

Most gasoline sold in the U.S. contains at least 10 percent ethanol so the subsidy’s expiration may have triggered a 4.5 cents per gallon increase in fuel costs to gasoline suppliers. That charge that now looks to be getting passed on to consumers, the blog suggests.

The subsidy, which was the subject of legal wrangling for much of last year, paid out around $6 billion in 2011.


Tuesday, January 17, 2012

Algae for Your Fuel Tank

The available amount of fossil fuels is limited and their combustion in vehicle motors increases atmospheric CO2 levels. The generation of fuels from biomass as an alternative is on the rise. In the journal Angewandte Chemie, Johannes A. Lercher and his team at the Technische Universitaet Muenchen have now introduced a new catalytic process that allows the effective conversion of biopetroleum from microalgae into diesel fuels.

Plant oils from sources such as soybean and rapeseed are promising starting materials for the production of biofuels. Microalgae are an interesting alternative to these conventional oil-containing crops. Microalgae are individual cells or short chains of cells from algae freely moving through water. They occur in nearly any pool of water and can readily be cultivated. "They have a number of advantages over oil-containing agricultural products," explains Lercher. "They grow significantly faster than land-based biomass, have a high triglyceride content, and, unlike the terrestrial cultivation of oilseed plants, their use for fuel production does not compete with food production."

Previously known methods for refining oil from microalgae suffer from various disadvantages. The resulting fuel either has too high an oxygen content and poor flow at low temperatures, or a sulfur-containing catalyst may contaminate the product. However, other catalysts are still not efficient enough. The Munich scientists now propose a new process, for which they have developed a novel catalyst: nickel on a porous support made of zeolite HBeta. They have used this to achieve the conversion of raw, untreated algae oil under mild conditions (260 °C, 40 bar hydrogen pressure). Says Lercher: "The products are diesel-range saturated hydrocarbons that are suitable for use as high-grade fuels for vehicles."

The oil produced by the microalgae is mainly composed of neutral lipids, such as mono-, di-, and triglycerides with unsaturated C18 fatty acids as the primary component (88 %). After an eight-hour reaction, the researchers obtain 78 % liquid alkanes with octadecane (C18) as the primary component. The main gas-phase side products are propane and methane.

Analysis of the reaction mechanism shows that this is a cascade reaction. First the double bonds of the unsaturated fatty acid chains of the triglycerides are saturated by hydrogen. Then, the now saturated fatty acids take up hydrogen and are split from their glycerin component, which reacts to form propane. In the final step, the acid groups in the fatty acids are reduced stepwise to the corresponding alkane.


Monday, January 9, 2012

‘Prepare for Low-Carbon Economy This Year,’ Ex-UN Climate Chief Says

Results from the Durban climate talks show that businesses should start preparing in 2012 for a low-carbon economy, according to the former executive secretary of the U.N. Framework Convention on Climate Change.

Yvo de Boer told the Guardian that Durban sent a strong message to business that the world’s governments are serious about tackling climate change. He said it is now apparent that market-based mechanisms such as carbon trading will continue and that there will be clear reporting guidelines on GHG emissions.

De Boer is now a special adviser on climate change at KPMG, but in 2009 he was one of the driving forces behind the Copenhagen climate summit, where countries made a voluntary commitment to cut emissions by 2020.

At Durban, negotiators agreed a second commitment period under the Kyoto Protocol, to run from 2013 through 2017, and bound themselves to agree in 2015 a deal to force them to cut emissions by 2020.

De Boer said a legally binding agreement would help business by providing greater certainty and a level playing field. He said companies will play a key role in combating global warming, including through the green climate fund, which is set to channel $100bn a year from rich to poor countries by 2020. The Durban outcomes confirmed that the fund will be able to help pay for private sector initiatives, he said.

Writing for Australia’s ABC, De Boer said that Durban resulted in an agreement to develop a common system for measuring, reporting and verifying emissions cuts, which was a key to progress on GHG reduction, and also key to private sector investment.

Paul Toyne, group head of sustainability at engineering and environmental consultancy WSP, said the changes for business would be “profound.” Writing in the Guardian, he said that new global rules on emissions would stimulate investment in low-carbon technology and encourage carbon offset markets.

But changing consumer behavior would be a significant obstacle, he said. Manufacturers and retailers must therefore “selectively edit out products” with a harmful environmental impact, he said, and continue to promote energy efficiency.