The Rapid Response Institute

Tag: renewable

  • Going Green? Or NOT!

    Going Green? Or NOT!

    The total or lifecycle carbon footprint for any energy source is a function of the manufacturing, commissioning, operation (including maintenance) and decommissioning of that asset.  Moreover, the value of an electric powered vehicles (EV) is seen as a function of the amount of fossil fuel no longer used by the vehicle.  However, this is only a sub-model of the to carbon footprint of any component in the Basket of (Energy) Goods, aka Energy Basket.

    All energy resources in the basket must be held to the same set of metrics.  These include Human Resources (including diversity and inclusion), Safety Culture, communities as well as the bottom line performance against governance standards (ESG).

    Risk Governance

    A governance framework that exceeds these standards follows.  Evolving over several decades, it reflects a comprehensive approach to operational risk that is often overlooked.  It addresses the entire life of a revenue producing asset.

    Lifecycle risk mitigation of an energy resource must include the end of the asset life processes.  What governance driven processes are in place to prevent the accumulation of wind turbine blades or spent solar panels stacked and abandoned?  Just like the tires stacked for decades.

    Turns out the answer is few.  Long life assets such as factories, skyscrapers, fossil fuel production systems, etc. are built to the engineering, industry and local regulatory standards of that day.  Ongoing operations, maintenance, upgrades and so forth keep them performing at acceptable levels.  However, governance models are often focused on the present.  End of asset life risk does not fit into the four quarter management mindset as the event may be sometime in the future.

    The above graphic represents a governance model built around operations and associated risks.  The archetype recognizes that many risk mitigation processes are inadequate for today’s complex organizations with multi-faceted global processes.

    Its framework is built upon the work done by the Treadwell Commission several decades ago to detect financial fraud.  This structure supports the extension into field operations and provides a structure for attaining and sustaining Operational Excellence.

    Risk mitigation is both quantitative and qualitative.  The risk associate with the use of any industrial energy source must be thoroughly assessed as a function of its lifecycle, not just its initial CAPEX and ongoing operations.

    Dumping v Decommissioning

    Illegal industrial dumping has long been a problem.  Today, some in the wind turbine sector appear to be following the decades long vehicle tire disposal process (or lack thereof).

    Lady Bird Johnson at least tried to hide the piles of tire debris but no one has found a way of completely dealing with this growing and massive problem.  As of 2017, some 17% were still disposed of in landfills.  In 2003, the EPA reports that almost 300 million tires are scraped each year.  Flash forward to today and this is likely a very conservative number.  That said, 17% equals approximately 50 million tires headed to landfills as opposed to recycling.

    Moreover, there is a long history of industrial dumping trash so as not to have to pay the disposal fees.  One wonders how many millions of tires destined for landfills (and other recycling) are just dumped?

    The decommissioning process is the responsible end-of-asset-life shutdown and removal.  The intent is to return the site to a condition similar to its initial environment and properly remove and dispose of equipment and materials.  It should not include stacking wind turbine blades next to a pile of discarded vehicle tires.

    Total Carbon Lifecycle Model

    Daily, we hear about the need to reduce carbon output to (net) zero.  Promises are made by many that by such and such a time this metric will be met.  Caveat: usually the time period is beyond the expected tenure of those making the statements.  Often lost in the discussion is the carbon cost of manufacturing and decommissioning.

    Carbon output should include the mineral extraction process, recycling of older materials if appropriate, transportation, manufacturing, installation, operations and decommissioning.  It also must include the carbon cost of the supply chain necessary to support the asset across its lifecycle.  For example, the carbon cost of an EV is not just the vehicle’s operation but the lifecycle of the vehicle as well as the electric power generation and distribution necessary to operate the automobile.  Do not forget the carbon cost of manufacturing a battery and disposing of it at end of life.

    Scrap

    Materials are often staged for recycling.  They feed a process that results in new useful product(s) that may add new value.  This is a useful recycling process that makes a lot of sense.  However, sometimes this is not as economical as new manufacturing.  These economics lead to dumping as the low-cost-solution.  Fields of discarded materials may or may not be awaiting recycling.

    Defining Green

    Being green is not simply using renewable electricity instead of gasoline.  If the carbon footprint is no different or even worse, then the problem is not solved and may even be made greater.

    Keep in mind that coal is still a major fuel in the generation of electricity.  According to the US Energy Information Administration (EIA), in 2020 over 60% of power is generated using fossil fuels of which over 19% is from coal.  This does not include the carbon footprint of materials and products imported to the US.

    So if the carbon footprint of a wind turbine is defined as its lifecycle and if at the end result is abandonment in a field, is the green value of that product positive?  Or is it just dumping not unlike the pollution of a nation’s river systems?

    Being green is not just plugging in your car overnight.  Like most things in life, it is systemic.

    Is Your Organization’s Green Plan Systemic or Myopic?

    For More Information

    Please note, RRI does not endorse or advocate the links to any third-party materials.  They are provided for education and entertainment only.

    For more information on Cross Cultural Engagement, check out our Cross Cultural Serious Game

    We presented, Should Cross Cultural Serious Games Be Included in Your Diversity Program: Best Practices and Lessons Learned at the Online Conference, New Diversity Summit 2020 the week of September 14, 2020.  Check Out this timely event and contact the organizer for access to the presentations!!

    For more on DEI Standards, see the newly released ISO-30415.

    You can contact this author as well.

  • Heavy Metal Rocks

    Heavy Metal Rocks

    Not the rock bands of the 1960s–1980s, but the mining required to extract the heavy metals necessary for electric vehicles and other renewable energy solutions.  So, what is a heavy metal and why do we care?

