How Businesses Can Help Make Half-Earth A Reality: Mitigating Pollution and Climate Change

October 15, 2018 By Mark Aspelin

Part 4 of a 5-part series that is published on the E.O. Wilson Biodiversity Foundation and Half-Earth Project website at www.half-earthproject.org/news-notes

———————————————————–October 4, 2018

How Businesses Can Help Make Half-Earth a Reality: Mitigating Pollution and Climate Change

by Mark AspelinPart 4 of a 5-part series

This week, we’ll focus on the role that companies play to address pollution, the third biggest threat to biodiversity. This post will also cover the special form of pollution known as climate change.

“Pollution” refers to the introduction of contaminants, such as chemicals, light, noise, or heat, into the natural environment where they may cause negative changes. For example, herbicides and pesticides cause harm to nontarget species, such as insect pollinators, and pose a risk to human health. The discharge of detergents, fertilizers, and sewage into aquatic systems can cause an excess of nutrients, such as nitrogen and phosphorus, which disrupt ecosystems by causing the overgrowth and decay of plants, algae, and phytoplankton. The result is a severe decline in water quality and the creation of an aquatic environment that promotes the survival of simple algae and plankton over more complicated plants.

Then we have the example of acid rain. The burning of fossil fuels generates air pollutants that can either remain in the air as particle pollutants or fall to the ground in the form of acid rain. The sulfuric- and nitric-acid components of acid rain can lead to the acidification of lakes, streams, and forest soils. Species of fish, amphibians, clams, snails, insects, and plants can have a difficult time surviving in acidic conditions. Fish eggs can’t hatch if the pH of water is too low, and fish species, such as salmon, may abandon their spawning areas. When fewer fish spawn and fewer eggs hatch, it creates fewer food options for predators. Acid rain also harms plants and trees by slowing their growth, damaging their leaves, and making the soil more toxic to plants. The key point is that pollution, in all its forms, can cause serious, widespread harm to wildlife and the ecosystems upon which they depend.

Then we have the special form of pollution known as climate change, caused by the release of carbon dioxide and other greenhouse gases into the environment. The biggest human-caused sources of these “greenhouse gases”—particularly carbon dioxide—are a result of burning fossil fuels and cutting down carbon-absorbing forests.

Increases in temperature can have a massive impact on wildlife. Some habitats may disappear due to rising sea levels, which are caused by the melting of mountain glaciers and polar ice sheets. Temperature changes have an impact on flowering and fruiting times for plants. They also have a significant impact on the habitat ranges that are occupied by animals. Biologists on the ground are witnessing significant shifts in habitat ranges and species composition in different parts of the world. Some species are showing up in areas where they haven’t been seen previously while other species are starting to disappear from areas where they were once abundant. I recently went to a presentation that showed slide after slide of striking shifts in locations where New Mexico birds have been spotted in the state over the past few decades. For species that can survive in a wide variety of habitat patches, climate change may not pose a major threat. However, species that are isolated in just a few habitat patches or are restricted to mountaintops may not be able to rapidly shift their distribution to survive.

What Can Corporations Do?

Fortunately, pollution is one biodiversity threat that corporations of all shapes and sizes are willing to address, at least to some degree. This is largely due to the thousands of pages of environmental regulations with which corporations must comply to ensure that processes and controls are in place for air emissions, wastewater and stormwater discharge, and hazardous-material transport and storage. However, regulatory pressure isn’t the only reason why corporations pay close attention to pollution. Many of the actions that corporations take to prevent pollution also produce significant cost savings. In addition, the approach that corporations need to take to address pollution include processes and ways of thinking that are familiar to them. When you talk about “minimizing waste” and “improving process efficiency,” you’re speaking the language of business. Waste minimization and process efficiency are topics that already get a lot of attention in corporations through a variety of initiatives, such as Lean, Six Sigma, and quality-management systems.

Companies typically adopt one or more of the following five strategies to address the threats of pollution and climate change: pollution prevention, carbon offsets, environmental design, green building, and green infrastructure. Let’s look at each of these strategies in more detail.

Strategy #1: Pollution Prevention. Most corporations have a pollution-prevention program or project in place, often using the well-known “reduce, reuse, and recycle” concept. Many of these pollution-prevention efforts are driven by regulations, following specific guidance from various regulatory agencies. Other pollution-prevention initiatives aim to go beyond compliance, driven by a company’s desire to identify cost-saving opportunities that also reduce pollution. Pollution-prevention activities that yield the greatest value for business and the environment will vary, depending on the company, industry, and location, but they typically include a combination of training programs, energy audits, “green IT” practices, transportation and fleet efficiency efforts, and initiatives to reduce food and beverage waste and unnecessary packaging. For example, Walmart created a tool for apparel buyers and sourcing teams to help them optimize the size of corrugated cardboard shipping cartons. As a result, Walmart was able to reduce the number of boxes shipped by 8.1 million in one year, saving 6.3 million pounds of corrugate, 7,800 metric tons of greenhouse gases, and US$ 15.3 million in operational costs.

Strategy #2: Carbon Offsets. Carbon offsets (also known as “greenhouse-gas offsets”) are a popular tool that corporations use to address climate change, where the company reduces emissions of carbon dioxide or other greenhouse gases in one area to compensate for emissions that are made elsewhere. This benefits companies by enabling them to meet regulatory requirements at a significantly lower cost compared with the effort and resources required to directly reduce emissions from operations. As for the benefits of carbon offsets to wildlife and biodiversity, the jury is still out.

Strategy #3: Environmental Design. A third powerful corporate strategy for addressing pollution and climate change is to design products, processes, or services in a way that reduces impacts to human health and the environment. This approach is often called Design for the Environment (DfE), and the concept has been around since the early 1990s. Companies like IBM, Hewlett-Packard (HP), and Philips use DfE to identify chemical alternatives that are better for the environment without sacrificing product quality or performance. These companies also look for ways to make it safer and easier to reuse or dispose of products at the end of a product’s useful life. For example, HP’s DfE program identified an opportunity to use recycled plastic instead of virgin plastic for most of its ink cartridges. This enabled HP to reduce greenhouse-gas emissions by 43 million pounds from 2013 to 2015, which is equivalent to taking 4,125 cars off the road for one year.

