Office Depot says that its bottom line is green. It aims to be an environmental steward among national retailers and does everything from recycle paper and ink cartridges to invest in renewable energy projects. Altogether, it has spent $20 million making its stores energy efficient while providing 4,000 in-store products that have recycled content.
Its latest forays, though, are less known. Office Depot is buying renewable energy credits to offset its energy use. Companies of all sizes have the ability to purchase blocks of green power -- energy that is then used to displace so-called brown or dirty fuels. While companies will never know what types of electrons are powering their facilities, they will know that they are guaranteeing the production of clean energy.
"Office Depot's environmental program is structured around a vision to increasingly 'buy green, be green and sell green,'" said Yalmaz Siddiqui, environmental strategy advisor for Office Depot. In 2006, the company purchased 76,000 megawatt-hours of renewable energy from solar and wind sources. That equates to about 12 percent of its annual electricity use last year.
Not so long ago, the term "carbon footprint" was an enigma. But, with all the attention now being paid to the potential devastations that global warming could cause, major companies are stepping up. Companies are asking what it is they need to do prepare for a carbon-conscious world and as such they are trying to develop strategies.
At this point, their efforts are voluntary. But that could change if more state and federal mandates are handed down. The ultimate goal is to build a cost-effective and reliable supply of renewable energy sources. As the demand for clean energy projects increases so too would the supply. As those green industries build economies of scale, they would offer better and cheaper services.
Now, though, the corporate do-gooders that are buying those renewable energy credits are paying for them in addition to their ordinary energy costs. But it is money that is well spent, as companies are trying to brand themselves in the marketplace.
Credits are often brokered after green blocks of power are solicited from producers and a purchase price is developed. A company using 500 million kilowatt-hours a year of electricity may decide to offset its emissions by 10 percent. It would then buy credits from a marketer or utility that equates to 50 million kilowatt-hours, or 50,000 megawatt-hours -- in a totally separate purchase from what it otherwise pays for electricity.
"The total carbon footprint is defined as the operation of corporation's facilities and processes," says Christian Blattenberger, manager of procurement for Cadence Network in Cincinnati, Ohio. "That includes heat, light and transport. By measuring and reporting these factors enterprise wide, companies can begin to take measureable steps toward the procurement of renewable energy credits. We take data and manage it to determine a company's carbon footprint."
The need to offset carbon dioxide emissions is apparent. Carbon dioxide emissions rose 27 percent from 1990 to 2004, says a report by a coalition of investors, environmentalists and utilities. And emissions will only get worse: About 160 new coal plants are being proposed across the U.S., leading the U.S. Energy Information Administration to project a 66 percent increase in coal-based power production.
Industry is responding, partly for the good PR and partly because the efforts may produce profits. For their part, hundreds of utilities are either generating green power or buying it in big blocks from those that do produce it. Sales are booming. At the same time, financial institutions are financing green projects as well as buying the credits. Wells Fargo, for example, not only provides those types of loans but it is also a consumer of such credits, offsetting about 40 percent of its electricity use with this option.
Among the utilities that are marketing those credits are PPL EnergyPlus and Constellation NewEnergy. The former has said it will buy half the renewable energy credits produced by a wind farm in West Virginia. At the same time, PPL says that it will invest at least $100 million to develop new solar, wind, biomass and landfill gas renewable energy operations in the next five years. Meantime, Constellation NewEnergy is purchasing credits totaling 6 million kilowatt-hours on behalf of HMSHost Corp., which develops and operates travel plazas along the Eastern Seaboard.
Likewise, Whole Foods has said it will buy 100 percent of its power -- for 173 stores in the United States and Canada -- from wind energy. That equates to 458 million kilowatt-hour credits a year. The organic grocery chain says that it will avoid about 700 million pounds of carbon dioxide. Meantime, FedEx Kinko's is also buying renewable energy credits for more than 100 locations nationwide and thereby offsetting 14 percent of its total annual U.S. electricity needs.
"The money you used to buy renewable energy credits supports the continued production of green power, as well as the development and research of new technologies for sustainable energy and a better world," says Wind Street, which markets the credits. "The cost to be 'green' is in addition to your monthly utility charges. You will, however, know that you are 'green' and doing the right thing for the environment and our future."
Companies can certainly make investments in clean technologies -- steps that will involve capital outflows but will make their operations more efficient. They can also take less invasive steps and notably ones that allow them to buy credits that guarantee the production of green energy. If the idea continues to get more traction, it will help change the energy landscape and have some effect on carbon emissions.
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