Energy, Carbon, and the Secondary Market for Consumer Goods

1. Energy, Carbon, and the Secondary Market for Consumer Goods Dr. Ron Lembke

2. Hot, Flat, and Crowded • Hot: Climate Change • Flat: Technology and Bandwidth • Crowded: More people, who want to live like us

3. The demand for energy

5. International Energy Outlook, 2011, US Energy Information Admistration, eia.gov

7. The supply of energy

8. Hubbert’s Peak • M. King Hubbert, “Nuclear Energy and the Fossil Fuels” (Drilling and Production Practices, American Petroleum Institute, Washington, DC, 1956),

11. Causality or Correlation?

12. Where does our oil come from?

13. US Oil Imports, US EIA

14. When is the Peak? 2004 data

16. Amount of Recoverable Oil, 2004 S

19. Proven Oil Reserves, CIA Factbook

21. The Price of energy

22. Price of Liquids

24. EIA Predicted Price of Crude Oil, 2011

25. NV Electricity Prices Elect. Price Data: EIA, 20y Rsq=0.91, 10y Rsq=0.94

26. Carbon Footprints

27. Carbon Footprint Visibility • Wal-Mart • Sustainability initiative • Carbon Trust • Labeled £2 billion last year • Patagonia • Footprint chronicles

29. Direct vs. indirect GHG emissions? • Direct: sources that are owned or controlled • Indirect: result of activities, but at sources owned or controlled by another entity. Scope: • Direct GHG emissions • GHG from purchased electricity, heat, or steam • Extraction and production of purchased materials and fuels, transport-related activities in vehicles not owned or controlled by the reporting entity, electricity-related activities (e.g. T&D losses) not covered in Scope 2, outsourced activities, waste disposal, etc.

31. GHG Footprint of Retailer

32. Corporate Perspective Retailer Supplier

33. Lifecycle Analysis End Of Life Supplier Retailer Consumer

35. Apple Carbon Footprint

36. Carbon Disclosure Project

37. Wal-Mart • Sustainability Index: more transparent supply chain, drive product innovation, info to customers • “And increasingly [customers] want information about the entire lifecycle of a product so that they can feel good about buying it.” Mike Duke • 1. Supplier Sustainability Assessment • Energy & climate, material efficiency, natural resources, people & community • 2. Sustainability Index Consortium • Lifecycle Analysis Database, develop an open index • ASU, U of Ark, database of info on products’ lifecycles • 3. Simple, convenient, easy to understand presentation of the info to customers: TBD

38. Wal-Mart • “These are not complicated questions, but we have never systematically asked for this kind of information before ” Mike Duke

39. GHG: Do you measure? Report to the Carbon Disclosure Project (CDP)? Annual GHG? Public Targets? If so, what? Solid Waste: from the facilities for WM? Public Targets? If so, what? Water: total use from facilities for WM? Public Targets? If so, what? Public sustainability purchasing guidelines for direct suppliers environmental compliance, employment practices and product/ingredient safety? Have you obtained 3rd party certifications for products to WM? Do you know location of 100 % of facilities that produce your product(s)? Do you evaluate quality capacity for, production before signing a supplier? Do you have a process for managing social compliance at the mfg. level? Do you work with suppliers to resolve issues on social compliance evaluations and document specific corrections and improvements? Do you invest in community development activities in the markets you source from and/or operate within?

40. Carbon Trust • Measuring and Reducing GHG

41. CF per Unit + + =

42. Embodied Carbon Supplier Retailer

43. Embodied Carbon Consideration • Total amount of GHG expended thus far in the life cycle. • Treat it like gold • 6,000 kg of CO2 = 1 TL of product, 10,000 units • CF = 6,000 kg/ 10,000 units = 600 g/unit • Suppose you throw away half the product • What is your footprint? • 6,000 kg / 5,000 units = 1,200 g/unit

44. RL impact on CF Theoretical (Naïve - no returns) 6 kg GHG 6 kg GHG 6 kg GHG 94 units 100 units 99 units 6% returns, all landfilled = = = 63.83 g / unit 60.61 g / unit 60.00 g / unit 6.4% higher 6% returns, 5 units re-sold Reverse Logistics reduces CF by 5%.

45. Secondary Markets for Consumer Goods Where does all of the stuff go that they can’t sell anymore?

46. Secondary Market • Retailer’s Disposition Options • Sell as New • Open Box • Outlet • Return to Vendor • Cannibalize Parts • Salvage dealers • Recycle/Landfill Customer Returns Unsold product Marketing Returns

47. Secondary market • Companies recover, refurbish, remanufacture, and recycle product for additional use elsewhere. • System “drains” excess inventory or assets can be recovered and resold. • Several of the largest US export commodities are through the secondary market. • Environmental Benefit - reduces waste • stable income for a growing sector of the US economy. • positively impacts environmental initiatives, social benefits to constituents, and produces healthy margins.

48. Measuring Economic Activity • GDP Calculation avoids double-counting GDP = C + I + (X – M) + G • Other measurements different approach: • e.g. trucking, online, marketplaces, etc.

49. Secondary Market Includes Elements not Found in GDP We want to understand the total dollars flowing through the secondary market