Australia’s inaugural cap-and-trade legislation is causing the nation’s political climate to heat up so much that it has now become the deciding factor between whether or not the country will see an early election this year.

The country’s opposition leader, Malcolm Turnbull, has made it clear that his coalition will vote against the nation’s first-ever climate change legislation next month, unless the bill is amended from its current form. Known as the Carbon Reduction Pollution Scheme (CRPS), the bill was originally presented to the upper house Senate in June, 2009. The bill is slated for a second vote on August 13^th and according to Australia’s laws, if the bill does not pass on it’s second time through, the Australian Labor government will have reason to call for a snap election.

Originally proposed by Prime Minister Kevin Rudd’s Labor government, the bill requires an extra seven votes to pass through the upper house, which is controlled by opposition parties. It was hoped that Rudd would be able to pass the legislation through the Senate before the American Clean Energy and Security Act, and before the UN climate talks in Copenhagen. Turnbull has offered the support of his opposition coalition if the bill is amended to provide more economic support to power generators who leverage coal as a fuel source to generate roughly 80% of the country’s electricity. Additionally, Turnbull is seeking to exclude the agricultural sector from the trading scheme. Those who oppose the amendments proposed by Turnbull argue that if accepted, the bill will do little to affect the country’s overall greenhouse gas emissions.

The legislation contains 11 bills that have become highly controversial in the country’s political arena as politicians and industry leaders debate the impacts that the laws may have on the economic health of the nation. As it now stands, the bill will regulate 1,000 of Australia’s largest companies and will price carbon initially at $5 (USD) per ton, giving businesses a financial incentive to reduce their emissions over time. Opponents of the bill claim that the economic impacts will be too great and that the nation’s industries won’t be able to compete with foreign nations who have either have less stringent climate change laws or, none at all.

Although the opposition is largely against the proposed cap and trade scheme, they have a vested interest in passing the bill because if they don’t, they are fairly certain that Rudd will call for the early election which polls project he can easily win. Instead, many opposition leaders are interested in passing the bill now and holding out for the previously scheduled election in late 2010, when they will have a better shot at winning.

Despite Turnbull’s admonitions that he controls the votes of the opposition, the Labor party only needs seven more votes to pass the bill. Unfortunately, what it might come down to is that Australia’s political leaders may vote on their nation’s first ever carbon trading scheme not based on the scientific and economic merits of the legislation but more so, out of their personal interests in political survival.

Earlier this week, a study published in the Proceedings of the National Academy of Sciences confirmed that refrigerant chemicals known as “F-gases” pose a greater threat to global climate change than was previously thought. The paper, which was authored by a team of scientists from NOAA, EPA, Dupont and the Netherlands Environmental Assessment Agency, estimates that the growth of F-gas emissions due to increased cooling needs represents a grave enough threat that it may undo nearly half of the efforts to stabilize greenhouse gas emissions as a means to combat global climate change.

Found in everyday products such as refrigerators, insulation foams and air conditioning units (including units in homes, building and cars), fluorocarbons were designed by chemical engineers to trap heat in modern cooling appliances. In this light, hydrofluorocarbons (HFC) are the quintessential greenhouse gases. The intention behind the design of HFCs was to combat the impact of cooling chemicals such as Freon on the depletion of the ozone layer, and they were developed before the impact of human-induced climate change was widely understood.

The environmental impact of F-gases
F-gases are roughly 20,000 times more potent in contributing to global warming than carbon dioxide, and the IPCC has determined that the accumulation of these gases in our atmosphere was responsible for roughly 17% of human-caused global warming in 2005. The NAS study stipulates that the usage of HFCs is on the rise with increased consumption in developing nations. Specifically, the NAS study projects that these chemicals could be heating the atmosphere with an impact equivalent to that of seven or eight billon tons of carbon dioxide.

The market opportunities
So that’s the bad news. The good news is that the recent findings open new opportunities for businesses to emerge with innovative product alternatives and new service offerings such as retrofitting of existing equipment, appropriate disposal services and consultation for finding alternative product options.