Strategy #4: Green Building. Green building is a well-known, cost-effective, environmental-management strategy that businesses have adopted with enormous success. Its popularity continues to grow thanks to numerous examples of green buildings that have yielded significant reductions in environmental impacts while providing a substantial return on investment. For example, in 2006, Adobe estimated a net-present-value rate of return of nearly 20:1 for the initial investment in its headquarters towers. The U.S. Green Building Council estimates that commercial building owners and managers will invest US$ 960 billion globally between 2015 and 2023 on greening their existing buildings. The primary areas of focus are expected to include the installation of more energy-efficient windows, lighting, plumbing fixtures, and heating, ventilation, and air conditioning systems.

Strategy #5: Green Infrastructure. Green infrastructure is similar to green building, but it can take some different forms than a building or roof. The term “green infrastructure” is defined differently by various organizations, but it generally refers to natural systems that are managed to address urban challenges, such as stormwater management, climate adaptation, clean water, and healthy soils. For example, Union Carbide Corporation, a subsidiary of The Dow Chemical Company, constructed a 110-acre wetland in Texas to serve the function of a wastewater-treatment facility. The wetland was 100% compliant from day zero with all discharge requirements. In addition, the constructed wetland has low energy, maintenance, and resource requirements with no need for pumps, additives, an oxygen system, or added water, and there are no biosolids to handle or dispose. Compared with a wastewater treatment plant, the wetland supports greater biodiversity of plants, animals, and micro-organisms. From a cost perspective, the US$ 1.4 million initial investment and operational capital pales in comparison to the US$ 40 million price tag for a gray infrastructure alternative. It’s a good example of a win-win, profitable-conservation project.

I hope this post gives you a better understanding of how companies can mitigate pollution and climate changes in ways that also benefit biodiversity and wildlife, and can help us get to Half-Earth. In next week’s post, we’ll turn our attention to the final biodiversity threat that we’ll be covering in this series: overharvesting.

How Businesses Can Help Make Half-Earth A Reality: Combating Invasive Species

October 1, 2018 By Mark Aspelin

Part 3 of a 5-part series that is published on the E.O. Wilson Biodiversity Foundation and Half-Earth Project website at www.half-earthproject.org/news-notes

———————————————————–September 27, 2018

How Businesses Can Help Make Half-Earth a Reality: Combating Invasive Species

by Mark AspelinPart 3 of a 5-part series

You may be surprised to learn that invasive species rank second only to habitat destruction when it comes to the biggest threats to biodiversity.  In the United States alone, there are an estimated 1,000 invasive species. Some of these species, such as kudzu (pictured above), were brought in the U.S. deliberately, while other species, like the zebra mussel, arrived by accident. Regardless of how they arrive, invasive species can do a lot of ecological and economic damage. The overall economic cost of invasive species in the U.S. is estimated to be around US$ 120 billion per year.

One of the more infamous examples is the zebra mussel, which frequently appears on lists of the worst invasive species. Back in 1988, the zebra mussel hitched a ride in the ballast water of a transatlantic freighter, arriving in Lake St. Clair—a freshwater lake located between Ontario and Michigan. The mussel quickly spread to other watersheds, such as the Great Lakes and the Hudson River, by riding the currents and hitching a ride on anchors, the bottom of boats, and other human-mediated modes of transport. Zebra mussels like to attach to stable objects. Stable objects can take the form of clams and other mussel species, which they can kill by reducing their ability to move, feed, and breed. This is how the zebra mussel wiped out certain species of clams in Lake St. Clair as well as other freshwater mussel species in Ireland. It’s estimated that at least 30 species of freshwater mussel are threatened with extinction because of the zebra mussel. Other stable objects to which zebra mussels like to attach include water-treatment-facility pipes and electricity-generation infrastructure. The mussels grow in thick densities, which can block pipes and clog water intakes. As a result, corporations in these industries spend a great deal of time and money monitoring and removing mussels from their infrastructure, and companies in the shipping industry must manage their ballast water to ensure that invasive species aren’t along for the ride.

When it comes to invasive species, there are three basic strategies that corporations can adopt to manage the issue: prevention processes, early detection and rapid response, and restoration of native habitat.

The best—and most cost-effective—way to manage invasive species is to prevent them from entering in the first place. Of course, that’s easier said than done. To accomplish this, a company will need to implement a systematic process that monitors for high-risk invaders at critical control points such as wooden packing material, horticultural plants, and ship ballast water, as we saw in the zebra mussel example above.

While prevention is our first line of defense, no matter how many regulations or how much money we throw at preventing invasive species, some will continue to arrive. When they do arrive, we’ll want to have a second strategy in place to address this threat: early detection and rapid response (EDRR). The earlier we detect an invasive species, the better chance we have at eradicating before it before it multiplies and spreads, which translates into substantial costs and resources. Companies can participate in an EDRR system using their own staff, or by partnering with local universities, Native Plant Society organizations, and other trained experts to help with a baseline inventory and ongoing monitoring.

For the “rapid response” piece of EDRR, our goal is to eradicate—or at least slow down—the invasive species after we spot it. In some cases, scientists will recommend that a newly introduced species be tolerated and monitored, as the cost of eradication may be too great, and some invasions will recede on their own. In other cases, it’s time to act by using a variety of mechanical, chemical, or biological control techniques. Each of these control techniques has a variety of pros and cons that go beyond the scope of this short post.

The third strategy that corporations can take to combat the issue of invasive species is to restore habitat by removing invasive species and replacing them with native species. This may take the form of landscaping with native plants, planting meadows and gardens that are attractive to pollinators, and building wetlands or artificial ponds that provide water sources for local wildlife.  For example, in Pacheco, Argentina, Volkswagen created an artificial lake near its facility to collect rainwater and provide a habitat for indigenous flora and fauna. This effort provides a natural landscape for the industrial center, and 62 species of birds have been counted at the lake.

