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CHAPTER 12
ENVIRONMENTAL MANAGEMENT PROGRAMS
In the previous chapter we looked at the shift from environmental management as a separate activity undertaken by one department to its integration into the activities of all departments. Top management initiates this integration and makes it part of corporate policy, strategy, and organization. In this section we look more closely at how environmental management is integrated into the activities of a company through environmental programs. An environmental program is plan for achieving specific environmental objectives that details all the steps that need to be taken. Environmental programs can be undertaken on a company-wide basis to achieve an overall objective (e.g. energy reduction) or specific departments can undertake programs that address their direct environmental impacts and the impacts that can be reduced by using their expertise. The departmental programs require more direct responsibility and initiatives compared to company-wide programs that begin with top management or environmental management initiatives. Both types of programs, however, integrate the activities of different departments and the activities of the company with other companies upstream and downstream.
There are many different types of both the company-wide and departmental programs that can be undertaken (as listed in table 12.i below). There is a great deal of overlap between the two and even in some of the company-wide programs a department or a few departments may take the lead. For example, human resources will play a large role in training and communication or good housekeeping. Production and site and facilities will be highly involved in energy reduction. EHS will probably play an advisory role in most programs. This overlap between company-wide programs and department programs reveals the need for integration among departments .We will look at examples of each of both company-wide and department specific programs. To begin with, we consider the ways that these programs can achieve more immediate and practical results— the ‘low hanging fruit’ that can bring a company both low cost environmental improvements and cost reductions. Later we will look at how a company can build on those improvements by using them as a base for design for environment and industrial ecology. To begin, lets look at the procedures that are common to most programs.
Table 12.i: Programs Types
COMPANY-WIDE DEPARTMENTAL Awareness & Training Human Resources Communication & Staff Suggestion
Accounting
Energy reduction Production Review & Auditing Purchasing Reporting and publicity Marketing Compliance and monitoring
Environmental, Health and Safety Good housekeeping Site and Facilities Waste management Research and Development
12.1 PROCEDURES
The procedures common to most environmental programs follow the requirements of the plan, do, check, act, cycle. The programs follow this system because it promotes effective implementation of the program and constant improvement of environmental performance, and also because these programs are often expected to be incorporated into environmental management systems. The points below refer to the planning of the program. These points, of course, must be put into implementation and monitored. The information that comes out of the monitoring is used to evaluate the program and to make new plans. In company wide programs the environmental management team and green committee usually does this planning. These committees include representatives with direct responsibility over a particular activity and also people who are indirectly involved. The green management team will also be responsible for determining how much the program will cost. In department-based programs, the department’s people will form the core of the committee and ask for the participation of people from other activities.
o Measure impacts, determine compliance needs, and set improvement targets o Determine changes to awareness, practices, equipment, and products o Allocate resources (technology, people, finance) o Designate responsibility at each function and level, and provide training and manuals o Establish monitoring and recording system
Figure 12.ii Example of Planning of Monitoring and Recording for an Environmental Program (see EPD website for more)
12.2 GOOD HOUSEKEEPING: THE HOTEL NIKKO
Substantial environmental performance improvements can be achieved in any company even with low levels of investment and change in practices. These programs are referred to as capturing ‘low hanging fruit’ because picking fruit hanging on the bottom of a tree consumes much less time and money than picking from the top of a tree. Capturing low hanging fruit requires adopting the principles of reduce, reuse, and recycle to existing practices such as paper use, heating, cooling, illumination, water use, recycling materials and so on. Simple things can make a big difference. Every piece of paper that is used on both sides can save another piece of paper—and therefore
reducing consumption by half. Every tap that is turned off promptly when not in use can reduce wastage by more than half. Lights that are turned off when nobody is around can also make great savings in energy. Changing these practices does require concerted effort as changing a culture of waste requires training and motivating staff. Human resources and green management committees play leading roles in promoting these changes because they affect both supporting and production activities. Good housekeeping practices must be tailored for the business being affected, as an office, a restaurant, a factory, all have different environmental aspects that need to be upgraded in their own way. A hotel, however, provides a useful example because it incorporates many features of many businesses. In our example, Hong Kong’s Hotel Nikko reduced its energy and water costs about 10% through simple changes in daily practices. Of course these energy and water cost reductions also reduced the environmental impacts of the company. These reductions were achieved with no major capital investments or the use of specialist expertise.