    Typically, “In science, a heavy metal is a metallic element which is toxic and has a high density, specific gravity or atomic weight. However, the term means something slightly different in common usage, referring to any metal capable of causing health problems or environmental damage.”  Often these toxic elements are carcinogenic.

    For most readers this will not come as a surprise.  The heavy metals in batteries can be recycled, thus minimizing their negative impact on the environment and subsequently, humans and other life forms, i.e., the food chain.  However, smaller batteries are typically tossed into the trash.  Larger ones such as lead acid automotive batteries are usually reclaimed (for a fee to the consumer).

    From this pundit’s perspective, it is too early in the technology maturity to fully understand how millions of EV (electric vehicle) will be recycled effectively and economically.  Managing the lifecycle of these ‘elements’ from mining, use, recycling and reuse is a significant component of these renewables.  There is a cost associated with this process, both monetary and socially.

    Total Carbon Ownership

    In the business, the term TCO usually referees to the Total Cost of Ownership.  Updated, this Lifecycle metric may better reflect the Total Carbon impact of a product/solution, i.e., large scale batteries, solar panel, fossil fuels, etc.

    TCO = Carbon as a function of two major lifecycle elements; Operations and Decommissioning.

    For this purpose we define Operations (aka Use) as the lifecycle process from mineral extraction, manufacturing, deployment and maintenance.

    Decommissioning is the process of taking out of service, removal and appropriate disposal of components, including recycling.

    Follow on from our blog of November 2, 2021, where Milton Friedman detailed the complex supply chain required to manufacture a simple yellow graphite pencil, one can only imagine how complex the requirements are for a wind turbine.  Carbon neutral is not a simple problem to solve.

    Enter Structural Dynamics

    Many readers understand that Machine Learning Algorithms use the statistical multivariable method, Multiple Linear Regression–defined as, where “one variable is estimated by the use of more than one other variable.”  While this tool can be useful when assessing the impact and relationships of several independent variables, it does not necessarily help organizations to understand their TCO.

    Theoretically, every economic actor in the supply chain or the decommissioning process can calculate their carbon footprint for each​ product/step they control.  In the real world, such intangibles, i.e., safety are open to interpretation, ‘fudging’ or worse.  Moreover, we can expect large gaps or errors (inadvertent or otherwise) in carbon models that must be addressed if we are to realistically address the carbon problem.

    In the 1990s as a result of watching a number of systemic enterprise failures and/or poor performance, and wondering how this happened with such regularity the questions was raised–why?  This led this author coin the term with the subsequent book, Structural Dynamics: Foundation of Next Generation Management Science.

    Most do not understand the processes and structural changes at work on a daily basis.  Focused on near term performance metrics, they lose sight of the forest while concentrating on the trees.  The subsequent disruption caused is often rapid and economically cataclysmic.

    Structural Dynamics uses tools such as Structural Equation Modeling (SEM) to seek to identify the underlying process and structural movements.  It appears to be a useful tool to address the Total Carbon Ownership that organizations will have to address in the very near future.

    Dealing With Residuals

    Whether heavy metals or carbon, organizations must also assure ESG (Environmental, Social, and Governance) criteria are met throughout the energy lifecycle.  However, there is a cost associated with these and other organizational structures from the deployment and/or use of energy of all types.

    TCO is a decades long cost that can transcend actual corporate life, i.e., acquisition, bankruptcy, etc.  Currently, the oil and gas industry is littered with assets no one claims ownership.  Two cases follow:

    • Stranded assets are, “those investments which are made but which, at some time prior to the end of their economic life (as assumed at the investment decision point), are no longer able to generate an economic return, as a result of changes in the market and regulatory environment.”  These resources are no longer worth continued investment.
    • Abandoned assets have reached the end of life.  By one source, it is estimated that there are approximately 53,000 Gulf of Mexico offshore oil and gas well in this category.  Remediation costs range from $500k to $10 million per well–min $26.5 billion.

    It is reasonable to expect that all sources in the ‘energy basket’ will have similar end of life futures.  Green is therefore, not unique.

    “Forewarned is Forearmed”

    A Serious Assessment

    This pundit believes that scant attention has been paid to the lifecycle (economic and social) price of renewables and that the Total Carbon Ownership cost has never been calculated–certainly not published.  However, there are tools that will shed light on this going forward.

    TCO is a function of a detailed and long lifecycle, not unlike oil and gas assets that in some cases are over half a century old.  Any subsequent model of this process is by default complex, detailed and full of unknowns, or unmeasured latent variables.

    The approached this writer has developed using Structural Equation Modeling driven by Structural Dynamics seems well fitted to address this longitudinal and futuristic problem.

    For many, the so-called ‘green energy’ seems without consequences.  The history of energy suggests otherwise.  A full assessment using Structural Dynamics can reveal gaps, misunderstandings, errors and omissions.

    This model will advise management and even regulators what the true cost of an energy source is.  The approach is worthy of a serious discussion.  By the way, this model works for all sources of energy including coal and other fossil fuels as well as renewables.

    What is Your Firm’s TCO and How Can It be Lowered?

    For More Information

    Please note, RRI does not endorse or advocate the links to any third-party materials.  They are provided for education and entertainment only.

    Interested in Cross Cultural Engagement or DEI, check out our Cross Cultural Serious Game

    We presented, Should Cross Cultural Serious Games Be Included in Your Diversity Program: Best Practices and Lessons Learned at the Online Conference, New Diversity Summit 2020 the week of September 14, 2020.

    Contact the author for information on these and others subjects covered in the Critical Mass series.