For many companies, the value proposition for these three strategies to combat invasive species will come in the form of ecosystem services and more intangible benefits in the forms of employee satisfaction and fostering goodwill with customers, regulators, and the local community. For other companies, the proactive implementation of programs to prevent, detect, and respond to invasive species can yield more tangible cost savings. Let’s take another look at the zebra mussel’s impact on water-treatment and electricity-generating facilities.

In the United Kingdom, Thames Water spends £1 million a year on clearing zebra mussels from its raw water pipes and water-treatment facilities and applying heavy doses of chlorine to deter the mussels, while Anglian Water spends £500,000 a year tackling the problem. In the United States, zebra mussels are estimated to have cost municipalities and power companies over US$ 1.5 billion over the past 25 years. Another study came up with a cost estimate of US$ 267 million for all water-treatment and electricity-generating facilities from 1989 through 2004. These are big numbers. Any prevention, early detection, and rapid-response actions that corporations in those industries successfully implement can yield a significant return on investment.

Coming attractions: In next week’s post, we’ll turn our attention to the biodiversity threats of pollution and climate change. In the meantime, don’t forget to make plans to attend the October 22, 2018 Half-Earth Day event in New York City – it’s going to be a great event!  To learn more about Half-Earth Day, visit http://www.half-earthproject.org/half-earth-day.

China National Petroleum Corporation’s Profitable Conservation Strategies for Biodiversity and Wildlife Conservation

July 9, 2018 By Mark Aspelin

Today we’ll explore the profitable conservation strategies of the fourth largest company in the world, the China National Petroleum Corporation, or CNPC for short.  CNPC is a Chinese state-owned corporation with 1.46 million employees and oil and gas assets that are scattered across 38 countries in Africa, Central Asia-Russia, America, the Middle East, Asia-Pacific, and other regions.  The Company’s operations include petroleum exploration and production, natural gas and pipelines, refining and marketing, oilfield services, engineering construction, petroleum equipment manufacturing, new energy development, capital management, finance, and insurance services.

CNPC’s tagline is “Caring for Energy, Caring for You”, with a mission to “strive for harmonious relationships between operations and safety, energy and the environment, corporate and community interests, and employers and employees”.  The Company has also stated its commitment to “protecting the environment and saving resources, promoting the research, development and application of environmentally friendly products, fulfilling our responsibilities to society and promoting development that benefits all.”

With such an environmentally-friendly mission statement I was very interested to learn more about what CNPC is doing in the areas of biodiversity and wildlife conservation.  CNPC’s sustainability report and website mention a broad range of initiatives that directly or indirectly have an impact on biodiversity and wildlife, although climate change, energy efficiency, and pollution prevention are the key areas of focus.

In this post, I’ll provide an overview of the various activities that CNPC is engaged in to address the following four major threats to biodiversity and wildlife: habitat destruction, invasive species, pollution, and overharvesting.

Habitat Destruction

Avoidance: Avoidance refers to the strategy of avoiding development or operations in areas with a high-quality habitat for species that are classified as endangered, threatened, or vulnerable to extinction.  Here are two examples of how CNPC puts an avoidance strategy into practice.

  • Protecting Euphrates Poplars in China: In the Tuha Oilfield of China, the most desirable site for new wells was located within a Euphrates poplar forest.  However, given that Euphrates poplars (pictured below) are considered rare in the area, the Tuha Oilfield Company took steps to minimize the impact on the trees by relocating well sites, detouring roads, and reducing the size of station yards.  For example, in 2007, the Company relocated 10 well sites and used extended reach drilling, which increased project costs by over US$ 3 million.  To avoid poplars, CNPC also spent an additional US$ 500,000 to re-rout a nine-mile section of gas pipeline, which extended the pipeline length by over a mile and extended the length of a parallel road by over two miles.  The number of gathering stations in new exploration areas was reduced from nine to six, and over 322,000 square feet of land remained undisturbed. Throughout the process of developing the oilfield, no single Euphrates poplar was damaged in the area’s 13,000 acres of Euphrates poplar forests.
  • West-East Gas Pipeline and the Alkin Wild Camel Nature Reserve: During the construction of the nearly 2,500-mile West-East Gas pipeline, CNPC made the decision to spend an additional US$ 30.8 million to avoid cutting across the buffer zone of the Alkin Wild Camel Nature Reserve, which is home to a variety of rare animals such as wild camel, wild yak, antelope, and black-necked crane.

Minimization: Minimization refers to a broad range of strategies that are designed to reduce the duration, intensity, and extent of impacts to habitat for biodiversity and wildlife.  Corporate minimization strategies include the creation of wildlife corridors, installing green roofs, rehabilitating or restoring land, and purchasing biodiversity offsets or other voluntary compensatory actions.  While it doesn’t appear that CNPC is engaged in the creation of wildlife corridors, installing green roofs, or pursuing biodiversity offsets, the Company has implemented a variety of policies and procedures to modify its operations near environmentally-sensitive areas to protect wildlife and biodiversity.  CNPC is also engaged in a variety of land rehabilitation and restoration strategies.  Restoration of an ecosystem refers to an attempt to return it to its original landscape, while rehabilitation focuses on repairing ecosystems processes, services, and productivity, but not to the pre-existing, historical condition.  Here are some examples of CNPC’s minimization strategies:

Policies and procedures near environmentally-sensitive areas

  • Wetland conservation at the Liaohe Oilfield: CNPC’s Liaohe Oilfield is located in the Liaohe delta wetland (pictured below), a national nature reserve that is considered to be one of China’s largest and best-preserved wetlands that provide habitat for 236 bird species such as the Saunder’s Gull (Vulnerable) and Red-Crowned Crane (Endangered).  Rather than use vertical wells, CNPC uses horizontal and cluster wells to help protect wildlife habitat and the natural landscape.  Thirty years ago, the total area of reed marsh in the Liaohe Delta was approximately 200,000 acres.  Today, through joint efforts of the Liaohe Oilfield and the local government, the total area of the marsh has reached nearly 250,000 acres, making it one of the world’s largest reed marshes.  The area also serves as China’s biggest heavy oil and super-heavy oil production base.
  • Reduced footprint for the Russia-China Oil Pipeline: When constructing the Mohe-Daqing Section of the Russia-China Oil Pipeline, CNPC reduced the width of its operational area from 92 feet to 59 – 66 feet, which decreased its footprint in the virgin forest by 1,352 acres.  The Company also implemented “extremely high requirements” to protect soil, vegetation, and wildlife during construction.
  • Reduced land use at the Changqing Oilfield: In 2016, the Changqing Oilfield was able to save 15,000 acres of land by using cluster wells and horizontal wells, optimizing the arrangement of well patterns, and through the integrative planning of stations.
  • Wetland conservation practices in Iran: In Iran, CNPC’s environmentally-sensitive road construction practices and efforts to maintain the wetland water flow for its North Azadegan project resulted in the Company becoming the first foreign enterprise to win an award for environmental protection.
  • “Giving Way to Animals” in Kenya: During the construction of an oil pipeline in Kenya, CNPC adopted a construction principle of “giving way to animals”.  This included “Rules on Protecting Wild Animals during Construction” within National Parks of Nairobi and Nakuru to confirm that no wild animals were present before operating in the area, and to ensure that construction equipment moved at a slow pace to minimize noise.
  • Operational Changes to protect wildlife: During the contraction of the Mohe-Daqing Section of the Russia-China Oil Pipeline, CNPC reduced its operations at night and avoided construction during the breeding season to help protect wildlife.
  • 3-D seismic exploration technology to reduce tropical rainforest impacts in Ecuador: In the tropical rainforests of Ecuador, CNPC used 3-D seismic exploration technology to avoid damage to rainforest vegetation, and drilled new wells in old well sites to minimize operational land use in order to protect biodiversity.  CNPC chose to adopt European or US environmental protection standards, rather than less stringent local regulations, to minimize its waste discharges from power generation, oil refining, and water treatment.

Restoration and rehabilitation of land

  • Wetland restoration and bird conservation: In 2012, the Yingtai Oil Production Plant of Jilin Oilfield in China planted sedge and grasses to improve wetland habitat within the oil recovery zones of the Jilin Momoge National Nature Reserve.  The Nature Reserve serves as habitat for the greatest variety of cranes in China, including the endangered red-crowned crane and critically endangered white crane (aka Siberian crane).  By the end of 2012, the Yingtai Oil Production Plant had invested more than US$ 4.6 million in six phases of comprehensive treatment projects, restored 6.6 million square feet of wetland vegetation, and created nearly 1.4 million square feet of woodland.  Over the past five years, the number of waterfowl increased by 15%-20%, the population of Siberian cranes increased from about 500 to 3,000, and the number of bird species increased from 296 to over 320.
  • Ecological restoration for the Western Pipeline project: CNPC pursued an ecological restoration effort as part of the Western Pipeline project in China.  As soon as the new pipes were laid down and buried, CNPC planted vegetation in an attempt to restore the original landscape.  As part of this effort, CNPC adopted a higher design grade, increased the pipeline burial depth, enhanced the anti-corrosion grade of the pipes, and installed cut-off valves to prevent oil leakage in the event of any accidents.  Since the project was launched in 2004, CNPC has followed up with monitoring and remediation measures on an annual basis to ensure that the restoration effort is a success.
  • Soil remediation and restoration of freshwater fish: As part of the project to implement the Mohe-Daqing Section of the Russia-China Oil Pipeline, which runs across several nature reserves and environmentally sensitive rivers, CNPC invested US$ 15.4 million on soil and water conservation efforts.  These efforts included remediating over 2,000 acres of arable land and over 24 million cubic feet of soil covering, and building a 2,784 acre green area.  CNPC also spent US$ 2.9 million to build fish breeding stations, conduct research on the artificial reproduction of burbots (freshwater fish, pictured below), and monitor water quality and aquatic life along the pipeline.  Through these fish breeding efforts, 200,000 – 500,000 cold-water fish are released into the river each year.
  • Southwest Oil and Gas Field remediation: From 2011, to 2016, the Southwest Oil and Gas Field in China reclaimed a total of 7,419 acres of land and turned it into grassland or forest.
  • Soil restoration research: CNPC is engaged in soil restoration research, exploring the use of “microorganism repair technology” for polluted soil.  Research trials in the treatment of solid waste were conducted at two old wells, and the study was successful in rehabilitating over 21,500 square feet of land that was once used as a solid waste pool.  The new technology transforms harmful substances in wastes into carbon dioxide and water, and makes the soil cultivable again with the metabolites from microbial growth.  The Company plans to continue to develop and improve this technology and promote its wide application.
  • Marine and fisheries restoration: After completing the Shenzhen-Hong Kong subsea pipeline, CNPC launched a marine environment and fishery resources restoration project to return two million young black seabream to the sea in the effort to improve the marine ecological environment.

Invasive Species

There is no mention of any efforts to address invasive species in CPNC’s various reports and website.