One such example is an HFC-free refrigerant technology known as Greenfreeze, which was developed by Greenpeace in 1992. Companies such as Whirlpool, Samsung and Electrolux now have roughly 300 million HFC-free refrigeration units being used worldwide. This number of units is estimated to have removed 43,000 pounds of fluorocarbons from our atmosphere, which is equivalent to the pollution contribution of 10 million automobiles. However, due to concerns over the flammability of Greenfreeze’s hydrocarbon system, the EPA has not certified the technology for use in the United States.

Nonetheless, the U.S. market for this type of technology is quickly emerging. Last year, Greenpeace came to an agreement with the EPA that allowed them to test 2,000 Greenfreeze freezers in Ben & Jerry’s retail stores in Boston, Washington D.C. and Vermont. In October of 2008, General Electric petitioned the EPA for approval to sell its new Monogram line of refrigerators, which use isobutane as the refrigerant and hopes to launch the new line to the United States in 2010. Allowing for product alternatives to enter the market directly combats the impact that increased emissions of HFCs may have on global climate change.

Support for substituting harmful fluorinated gases reaches much farther than just Ben & Jerry’s, Greenpeace and GE. Refrigerants Naturally is a corporate initiative to reduce the use of F-gasses such as CFCs, HCFCs and HFCs. Its sponsors include IKEA, McDonalds’s, Coca-Cola and the United Nations Environmental Programme. The European Union also currently has plans to phase out HFCs in new automotive air conditioning systems in the coming years. All these signs indicate that there is strong international support to curtail the impact the f-gases will ultimately have on heating the Earth’s atmosphere.

The opportunities for policy development
In addition to federal approval for product alternatives, it is also critical that we adopt policies to regulate the emissions of these harmful chemicals. Existing treaties such as the Montreal Protocol represent opportunities for national governments to limit the emissions of what is a significant and now a documented threat to the health of our planet. Whether or not regulation of HFCs will make it into the American Clean Energy and Security Act and the upcoming climate negotiations in Copenhagen remains to be seen.

For years, Patagonia has established itself as one of the strongest leaders of sustainability within the business community. Although it’s a well-deserved reputation, there are a number of innovative strategies behind why Patagonia’s industry leading reputation is so widespread. From their product catalogs, which serve as environmental education materials to their product labeling strategy that touts organic and reused materials, Patagonia clearly knows the value in communicating their message through innovative and effective channels.

The Tin Shed, Patagonia’s latest sustainability communication tool is no exception. The Tin Shed is an interactive web application that combines the stories and dispatches of Patagonia’s sustainability ambassadors from around the world. The “tin shed” is a reference to Patagonia’s origins which was an old shed that Yvon Chouinard began forging his pitons in. Today, Patagonia’s virtual tin shed serves as the platform from which the company integrates the breadth and depth of their environmental and human sustainability initiatives.

The Tin Shed provides site visitors with easy access to exploring the wide variety of Patagonia’s environmental efforts ranging from community relief in regions affected by natural disasters and political struggle to the journeys of surf mavericks fueled by waste vegetable oil. Additional highlights include Patagonia’s work to establish wildlife corridors for threatened species as well as their advocacy for the protection of endangered marine mammals. When it comes to providing access to a company’s philanthropic work and building a passionate and loyal customer base around their values, we can all take a page from Patagonia’s sustainability playbook.

Patagonia has built an outstanding and justified reputation founded on the company’s guiding principles that inform their business practices. Patagonia has taken the core values of their mission and has applied them to product design and manufacturing, employee programs as well as customer service. Additionally, Patagonia demonstrates their environmental and social commitment through a high impact outreach effort that supports an elaborate network of company ambassadors.

Patagonia’s history is rooted in the 1960’s California counterculture that embraced environmentalism and today, the company has been able to retain these core values while also maintaining a dedication to running a profitable company. At Patagonia, there’s no question whether or not the company is about affecting social change or making profit; it’s clear that company is about both. Fortunately for Chouinard, the two go hand in hand. The full story of Patagonia and Chouinard’s approach to business management are detailed in Chouinard’s biographical book, “Let My People Go Surfing” which has become a cult favorite among aspiring and established sustainable business leaders.