For the Hotel Nikko: “Good housekeeping means reducing wastage of water and energy when they are not required, or where they are over supplied. For example, lights and air conditioning being switched off when a room is not in use; turning on water taps in kitchens only when needed; turning off equipment such as coffee machines when not in use.” Besides savings in energy and water, using appropriate levels of supplies such as detergents and food or recycling and reusing soap, linen and other materials captured savings and reduced environmental impacts.
Common sense can identify many of the environmental issues involved in good housekeeping, and if they are measured on a quantitative basis, the true environmental and monetary costs of these issues can be realized and the search for alternative practices promoted. For example, the electricity and water used by a hotel are measured as they are purchased. The amount of detergent, toilet paper or bath towels used can be measured. All these can then be compared to the actual amount used by a guest (e.g. towels, soap), needed for the purpose (e.g. lights on in vacant rooms, running taps), or appropriate to the specifications of the equipment (e.g. air conditioning temperature, or laundry detergent amount). A record of these purchases, their use (correct and incorrect) can be kept and used to improve the program.
The most important concern in achieving good housekeeping is changing the practices of frontline staff and fostering their motivation because they are the ones responsible for operating and maintaining the guest rooms, the kitchens and dining rooms, the laundry and other areas. Top management has to encourage and train each employee to ensure that will take part in environmental improvement. A simple checklist can be given to each employee to help ensure he or she carries out their new responsibilities (examples below).
Kitchens: o Turn off or turn down kitchen equipment, in particular gas cookers, when not in use; o Minimize the opening of doors of cold store and freezers; o Turn on a water tap only when needed and never let water run continuously; o Adjust water flow rate and water temperature to suit different kitchen use and for cleaning;
etc. However, most businesses are now service businesses, and the example shows that conserving energy or materials through changing engineering practices is not only a task for manufacturing companies, but also a task for all companies. Improving the environmental performance of service production is a priority because the capital intensity of services is actually higher than that of manufacturing production. In other words, service activities like hotels and universities actually use more materials and energy per person employed than do manufacturing industries—each person use a whole lot of equipment to get their job done.
Auditing Auditing obtains the information needed to create a program for improvement. The audit establishes what types of energy are being used and determines priorities for further investigation and actions to be taken for improvement. It can also be used to justify investments in improvements and to raise staff awareness. The audit requires four steps: data collection, data analysis, data presentation, and establishing priorities.
Data Collection: Most data is collected from invoices for electricity, gas, and diesel oil. It should include the information the total amount (in measurement units) of energy, the cost per unit and the total cost. Data can also be gathered from meters connected to particular equipment.
Data Analysis: The purpose of the data analysis is to allow comparison of energy use by months and by different types (i.e. electricity, diesel, gas). The energy used by each type is converted to a common measurement unit (gigajoules) and totaled by month and year.
Data Presentation: Chart or table the amount of different energy uses and costs by: total, by month, and against occupancy rates (or other use rates).
Establishing Priorities: At the hotel Nikko (and in hotels in Hong Kong in general), electricity use is greater than gas or diesel but its greater cost is particularly noteworthy. Electricity is a priority for those reasons. It is also a priority because the energy efficiency of electricity as it is transformed from coal, transmitted, and used in lighting, etc. is a very low 3% and thus imposes a greater environmental burden. The audit also revealed that energy costs varied most with the changing seasons rather than occupancy rates.
