CEO Shashi Menon eco engineeris a carbon advisory and consulting firm helping companies navigate a clean energy environment.
What’s your Carbon Intensity Score? With the recently signed Inflation Reduction Act (IRA), I think this will be a key issue for businesses as carbon intensity (CI) and carbon neutrality will create huge business opportunities in the very near future.
The landmark legislation will spend $369 billion on climate and energy research and development, much of it in the form of high-tech solutions to reduce carbon emissions. In addition, he has expanded clean energy tax credits and invested more than $200 billion in clean energy manufacturing, energy efficiency and electric vehicle sales.
I think the U.S. economy will be greatly impacted by the Inflation Control Act over the next decade. This is backed up by the numbers presented in the Credit Suisse report on IRAs. The report includes that the IRA’s total spending is likely to exceed his $800 billion, with so many people and businesses projected to use the tax credit.
This is where the CI score comes into play. The IRA’s proposed tax credit aligns payments with carbon reductions by measuring his CI scores for fuel and projects. This is of great value to companies ready to turn risk mitigation into opportunity.
However, all this will not happen overnight. There are tolerable pain points, aging infrastructure, and understaffed government agencies that can slow deployment. I have a lot of money on the table. And those who understand the ins and outs of the ever-evolving clean energy space and understand the language of carbon accounting and carbon markets can reap the benefits.
Do you know how to take chances?
All of us, not just business leaders, but average Americans and homeowners across the country, need a better understanding of green policies, carbon offsets, and more. It is what is known as carbon literacy. This is a necessary step to transform the financial risk of climate change adaptation or risk mitigation into a neutral or profitable scenario.
This raises the question: Where do I start?
Management models should start by recognizing the paradigm shift wrought by IRAs and incorporating some healthy habits that are important for navigating the energy transition. My experience as a consultant in this area has revealed six key things you can start doing right away.
1. Stay informed. With so many reports and descriptions of carbon (often incorrectly), a curated list is available, along with solid advice, interpretations and predictive models to help you make informed decisions on time. You will need a reliable source of information.
2. Measure emissions. Lifecycle analysis (LCA), which measures emissions from operations, supply chains, post-consumer waste, etc., is important for the energy transition because you can’t reduce what you don’t measure. Appropriate methods should be adopted to measure emissions, compare them to baselines, and report in a way that is meaningful to business, regulators, and customers.
3. Engage in policy. The clean energy market is a rapidly evolving field, but regulatory requirements are often unclear. Active participation in the regulatory process allows us to better understand regulatory risks and better determine project feasibility. Better laws and standards are usually also enforced as a result.
4. Plan for the future. Create a business plan for navigating the energy transition, including seizing available market opportunities. Execution of these plans and projects is complex and often requires a sound foundation in regulation, energy markets, technology, carbon accounting and project management.
5. Measure and report. Measurement, verification and reporting must be transparent to bring trust to the market. Identify how and why the data represents risk, the data that supports the shift to risk aversion, and who is responsible for accurately monitoring this data.
6. Verify your claim. The sixth and final good practice is to ensure third-party verification of all carbon reduction claims. We live in a fragmented and largely unregulated emissions reduction market, and organizations that adopt clear and transparent measurement, verification and reporting standards stand out from the crowd.
By adopting these practices, management boards and management can help protect the future financial future of the assets under their control as the pendulum swings from uncontrolled energy consumption to controlled sustainable development. I can. Much like when Netflix started mailing DVDs or Apple started selling downloadable songs, measuring carbon intensity and getting tax credits may seem strange and new. There are many generations today who only know streaming entertainment. Similarly, I think CI scores will be everywhere in the near future and will be part of basic labeling.
So what’s your CI score? If you don’t know, maybe it’s time to find out.
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