Patagonia has an impressive list of environmental and social sustainability programs. After reviewing the list, I’m not sure what’s most impressive; the breadth of their activities, their ability to adhere to a strong environmental commitment while maintaining profits or, their ability to communicate and leverage the company values towards growing and ensuring a loyal customer base. The question I am left is, “Is Patagonia’s success founded in their ability to connect with an audience that shares their values or, is it found in their ability to shape and inform the values and interests of their expanding customer base through their innovative approaches to product marketing?”

A full listing of Patagonia’s sustainability programs can be found here.

Earlier this week, Volvo introduced a new model that integrates a lug-in lithium battery and a diesel engine, which Volvo plans to make available by 2012. When compared to Volvo’s earlier plan to have a hybrid vehicle available in 2012, the new plug-in model represents a more aggressive move on Volvo’s behalf.

Notably, this move could position Volvo as the world’s first provider of a plug-in diesel model. Although the technical specifications are a work in progress, the company says that the new plug-in will emit less than 50 grams of carbon dioxide per kilometer. When compared to the average emissions rate of roughly 90 g/km found among most European subcompacts, Volvo’s 2012 plug-in is a big leap in automotive efficiency.

Other manufacturers have touted plans for upcoming hybrid vehicles however; none have presented plans for a plug-in component to their diesel engine models. The usage of a lithium-ion battery will likely drive up the costs of Volvo’s plug-in model. Chances are that in order for this model to be a cost-effective option for consumers, a tax incentive for low-emissions vehicles will be required. With goals of offering a product that allows drivers to cover longer distances with a manageable recharge time (5 hours), Volvo believe the new model is a response to market needs.

In order to deliver the new technology, Volvo has partnered with Vattenfall, a Swedish electric utility company. The partnership has resulted in the development of an automotive battery that will provide drivers with the ability to run on battery power for up to 50 kilometers. The structure of the partnership is such that Volvo Car Corporation (a subsidiary of Ford) will manufacture the vehicles and Vattenfall will develop the charging systems that supply the cars with the necessary electricity. Touting at-home fill ups and reduced fuel costs, and reduced environmental impacts, Volvo believes that the new plug-in model is a purchase option that the market is eager for.

In addition to finalizing the technical specifications of the lithium-ion battery technology, Volvo is also finalizing the safety specifications of the vehicle in order to comply with current European safety regulations.

The company’s CEO, Stephan Odell has stated that, “I would go so far as to say that the plug-in electrical hybrid we will launch in 2012 will be a true dream car. With the innovative solution we will offer, the car owner will be able to drive a thoroughly enjoyable car packed with Volvo’s renowned high safety and genuine driving pleasure.”

A major new player in the energy management software arena named, Hara began selling their software-as-a-service offering on Monday. With a $6 million investment from Kleiner Perkins Caufield & Byers, Hara has launched with a promise to enable customers to reduce the cost of doing business through monitoring and managing their consumption of natural resources.

Started by alumni of SAP and Oracle, Hara launched with a number of municipal and corporate customers already on board, including Coca Cola Co. and the city of Palo Alto. Whether it’s through a cap-and-trade regime or a direct tax, if congress passes legislation to put a price on greenhouse gas emissions, businesses will need this exact type of enterprise software for managing their carbon emissions.

Based out of Menlo Park, California, Hara’s software calculates how much energy and water a company is consuming as well as how much carbon and other waste are being generated. The customer is able to realize financial savings through acting upon the forecasting data that Hara’s software provides. Tracking progress towards goals, creating an audit trail and developing an environmental record are added benefits of Hara’s new energy management software.

The city of Palo Alto has been using all four available modules in Hara’s software and now expects to save roughly $600,000 per year through reductions in gas and electricity consumption. Although software pricing is not available at this time, the city of Palo Alto has indicated that they paid $24,000 for their annual subscription.

Through a pilot project, Coca-Cola has been working with Hara to leverage their software tools for tracking the greenhouse gas emissions for 1,000 facilities throughout the world. It is believed that the use of Hara’s software influenced Coca-Cola’s cost-driven decision to replace crude oil with natural gas at it’s facilities in South Africa. The Hara software has also been supporting Coca-Cola’s U.S. based work to revamp their lighting systems.