Table 12.ii Energy Use at the Hotel Nikko Energy use in Hotel Energy cost in Hotel Electricity 51% 73% Diesel 38% 14% Town Gas 11% 13%
A second detailed audit of electricity uses revealed the greatest use to be heating, air conditioning, and ventilation (HVAC). This area was prioritized by directing attention to the chiller equipment that cools the air, to control of the air within the building (the airside), and the building envelope (walls, curtains, doors, etc) that controls heat loss and gain from the building.
Table 12.iii Electricity Consumption in Different Services at the Hotel Nikko
Heating, Air Conditioning and Ventilation 58.2% Lighting 23.4% Kitchen Equipment 6.6% Lifts and Escalators 4.4% Miscellaneous equipment 7.4%
Improvements Improvements include changes to practices, better maintenance and tuning, addition of new energy saving devices, automated controllers, and monitoring and sensing equipment. Importantly, the monitoring and sensing equipment allows for constant and objective monitoring of the system and improved data collection and analysis. Some of the improvements undertaken by the Hotel Nikko are listed below.
Benefits of Electricity Reduction
o 6.8% savings in electricity consumption and cost when occupancy rate increased by 21.5%. o Improved indoor comfort: e.g. the restaurant is no longer too cold (up from 18 to 22 degrees C). o Sufficient fresh air to maintain good indoor air quality for both guests and staff. o Improved working environment in laundry, underground car park, office and kitchen. o Better distribution of cooled air within the hotel building (more comfortable). o Improved building air balance: positive building internal pressure maintained (less outside air pollution drawn inside). o More accurate control and energy efficient operation for building services systems: chiller plant, air handling units (improved control and efficiency). o Arousing staff awareness through energy and water conservation, and raising morale through improving the indoor environment.
Examples of Energy Savings
Chillers: equipment that chills the air accounts for half of the energy used for air conditioning.
o Ensure that all chillers are in good working order through regular maintenance, including annual machine overhaul and cleaning of heat exchange surfaces; o Check for any leakage of refrigerant and water (chillers and pumps); o Check the accuracy of built-in instruments and take corrective measures if there are problems; o Record all operating parameters and ensure that plant operators understand their interpretation in terms of safe and efficient operation for the plant; o Ensure that chilled water flow rate through each chiller is as specified by the chiller manufacturer, because lower water flow rate could result in a poorer operating efficiency. For example, improper setting of butterfly valve in the chilled water exit may cause the problem of lowering efficiency; o A water flow meter is required to measure water flow rate, if in case water flow meter is not present or is malfunctioning, flow rate can be estimated using water pump pressure head and characteristic curves of the pump;
with heat generating machine (a coffee shop with coffee makers) or unfavorable orientation (east, north-west) are more prone to such problems. Installing additional cooling apparatus might be necessary to satisfy local cooling requirements; o When permitted by local weather conditions (air temperature is sufficiently low) and by duct system design (with appropriate filtration), use as much outdoor air as possible to maximize cooling effect; o Work in conjunction with other departments, consider to close an entire guest floor in low occupancy, thus the air conditioning system as well as other energy consuming systems in that floor can also be shut off.
Building Envelope
o Curtain wall structure is popular in many local hotels, which allows more heat gain in summer, in particular the solar heat penetration, resulting in large cooling loads. In case of unfavorable orientation, large solar heat gains may call for earlier and/or late shut down of additional chillers. Applying anti-solar gain reflective film in glass may be useful in reducing solar heat gain; o Use of internal venetian blinds can also have a significant effect on reducing solar gain through glazing; o Eliminate all possible paths of uncontrolled infiltration, including gaps of external doors and windows, cracks and unnecessary openings on external wall. Dampers for a fresh air intake should be in position and functioning.
Lighting Systems
o When replacing light fittings, use high energy efficiency fluorescent lamps/tubes wherever possible as they require no more than one-third of electricity used by incandescent lamps to achieve the same illumination level; o Reduce excess wattage to ensure that illumination level is no higher than necessary for guest visual comfort. Lights in public areas such as restaurants, coffee shop should have flexible switching arrangement so that part of the lighting system can be turned off if there is sufficient daylight available near windows area or if there are no people using the area; o Use of electronic ballasts for fluorescent fittings should be preferred because not only are they more energy efficient than the common magnetic type but also they do not generate heat which contributes to space cooling load; o Scheduled cleaning for all light fittings in a hotel on a regular basis; o Key-tag room-control, for automating guest room lighting and power and to ensure energy is not wasted in guest floors when they are not occupied.