Pollution

Pollution Prevention: CNPC is engaged in a wide variety of pollution prevention and energy saving initiatives.  Here are some of the more unusual examples:

  • Shelter-Forest project to protect highway from sand: In an interesting example of a green infrastructure project, CNPC partnered with the Chinese Academy of Sciences to complete a Shelter-Forest project for the Tarim Desert Highway (pictured below), which serves as an important road to access oil and gas resources in the area.  The Tarim Desert Highway was constructed in 1995, however the original mechanical sand-defense system (a sand-catching checkerboard mesh of straw) to protect the road from encroaching desert and sand dunes had become obsolete.  The three-year Shelter-Forest project created a green corridor that was 236 – 256 feet wide along 270 miles of the 349-mile highway that travels across the Taklimakan Desert.  The US$ 33.5 million project involved covering a total area of 7,729 acres with 20.74 million drought-resistant plants such as Chinese tamarisk, saxaul (Haloxylon ammodendron), and Calligonum.  Pilot tests uncovered a way to successfully (80% survival rate) irrigate the plants with high salinity groundwater in the desert, and research found that wind speed and sediment transport in the shelter-forest decreased by 64% – 99%.  This approach may be deployed in future large-scale projects to protect desert highways from sand.
  • Creating artificial islands to minimize impacts: To minimize the environmental impact caused by drilling and oil production on the surrounding waters of the Dagang Oilfield located in Huanghua Shoals of the Bohai Bay, CNPC built three artificial islands and used an “onshore production of offshore oil” approach.  The artificial islands include oil pollution treatment facilities and sewage treatment systems that operate in a closed-loop system.  Wellhead-slot wastewater and summer rainwater are collected and recycled, reusable drilling fluid is used in place of oil-based mud, and all industrial and domestic waste is collected for centralized processing.
  • Wastewater pool is transformed into a reed pond in Sudan: In Sudan, CNPC invested US$ 13.8 million to build biodegrading pools, and adopt advanced biodegradation technology to treat water produced from oilfields.  The treated water contains no oil, has a pH value of 8.90-8.97, and a dissolved oxygen level of 0.5-0.6 mg/L.  The 1.9 square mile wastewater pool has become a reed pond that provides habitat for 68 species of birds and fish.
  • Creation of the CNPC Pollution Sources Online Monitoring System: This system can accurately monitor, calculate, and analyze the emission data of each monitoring point in real time; monitor emissions from key sources in real time; assess the operating results of environmental protection facilities; and collect and analyze the alarm data.  By the end of 2015, data networking was completed for 298 key monitoring points.
  • Energy Conservation: In 2015, CNPC implemented 54 energy-saving projects, and developed 148 optimization programs that reduced energy consumption by 1.16 million tons of standard coal.  Compared with 2010 data, the emission intensity per unit of crude oil production for four major pollutants, chemical oxygen demand, ammonia nitrogen, sulfur dioxide and NOx, decreased by 31.5%, 23.1%, 33.6% and 28.3% respectively, and the emission intensity per unit of crude oil processing decreased by 27.8%, 28.8%, 54.8% and 32.0% respectively.  The Company continued to make progress in 2016 by reducing energy consumption by 950,000 tons of standard coal.  Overall energy consumption was reduced by 1.42% year-on-year.
  • Water Resource Conservation: CNPC has implemented a variety of water use efficiency initiatives in its production and operation activities. For example, it has reduced freshwater consumption through the adoption of wastewater treatment and reclaimed water reuse technologies.  The company also launched an online management system for energy and water conservation.  This helps standardize processes that save water and enables the company to collect and analyze data associated with its water management activities.  In 2015, water use efficiency initiatives have saved 20.61 million cubic meters of water.  In 2016, the Company saved an additional 13.39 million cubic meters of water throughout the year.

Climate Change: Climate change is a primary focus of CNPC’s environmental efforts and the Company is committed to green and low-carbon development, accelerating the upgrading of oil products, promoting the utilization of natural gas to meet the need for clean energy.  The Company also invests heavily in R&D for low-carbon technologies and increased carbon sequestration to minimize GHG emissions and mitigate global warming.  In 2016, CNPC joined the Oil and Gas Climate Initiative and signed the Joint Collaborative Declaration on low-carbon development.  CNPC has also set development goals and emission reduction measures, with a primary focus on carbon footprint verification, carbon emission reduction, and the construction of near-zero carbon emission demonstration projects.  Here are some examples of CNPC’s efforts to address climate change.

  • Forestry Carbon Sequestration: One of the measures that CNPC has taken in response to climate change is to plant a large number of trees to help reduce and control greenhouse gas emissions.  To support China’s carbon-sequestration forest construction and forestation activities in 2015, CNPC invested US$ 22.9 million in public-welfare forestation funds and planted over one-million trees.  The Company encourages voluntary tree planting programs and some facilities have enthusiastically embraced the cause.  CNPC describes a project in the Changqing Oilfield where “we joined hands with the local government to carry out the construction of Qingyang carbon sequestration forestry base in Gansu province, and have completed over 100,000 mu of carbon sequestration forestry since 2008.”  In 2012, employees from the Changging Oilfield planted more than 600,000 trees and shrubs.  In the Karamay Oilfield of Xinjiang oil province, CNPC has a 10-year plan to create a 65,977 acre forest for carbon sequestration and emission reduction, and along the northwestern boundary of the Junggar Basin, the Company will create another 164,819 acre forest.  These forests will serve as green carbon pools for COsequestration.  In addition, in cooperation with the State Forestry Administration, CNPC planted 8,229 acres of an experimental oil crop called yellowhorn (Xanthoceras sorbifolium), which is adaptive to the climate in Xinjiang.  One million units of this crop can yield 3,307 pounds of fruit, with an oil yield rate of 30%.  Important medical ingredients can first be extracted from the squeezed oil, and 93% of the remainder can be converted into biodiesel fuel.
  • Natural Gas: CNPC has increased the development and utilization of natural gas.  In 2015, natural gas accounted for 40.6% of its total domestic oil and gas equivalent production, compared to 35.9% in 2011.
  • Geothermal and Renewable Energy: CNPC mentions that it’s exploring the development and utilization of geothermal and other renewable energy, although it sounds like this is in the early stages.
  • Aviation Biofuel: CNPC is also actively engaged in research and development activities for aviation biofuel.  Research suggests that aviation biofuel emits 50% – 90% less greenhouse gas during its life cycle compared with traditional aviation kerosene.

Overharvesting

Supply Chain Sustainability: CNPC doesn’t specifically address the biodiversity threat of overharvesting in its website or reports.  However, CNPC does promote the sustainable development of its supply chain through the establishment of a contractor management group led by CNPC’s top executive and attended by heads of related departments and specialized subsidiaries.  The Company has created a supplier quality management process which covers quality approval, inspection, supervision and spot-checking, and on-site supervision of the manufacturing of major products.  CNPC has also implemented clear supplier requirements related to business ethics, human rights, health, safety, environment, quality standards, and public responsibility, in an effort to build a responsible supply chain in the petrochemical industry.