Although Hara has launched with an impressive offering, this is an already competitive space that is quickly gaining traction. Hara has plenty of competitors in this space including, ClearStandards, Adura Technologies and Enviance (there’s many others). Additionally, Cisco, IBM and SAP have all indicated plans to support enterprise solutions for energy and resource consumption accounting.

Despite the competition, a demanding market is growing. The likely passage of legislation, which places a price on carbon emissions, indicates that a company like Hara has an exciting future that we should all pay close attention to in the coming months.

Earlier this year, Google announced the development of a gadget called Google PowerMeter which delivers personal electricity usage data to consumers on their individual computers. This effort took a big step forward on Wednesday of this week when Google announced a list of eight initial electric utilities that will serve as partners.

United by a common interest in connecting their customers with personal consumption data, the diverse list of partners includes utilities from India, Canada and the United States. The partnering utilities range in size from small providers to ones with millions of customers.

The full list of partnering utilities is as follows:
* San Diego Gas & Electric® (California)
* TXU Energy (Texas)
* JEA (Florida)
* Reliance Energy (India)
* Wisconsin Public Service Corporation (Wisconsin)
* White River Valley Electric Cooperative (Missouri)
* Toronto Hydro–Electric System Limited (Canada)
* Glasgow EPB (Kentucky)

One of the larger utilities, San Diego Gas & Electric (SDG&E) has been partnering with Google throughout the past year and now has plans to install over 200,000 smart meters this year. By 2011, SDG&E estimates that they will have their entire territory of 1.4 million customers equipped with smart meters. According to a New York Times post, San Diego Gas & Electric has indicated that their smart meter customers should be able to access their energy usage data via the Google PowerMeter before the end of this year.

Google is not the only tech company working hard to bring energy data to customers via the Internet. As a smart energy grid evolves, so will energy management applications the applications that deliver usage data into the hands of the customers. By doing so, it is estimated that customers can reduce their energy usage by 5% – 10%.

In addition to listing the eight utility partners, Google also announced their partnership with smart meter maker, Itron. Although Google and others in the field of home energy management have discussed whether or not they actually require partnerships with utilities and smart meters in order to deliver these data services, it certainly helps Google’s efforts to have solidified the partnerships. The Google partnership is helping Itron as well, as indicated by Itron shares being up about 3.7% on Wednesday.

There a number of players in this field and more will emerge as partnerships such as these are formed. However, as usual, Google appears to be taking the lead.

On Wednesday, The UN Framework Convention on Climate Change (UNFCCC) released a first draft of a treaty to replace the Kyoto Protocol (1997) which is set to expire in 2012. This new 53 page document is considered to be the basis for the agreements to be made in the international climate talks scheduled for December 7th-18th in Copenhagen.

The key-differentiating factor between this document and the original Kyoto Protocol is that the newly proposed treaty calls for significant reductions in greenhouse gas emissions by both, developed and developing nations. Bridging this gap should satisfy the historical Kyoto opposition from both sides, which plagued the original framework since it’s inception. Under the Bush administration, opposition to Kyoto was founded in the notion that due to output volume of GHG emissions, developing nations should be included in the framework. Conversely, opposition from developing nations was founded in the argument that as the leaders in per capita pollution of CO2, the industrialized nations should hold the primary burden of emissions reductions.

With revised emission reductions for both developed and developing countries, the UNFCCC’s latest draft attempts to satisfy the needs of all involved parties. The head of the UNFCCC, Yvo de Boer indicates that the release of the new draft marks, “an important point on our road.” The document contains a nearly complete list of industrialized nations’ commitments to cut emissions after 2012, which allows for cross-national comparisons of reduction goals. The intent is that information sharing of this type will encourage the creation of more ambitious goals on behalf of participating nations.

According to the newly proposed treaty, emerging countries such as China and India would commit to targeting reductions of GHG emissions to 15% – 30% of 2000 levels by 2020. If agreed upon, this commitment would represent a first-ever international agreement for developing nations to reduce greenhouse gas emissions. Under the newly proposed framework, developed nations would target carbon emissions reductions to 75% – 95% of 1990 levels by 2050.