Lifts and Escalators
o Ensure proper maintenance by lift contractors and control lifts and escalators according to demand
Reference: the majority of the material above has been taken from the following reference available as Hotels.pdf on course website.
Building Services Engineering Department. Good Practice Guide to Energy Conservation for Hotels in Hong Kong. Hong Kong Polytechnic University
12.4 PRODUCTION
Production is the actual making of the product that a firm sells to its customers to provide income. Other activities such as finance, accounting, purchasing, R&D, and even top management may be the strengths of a company, their employees may get paid more, and their cost of operations may even be higher, but their role is to support the production of a product. Those products may be some sort of good such as a piano, car or cell phone, or they may be a service such as a hotel room, software services, a taxi or airplane ride, insurance or even a university education. Our previous example of the Hotel Nikko’s good housekeeping and energy conservation programs explained some aspects of improving the environmental performance of one type of service production. Its lessons could be applied generally to many other service companies, but any other—airlines, bus companies, or retailers—would have more specific problems to deal with. Yet, although improving the environmental performance of services is a priority because of their high capital intensity, much of the service impact is traced back to how capital equipment is made. It is also, therefore, necessary to reduce the environmental impacts of the actual production of equipment and facilities. Thus, in this section we are going to focus on reducing environmental impacts in production, but with more emphasis on applications to manufacturing processes.
The production process can be modeled quite simply (figure 12.iiia) as one of inputs, a process transforming them, and of outputs. The inputs are of course comprised of various raw materials, which depending on the product may include anything from wood to iron to sand/silicon. Raw materials will include the energy and water needed to transform a product. Already manufactured parts and components are also likely to be included into the inputs. The processes that could be applied to these raw materials are innumerable as they make up the totality of the material goods and services that we use. The output of most interest to the company is, of course its product. The other outputs are emissions to the environment through gas and smoke, through sewage, by waste to landfills, and as noise and heat. Other outputs may be used as byproducts or recycled. For simplicity’s sake the diagram below only indicates one process when in reality there will be a chain of processes leading directly to the product output, and there are also chains of complementary processes leading into each stage of main production chain. Of course there will be inputs to each stage and outputs in the form of emissions to the environment along with the production of each sub-product. Thus similar to the lifecycle analysis we looked at in chapter the total impact of a process not only those of the immediate process of concern (1a), but also involves downstream impacts, complementary process impacts, and refurbishment, recycling and dispersal issues (figure 12.iiib). Downstream impacts include both the direct impacts (1a) of resource exploitation and also indirect impacts (1b) from the processes of extraction and the production of capital equipment. Complementary impacts (2b) include those generated by the production and maintenance of equipment involved in the process and also preparation of materials and parts before they enter the process (e.g. the cleaning of metals or electronic parts). Finally, all process equipment and processing materials have to be refurbished (3), recycled or disposed of and associated impacts must be taken care of.
included in parts and components, poor maintenance, lack of monitoring, types of processes and complementary processes used, lack of treatment and so on.
Propose Solutions: Using alternative raw materials, changing processes, developing byproducts, recycling, better maintenance and monitoring, rigorous control of quantities used, emission treatment, etc. can reduce environmental impacts.
Production, however, does not exist as an independent or self-sufficient entity in a company. It is strongly linked to all the other activities of the firm and this linkage is reinforced by the demand for better environmental performance. Table 12.iv below draws the relationships between other departments and production.