Profitable Conservation

CNPC’s website and reports provide a lot of environmental investment data in terms of how much money was spent for various initiatives, but it’s difficult to calculate an overall return on investment.  Similar to my previous blog post about the State Grid Corporation of China, the best I can do is highlight some of the investments that CPNC is making in areas that are related to environmental conservation.  I have already highlighted many of these dollar amounts throughout this post.  Most of the efforts shared in this blog post are likely to yield a high financial return on investment as these activities enable CNPC to access lucrative oil reserves.

One area that I haven’t yet covered in this post, is how the CNPC allocates its spending for charitable giving.  CNPC invested more than RMB 1.3 billion (~US$ 200 million) in public welfare undertakings globally.  Approximately RMB 76 million (~US$ 11.7 million) of this money was spent on projects in China, which has benefitted 100 million people across 8 provinces.  The breakdown of charitable giving is as follows:

  • Poverty Alleviation: RMB 341 million (~US$ 52 million)
  • Disaster-relief: RMB 6 million (~US$ 920,000)
  • Education: RMB 238 million (~US$ 37 million)
  • Charity donations: RMB 632 million (~US$ 97 million)
  • Environmental charity: RMB 149 million (~US$ 23 million). This money was primarily directed towards forestry carbon sequestration efforts.

Biodiversity & Wildlife Conservation Performance Assessment

I originally wrote an article about CNPC’s profitable conservation efforts back in early 2016.  However, after researching CNPC’s activities since that time, I ended up deleting my original article because I found that the Company is now sharing a lot more information about its biodiversity conservation efforts on its website.  So that’s a positive sign.

Most of CNPC’s efforts related to biodiversity and wildlife conservation are focused on climate change and pollution prevention.  This makes sense since climate change is a major initiative for China, and pollution prevention efforts often yield win-win outcomes from both an economic and environmental perspective.  Many of the other practices that I shared in this post, such as altering operating policies and procedures in areas of high conservation value, likely generate very high financial returns on investment, but the jury is out in terms of the costs and benefits for biodiversity and wildlife.  While CNPC does provide us with some success stories, such as expanding the size of the Liaohe Delta from 200,000 acres to 250,000 acres, and increasing the number of bird species from 296 to 320 at the Jilin Momoge National Nature Reserve, we obviously need more before-and-after data to asses the overall impact (positive or negative) to local biodiversity and wildlife.

Some locations are so valuable from a biodiversity and wildlife perspective that is raises the obvious question of whether CNPC should be drilling and operating there in the first place, no matter what kind of mitigation measures are put in place.  However, since the various Government agencies have given CNPC permission to drill and operate in these areas, the Company is obviously going to pursue it.  From that perspective, I am glad that CNPC is spending the extra millions of dollars to implement measures that minimize harm to biodiversity and wildlife in exchange for access to new oil sources.

In terms of possible improvement opportunities, CNPC could benefit from setting and communicating clear performance targets.  To its credit, CNPC is in the process of setting development goals and emissions reduction measures, however, I hope that the Company also considers setting goals related to land use and biodiversity conservation.  This could come in the form of voluntary compensatory actions such as conserving a certain number of acres of wildlife habitat for every acre of land developed, similar to Walmart’s Acres for America program.  These land purchases may  serve a dual purpose of conserving biodiversity and wildlife while also supporting CNPC’s forestry carbon sequestration efforts.

Another possible improvement opportunity is to discuss efforts to combat invasive species on CNPC land.  CNPC’s thousands of miles of pipelines and roads create pathways for the spread of invasive species.  With all of the remediation, restoration, and rehabilitation work that CNPC is engaged in, it seems like invasive species would be an important topic of conversation.

Overall, CNPC is to be commended for being an early adopter of CSRs, publishing its first CSR in 2006, and for taking steps to share more information about biodiversity and wildlife conservation efforts on its website.  I look forward to learning about the company’s new goals and reading more about the company’s efforts in the area of biodiversity and wildlife conservation in the coming years.

Coming Attractions

For our next post, I have a special announcement that I look forward to sharing with you.

Thanks for reading!

Mark

Sinopec’s Profitable Conservation Strategies for Biodiversity and Wildlife Conservation

June 25, 2018 By Mark Aspelin

Today we’ll look at the profitable conservation strategies for the #3 company on the Fortune Global 500 list – Sinopec Group, the state-owned Chinese oil and gas company formerly known as the China Petroleum and Chemical Corporation.  Headquartered in Beijing, Sinopec‘s 446,225 employees are scattered across the company’s operations in 43 countries.  As of the end of 2017, Sinopec has 30,633 service stations, with its main oil and gas assets located in China, Kazakhstan, Russia, Colombia, and Angola.  The Company engages in the following activities:

  • Oil & gas exploration, production, transportation and marketing
  • Refining and marketing of petroleum products
  • Manufacturing and sales of chemicals, petrochemicals, coal chemicals
  • Petroleum and petrochemical engineering services
  • Technology research

Sinopec’s Mission statement is “Powering Better Life”.  The Company strives to “achieve green growth and contribute to clear waters, green land and a blue sky” and is guided by a principle of “Making Every Drop Count”. 

Sinopec has focused its recent efforts on promoting growth and efficiency, while fulfilling its social responsibility mission.  To help prioritize where to focus its CSR and sustainability efforts, Sinopec sends a survey to internal and external stakeholders that includes representatives from government, investors, employees, consumers, NGOs, and the media.  The results help the Company identify the highest priority issues in terms of their significance to stakeholders and their impact on Sinopec’s sustainability.  The prioritized survey results from the 2015 CSR are summarized in the graph below.

sinopec-graph

As you can see from the list above, Sinopec ranked biodiversity protection and ecosystem remediation as number 14 (out of 25) on its list of priorities.  However, it also ranked Clean Energy Supply as number 11, Climate Change efforts as #12, and Water Management as #13, all of which play a role in biodiversity and conservation.