With only 200 days remaining until the final December talks in Copenhagen, this document represents the promise of a comprehensive and shared set of agreements to sign-off on in Copenhagen. That being said, there is still more work to be done on the proposed treaty between now and December. In June, governments will meet in Bonn, Germany to debate the details of the new draft. Specifically, the Bonn talks will examine the various proposals for establishing emissions limits and the allocation of funding and penalty payments.

Currently, the draft treaty has indicated that a nation’s population trends, access to technology and economic trends will be considered. The new document also proposes that funding priorities be placed on regions with glaciers, regions affected by desertification as well as low-lying areas that are at high risk of flooding.

In addition to setting revised targets for emissions cuts, the draft document also describes detailed mechanisms for financing, technology development and capacity building initiatives in the fight against climate change.

Earlier this week, Boeing released it’s 2009 Environmental Report which highlights 2008 reductions in energy and water consumption and carbon dioxide emissions. On the more innovative side, the Boeing report describes biofuel demonstration flights held over the past year which document the technical feasibility of using biofuels in commercial jetliners. The demonstration flights represent a significant step toward a long-term vision of sustainable fuel solutions for the aviation industry.

In addition to biofuel advancements, a Boeing subsidiary, Spectrolab achieved a new solar cell world record with 40.7% efficiency in converting sunlight to electricity. The 2009 Environmental Report provides a clear indication that the company is pioneering innovative technologies that will realize even greater efficiencies in the coming year.

A true industry leader, Boeing is the world’s largest manufacturer of commercial jetliners and military aircraft combined. Boeing’s foray into sustainable fuels signals an emerging trend within the aviation industry that result in mainstream standards in a few short years.

Boeing worked a number of commercial airlines on the demonstration flights which required no modifications to the airplanes or engines.

• On Dec. 30th, 2008, Air New Zealand conducted the first sustainable biofuels flight using jatropha as a fuel source (flown with a 50/50 mix with traditional jet fuel).
• On Jan. 7th, 2009, Continental Airlines became the first U.S. carrier to conduct a biofuels test flight and also the first to use algae as a fuel source.
• On Jan. 30th, 2009, Japan Airlines became the first airline to use the energy crop camelina as a fuel source. The 90 minute flight relied upon a fuel mix of camelina, algae and jatropha mixed with conventional jet fuel.

Results from these test flights will be incorporated into Boeing’s strategy development as they work towards their target goal of a 15% improvement in fuel efficiency in each new-generation aircraft. Documentation of the demonstration flights is an encouraging signal that the possibility of non-fossil fuel flights is closer than most would imagine.

Additionally, the demonstration test flight results are intended to contribute to the effort to certify the algae-based fuels through the ASTM. The greater goal of this effort is to eventually alter the current jet fuel specification requirements which state that jet fuel must be derived from petroleum-based source material.

Driven by both, environmental and economic incentives, the widespread use of biofuels in the aviation industry represents a significant savings for airlines. With increasing fuel costs, biofuels represent a fuel source that in a matter of years will be price competitive with today’s fossil fuel costs. According to a recent article in Fast Company, jet fuel is the airlines’ largest and most volatile expense, representing 25% – 40% of total operating costs. Estimates indicate that commercial quantities of algae oil can be produced in three years and that this supply can be produced domestically. Experts agree that assuming projected increases in fuel prices takes place, algae-based biofuels will in fact, be price competitive. If not, we’ll likely see a program of government subsidies to introduce the new biofuels into the marketplace.

Until now, the aviation industry has been slow to demonstrate initiatives to reduce the environmental impact of their products and services. In addition to reductions in fuel consumptions, Boeing is now pioneering more sustainable technologies that address environmental noise pollution and reduced energy needs for their operations. In this regard, the aviation industry has begun to show greater progress on the environmental front than the shipping and cruise line industries, which contribute twice as much as the aviation industry does to climate change.

In addition to advancements in developing feasible biofuel sources, Boeing has also collaborated with leading airlines and environmental organizations to form the Sustainable Aviation Fuel Users Group. The goal of this group is to accelerate the development and commercialization of innovative sustainable aviation fuels. Outcomes from this group are expected to include reductions in greenhouse gas emissions from the aviation industry and to securie the industry’s exposure to volatile oil prices.