Table 12.iv Relationships of Departments to Environmental Improvements in Production
Department Relationship To Production Environmental Improvements
Human Resources Raise awareness & training; assign responsibilities & rewards. Accounting Identify true financial costs of each material, sub-process, & emission, compliance activity to its source within the overall production system and company cost structure Purchasing Determine environmentally friendly suppliers, material, parts and components Marketing Relate market and stakeholder demands for environmental performance and publicize successes Environmental, Health and Safety
Inform about and enforce regulatory demands; educate on EHS issues Site and Facilities Reduce emissions from site, find complementary means to reduce energy and raw materials usage Research and Development Develop more eco-efficient process and products
Changing Production at Elec & Eltek
Elec & Eltek is a Hong Kong company principally engaged in the manufacture and distribution of high-density double-sided and multi-layered printed circuit boards ("PCBs"). It has seventeen offices worldwide, thirteen plants across Southeast Asia - one in Hong Kong, two in Thailand and ten in mainland China - and a workforce of about 6,500 employees. Its PCB manufacturing process consumes large amounts of materials, chemicals, water and energy. Processes include board cutting, surface treatment, imaging, dry film developing and stripping, etching, pressing, drilling, electroplating, soldermask developing, solder coating and final surface coating. In these processes Elec & Eltek identified 500 environmental aspects of which they considered 200 significant. These problems include wastewater, spent acids and alkali, metal sludge, spent lubricant, acidic gases, ozone depleting substances, etc. Some of the improvements to these processes are listed below.
Material Conservation o Replaced tin-lead plating with pure tin plating o Phased out ammonium-based etchant for sodium-based etchant (despite cost) o Achieved 95% material utilization rate in board layout o Recycled 175 tons of material (1997) including aluminum sheets, solder bars, solder chips, gold solution, drills, copper chips, gold fingers, gold board, nickel squares, laminate stripe, stainless steel plate and prepreg. o Incorporate environmental criteria into material selection process
Water Conservation o Retrofitted various rinsing methods and equipment and achieved 66% reduction in selected processes o Most processes quipped with flow restrictor and conductivity control device for optimal flow rate o Water recycling system installed in plant
Electricity Conservation o Separate meters installed for all appliances and studies to reduce consumption o Power saving equipment installed
Waste Reduction o Consumption of acids and mild etchants was reduced by 420m^3.
Reduction of Ozone Depleting Substances o 1,1,1-trichloroethane solvent eliminated o Halon fire extinguishers eliminated o Seven conventional manufacturing chillers replaced by non-CFC chillers o Feasibility study on removing all CFC refrigerants
Waste Water Treatment o Commissioned HK$ 7.5 millions, 2,900m^3 /day rinse water treatment plant to reduce dissolved copper content to 0.6 ppm (regulations demand 1.0 ppm)
Chemical Waste Disposal o Licensed plant deals with 20m^3 /day in chemical waste, 2,500m^3 /yr treated off site
Air Emissions o Scrubbers installed at source to remove ammonia, hydrogen chloride, nitrogen dioxide, odour and CFC refrigerant to undetectable levels
Noise Noise shields placed on compressors o Occupational noise level monitored; no external complaints
Compliance o From 2,500 data submissions to EPD, only 7 cases of non-compliance.
Elec & Eltek did not achieve these production improvements simply by making equipment investments, but rather developed human resources programs and worked
Byproduct sales EMS development
The business could, thus, be changed to reduce or eliminate environmental problems and costs to achieve both benefits for the environment, human health, and the competitive advantage of the business.
Ideally TCA assigns not only the internal or private costs generated by a companies activities, but also the social costs or externalities to a product or process. Some of these costs, such as those for compliance with regulations, are easier to measure. Others such as the cost to company image by its environmental damage or future liabilities are harder to quantify, but they are becoming increasingly necessary to identify and take into consideration.
TCA is thus an important program for a company to undertake because it produces objective cost information that justifies environmental performance improvements on the basis of improving competitive performance. As a supporting activity managerial accounting performs an integrating role in a company because it investigates the various activities of the company to determine how they can work together more smoothly. TCA accounting integrates the activities of the firm further because accounting staff need to seek more information from the departments of logistics, operations, marketing, R&D and so on. In addition to the accounting staff, a cross-disciplinary team would probably have to be assembled in a manner similar to the green management committee. Monitoring, recording and information analysis would be the primary focus of TCA. It could then be used to support other programs in their more concrete plan steps to improve environmental performance, by supplying the true costs of their environmental impacts. TCA can be done at the level of individual process, product or product line; a system such as lighting or packaging; a facility or department; regionally; or the whole company or subsidiary.
TCA has 3 key elements:
- Cost identification
- Cost allocation
- Expanded time horizon
- Identifying Costs
TCA attempts to reveal how activities that hurt the environment also have financial costs. These costs are often hidden from management because they don’t know how improvements for environmental performance can also have significant impacts on their conventional costs such as materials, labor, marketing and R&D. Conventional accounting systems also hide environmental costs in factory or general administration overhead. The environmental costs that can be identified are explained below with examples.
Potentially Hidden Costs
a) Conventional costs: These costs are not usually considered environmental, but by using less of them, not only can environmental degradation be lessened, but financial costs to the company reduced. Examples: capital equipment, materials, labor, supplies, utilities, structures, salvage value.
b) Upfront costs: Costs that are incurred before a facility or a process is set up, or before a product is launched can be forgotten about when managers concentrate on operating costs. Examples: Site studies, site preparation, permitting, R&D, engineering and procurement, installation.
c) Back-end costs: the reverse of upfront costs, back-end costs are incurred after a facility or a process closed down, or a product discontinued. These cost tend to be forgotten about when managers concentrate on operating costs. Examples: closure/decommissioning, disposal of inventory, post-closure care, site survey.
d) Regulatory costs: Regulatory costs are usually treated as overheard and do not receive the attention of managers who are focused on the costs of operating their facility or process. Examples: Notification, reporting, monitoring/testing, studies/modeling, remediation, recordkeeping, plans, training, inspections, manifesting, labeling, preparedness, protective equipment, medical surveillance, environmental insurance, financial assurance, pollution control, spill response, storm water management, waste management, taxes/fees.
e) Voluntary costs (beyond compliance): Voluntary costs are also usually treated as overhead of the whole company and managers of different activities are not responsible for them. Examples: community relations/outreach, monitoring/testing, training, audits, qualifying suppliers, reports (e.g. annual environmental reports), insurance, planning, feasibility studies, remediation, recycling, environmental studies, R&D, habitat and wetland protection, landscaping, other environmental projects, financial support to environmental groups and/or researchers.
Contingent Costs Contingent costs are costs that may be incurred at some time in the future. Companies may be liable to new government regulations, pollution damage to property and people’s health, and to the legal costs of settling these issues. Examples: Future compliance costs, penalties/fines, response to future releases, remediation, property damage, personal injury damage, legal expenses, natural resource damages, economic loss damages.
Image and Relationship Costs Image and relationship costs are less tangible and more difficult to quantify than most other environmental costs but the financial damage that can be done to a company through a public relations problem is very real all the same. Examples: Pollution or other activity that damages the corporate image, relationships with customers, relationships with investors, relationships with insurers, relationship
Figure 12.v Revised Cost Accounting System
Revealing costs through the revised cost allocation system allows a business to accurately estimate production costs for different product lines and processes. Companies could begin by allocating the most obvious costs to a product or process before moving on to contingencies and corporate image. It is important to recognize that the environmental costs of any product will be multiple, including costs from its raw material use, utility use, waste produced, packaging, record keeping, environmental expertise, legal expenses and so on. The realization of all these costs can make a company reconsider the profitability of a product or process. Proper allocation also makes the managers responsible for specific products or processes more accountable and gives them the incentive to come up with creative ways of solving environmental problems. Table 12.vi below gives examples of costs identified by some
companies. The figure 12.vi that follows shows how the Amoco Oil Company broke these costs down at one of its refineries.
Table 12.vi Environmental Costs of Case Study Companies