China’s Ministry of Finance and Ministry of Environmental Protection have requested research from a regional think-tank to develop preliminary proposals for a national carbon tax. The proposals, which are due for publication within the month, may one day become a part of the Chinese government’s strategy to reduce greenhouse gas emissions.

International governments have pressed Beijing to implement legislation to curtail their carbon dioxide emissions and the Chinese response has typically been a call for rich countries to lead by example in the development of CO2 regulation schemes. With the possibility of a US cap-and-trade regime being approved later this year, the Chinese government’s request for research on carbon tax policies may indicate that China will head off in it’s own direction.

Devising an agreement on an appropriate taxation cost for carbon is complex, as it is affected by a number of uncontrollable variables. Preliminary research by the World Bank and the Dutch and British governments has come up with a range of $70 to $280 per ton of CO2. Certainly, further research is necessary to refine the range of taxation and more importantly, to devise one that is appropriate to the practices and scale of a country as large as China.

Revenue from a carbon tax in China represents a significant financial stream when you consider that China is the world’s largest source of CO2 with roughly 80% of its electricity being generated by coal-fired power plants. China has a population of 1.3 billion people and the country produces roughly four metric tons of GHG emissions per person. Although China’s total emission count now exceeds that of the US, the US averages about 20 metric tons of GHG emissions per person.

The question remains, what is driving Chinese interest in pursuing the possibility of a carbon tax policy when for years, they have adamantly declared that developed nations who have caused the climate crisis should lead the way in mitigating climate change? It seems apparent that developed nations are now heading in the direction of a cap-and-trade regime versus a carbon tax. Perhaps, the Chinese government views a cap-and –trade system as being overly laborious on the regulation side. Or, perhaps China is making preparations in advance of the December climate talks in Copenhagen.

However, the more likely motivation is that China strives to become a leading nation in the reduction of carbon emissions.

As industry leaders closely watch the consumer response to new electric vehicles, ideas are quickly taking shape in regards to where manufacturers should target their sales and production. While North American, European and Chinese auto manufacturers race to bring a viable electric car to market, the question remains, who will arrive first and where will the manufacturing centers be located?

A recent announcement that Think, Norway’s pioneering electric carmaker is opening a manufacturing plant in the US is an indication that the US may be overtaking Europe as a more lucrative marketplace for the production of electric vehicles.

Think CEO, Richard Canny has stated, “The U.S. is quickly overtaking Europe as an attractive market for EVs and is an ideal location to engineer and build EVs” and he may be right. Think is currently in discussion with eight US states to determine where to build their new manufacturing facility which will initially employ 300 workers and will have a production capacity of 16,000 cars per year. Think’s technical center will also provide 70 additional jobs for engineers and electric drive specialists. Long term plans for this facility include employment for roughly 900 total employees and production capacity of 60,000 electric vehicles per year.

In addition to job creation and dealer sales, the migration of Think manufacturing to the US will also impact our national economy through contributing to a growing supply chain which serves the electric vehicle and plug-in hybrid car markets. Currently, Think is partnering with US battery makers Ener1, Inc. and A123 to provide compact, high-powered lithium-ion power systems for “TH!NK city” which, is Think’s flagship vehicle.

The TH!NK city is estimated at being capable of traveling 65 miles per hour and up to 112 miles per charge. Although numbers such as those are impressive in terms of what consumer options have been in the past, the question still remains as to whether or not those specs are enough to draw in US consumers. If the failure of China’s marketplace to embrace the F3DM electric car is any indication as to the possible future of the TH!NK city, the Norwegian-run company may have some more design work ahead of them before being able to capture revenue through US sales.

However, with talks underway with eight US states (including Michigan), a recent acquisition of $5.7 million in interim financing and loans available through the US Department of Energy’s Advanced Technology Vehicle Manufacturing program, the arrival of a vibrant Think presence on the streets of America seems inevitable.

The question remains, will US consumers respond to an fully electric car that can travel 112 miles with a top speed of 65mph or, will they hold out for longer range and higher speed hybrid electric vehicles?