In the 2017 CSR, Sinopec went through a similar exercise, but also aligned its business operations with 17 Goals (SDGs) in the 2030 Agenda for Sustainable Development (The UN 2030 Agenda) and referred to the Recommendations Report issued by Task Force on Climate-related Financial Disclosures.  From this analysis, Sinopec outlined 13 material issues to include in its report, which included climate change, energy conservation and emission reduction, and biodiversity.

With that brief introduction, let’s take a look to see what profitable conservation activities Sinopec is undertaking in the areas of biodiversity and wildlife conservation.  We’ll focus on the steps that Sinopec is taking to address four of the biggest threats to biodiversity: habitat destruction, invasive species, pollution, and overharvesting.  Even though climate change is a major contributor to habitat destruction, we’ll cover that topic in the pollution section, since the actions that companies take to address climate change are similar to other pollution prevention initiatives.

Habitat Destruction

Avoidance and Minimization: Avoidance refers to the strategy of avoiding development or operations in areas with a high-quality habitat for species that are classified as endangered, threatened, or vulnerable to extinction.  Minimization refers to a broad range of strategies that are designed to reduce the duration, intensity, and extent of impacts to habitat for biodiversity and wildlife. Sinopec is putting avoidance and minimization strategies into practice through the following means:

  • Taking steps to avoid environmentally fragile areas and ecological conservation zones.
  • Integrating biological diversity protection in the assessment, decision making, production, and operation of project construction.
  • Evaluating the impact of proposed projects by assessing ecological reserves, forests, wetlands, fauna, and flora, and formulating measures to mitigate or eliminate the impacts during the preliminary project appraisal process, construction, and operation.
  • Focusing on the requirements of biodiversity conservation in the working areas, taking various measures to protect local ecosystems.
  • Strengthening the identification and analysis of environmentally sensitive areas and environmental risks.
  • Promoting clean production.
  • Restoring and rehabilitating habitat around abandoned oil and gas wells and along oil and gas pipelines to reduce the environmental impact of the Company’s production and operations.

Here are a few examples of how Sinopec puts avoidance and minimization strategies into practice.

  • YASREF protects local mangroves:   The Yanbu Aramco Sinopec Refining Company Ltd. (YASREF) is a joint venture between Saudi Aramco and Sinopec in Yanbu, Saudi Arabia.  YASREF spent additional time and money to modify the direction and construction of pipes and other infrastructure to avoid harming local mangroves in natural reserves that are located near its production area along the Red Sea.  The Red Sea mangrove image below is from Saudi Aramco’s 2014 Facts and Figures document.
  • Soil remediation and land restoration: Sinopec and its subsidiaries create ecological impact prevention and treatment plans which may include a variety of soil remediation and land restoration efforts.  For example, Sinopec’s Fuling Shale Gas Company used a pad drilling design that reduces the amount of occupied land by 30% compared with normal operations.  After completing platform construction, the Company implemented a variety of plantation restoration, water and soil maintenance, and soil restoration initiatives that resulted in a land conservation rate of 57%.
  • Quingning Gas Transmission Pipeline project: When Sinopec’s natural gas branch deployed a 553-kilometer gas transmission pipeline connecting Shandong
    and Jiangsu province, they analyzed fauna and flora in national reserves, nine city and county-level reserves, seven water conservation districts, and 51 ecologically vulnerable rivers, Ecological Red Line Areas, and areas within 500 meters of the project. The Company then assessed pipeline routes and widths to identify the approach that would have the least adverse impact on local plants and wildlife.

Invasive Species

There is no mention of any efforts to address invasive species in CPNC’s various reports and website.

Pollution

In 2013, Sinopec launched its Clear Water and Blue Sky Campaign, which focused primarily on the control of air pollution, water contamination, and solid waste.  In 2014, the campaign won the “Care for Climate and Environmental Protection Best Practice” from the China Network of United Nations Global Compact.  The Clear Water and Blue Sky Campaign is no longer mentioned in the Company’s 2017 CSR so it appears to have come to an end, but Sinopec is still actively pursuing a variety of pollution prevention and energy saving initiatives.  Here are a few examples:

  • Pollution prevention: Sinopec pollution prevention efforts include implementing de-sulfur, de-NOx, and dust removal projects for boilers, improving the recycling of drilling fluid and reduced solid drilling waste by 31,000 m3, installing vapor recovery projects for 265 oil tanks and 17,600 service stations, and significantly reducing the sulfur content of Sinopec gasoline from < 800ppm in January 2003 to a target of < 10ppm in December 2016.  The Company is also engaged in research of development of cutting-edge technologies that support its green development goals.
  • Chemical product design: Sinopec’s Chemicals segment is actively developing products that focus on high-end, eco-friendly materials.  Here are a few product development examples from 2017:
    • Green propylene and butene copolymer products.
    • Eco-friendly, high-crystallized and high-impact polypropylene products.
    • Non-dyed fibers to alleviate textile dyeing pollution at the source and reduce wastewater discharge.
    • Performance improvement for non-heavy metal polyester catalysts.
    • Increased production and sales of eco-friendly polyester and the development of high-performance fiber.
  • Saving energy and reducing emissions and carbon intensity: Sinopec has created clean production processes that save energy, reduce emissions, and decrease carbon intensity.  For example, in 2014, Sinopec launched its “Doubling Energy Efficiency” Program which commits the Company to doubling its energy efficiency by 2025.  The program is expected to save 42 million tons of coal equivalent (equal to planting 900 million trees) and reduce 81 million tons of CO2 emission (equal to the annual emission of 20 million economy cars).  In 2015, Sinopec implemented 484 projects under the “Doubling Energy Efficiency” initiative, which saved 980,000 tons of coal equivalent, and the Company also launched efforts to encourage energy efficiency among its subsidiaries.  In 2017, a total of 452 programs were implemented with an expected annual energy savings that are expected to equal to 949,000 tons of standard coal.  In addition, Sinopec’s oilfield and refining & chemical subsidiaries captured 270,000 tons of carbon dioxide, of which 190,000 tons were used by oilfield subsidiaries for flooding.
  • Recycling and Reusing Resources: The Company looks for opportunities to recycle and reuse resources such as waste heat and pressure, slurry, refinery gas, flare gas, hydrogen, used catalysts, and oilfield gas.  In 2015, these efforts enabled Sinopec to recover 200 million cubic meters of methane, equivalent to cutting 3 million tons of CO2 emission, and recover 70 tons of noble metal.  In 2017, Sinopec reduced methane emission in pipeline storage and transportation by 4.26 million cubic meters.  The Company’s oilfield subsidiaries implemented recovery measures for natural gas during production and testing processes, casing gas and oil tank gas when necessary and possible.  This resulted in the recovery of 220 million cubic meters of methane, which is equal to a reduction of 3.3 million tons of carbon dioxide emissions.
  • Renewable energy: Sinopec is exploring and experimenting with the industrial application of solar power.  In 2017, the Company completing three distributional photovoltaic
    power generation projects. Sinopec is also making progress on developing non-grain bio-fuels as it strives to become a leader in the bio-fuel industry in China.
  • Protecting Water: Sinopec has improved its water use efficiency by strictly enforcing practices that reduce water use and avoid water loss and waste during production and auxiliary production processes.  From 2010 – 2015, Sinopec reduced its industrial water consumption by an average of 1.22%, with a 1% drop in water use year-on-year in 2015.  In 2017, Sinopec’s industrial water intake declined by 1.27 % from 2016 levels, saving an additional 12 million cubic meters of water.  In one success story, Tianjin Petrochemical has been using desalinated sea water as supplement to circulating water, using 10 million tons of desalinated water since the program started in 2010.  By the end of 2015, the total value of enterprise output increased nearly four times, while the overall fresh water consumption was reduced by 50%.  In addition, the company takes a number of different measures to protect groundwater during drilling.  For example, Sinopec took the following steps in one project that involved the exploration and development of shale gas:
    • Before constructing the drilling platform, Sinopec conducted hydrologic explorations of subterranean rivers and caves 100 meters below the earth’s surface so that well locations could be optimized, and contamination could be avoided.
    • Storage tanks of sewage and other wastes were built according to the local conditions. Environmental protection utilities, including diversion ditches and intercepting ditches, were put into use after penetration tests and pressure tests.
    • Casing pipes for cementing were of high quality, and cement was paved up to the ground, effectively isolating the boreholes from natural waters and shallow rocks.
  • Technological innovation in pollution treatment: Sinopec was one of the first companies in China’s petrochemical industry to recycle industrial sewage.  For example, Sinopic Zhenhai has constructed three sewage recycling units, with a total capacity of 31,200 cubic meters per day.  As of the end of the 2017, the site recycled over 76 million cubic meters of discharged sewage.  Sinopic Zhenhai has been awarded eight national invention patents related to its pollution treatment efforts.

Climate Change: Sinopec is committed to taking proactive steps to tackle climate change through the following means:

  • Energy conservation and efficiency: The Company has determined that energy conservation and efficiency improvement are the most important carbon reduction measures given the nature of its operations.  Sinopec measures the consumption of comprehensive energy per RMB 10,000 of production value and looks for opportunities to reduce that amount.  The company reduces greenhouse gas emissions by reducing flaring emissions and through carbon dioxide capture and methane recovery in its oilfield, refining, and chemical subsidiaries.
  • Carbon Accounting and Trade: Sinopec has been involved in carbon accounting and verification activities for five consecutive years, and it has become the leading company in China for carbon asset management.  Over the past 5 years, Sinopec has completed full carbon accounting for over 100 oil field gathering and transportation stations, 2,000 petrochemical facilities, and 30,000 service stations under 89 subsidiaries.  In December of 2017, China announced the launch of a national carbon market, and the power generation industry was selected as the first industry to participate.  In the future, its expected that the trading system will be expanded to include the refining and chemical industries, which will encompass all of Sinopec’s refining and petrochemical subsidiaries.  Sinopec is taking steps to prepare for this by implementing a carbon assets information system, completing carbon accounting and verification for subsidiary equipment, measuring carbon emissions data, and identifying which enterprises to include in the market.  In 2017, some of Sinopec’s subsidiaries participated in a pilot carbon trading program.  Each of these subsidiaries completed the carbon quota in time, with a carbon trading volume of 1.35 million tons, and a carbon trading turnover of RMB 19 million.

Overharvesting

Sinopec doesn’t specifically address the biodiversity threat of overharvesting in its website or reports.

Profitable Conservation

While Sinopec’s CSRs focus primarily on providing data related to the level of investment in specific activities, the Company does provide some return on investment figures as well.  To help put these investment figures in perspective, Sinopec reported total sales revenue of RMB 2,047.3 billion in 2015 and RMB 2,360.2 billion in 2017.

  • Employee Feedback: Under the guiding principle that “every single piece of advice from employees counts”, Sinopec actively engages and motivates employees to provide operations and management improvement suggestions.  This approach has worked well for the organization, with Sinopec employees providing 36,475 pieces of advice in 2015.  The company adopted 26,217 of the suggestions, which resulted in a cost reduction and profit increase of approximately RMB 605 million.  The CSR does not specify what portion (if any) of these suggestions were related to environmental issues.
  • Environmental Protection Investments: In CY2015, Sinopec invested RMB 6.8 billion in environmental protection efforts.  From CY2013 – CY2015, Sinopec implemented 809 “Clear Water and Blue Sky” projects, with a total investment of RMB 21.47 billion.  As an example, Sinopec Yangzi Petrochemical successfully installed a wastewater reuse unit (850 tons per hour) that operates with an annual treatment capacity of 7 million tons, making it the “largest enterprise of high-purity reuse of waste water home and abroad.”  In 2017, Sinopec implemented new standards, completed the treatment of sewage and flue gas, and conducted the comprehensive treatment of VOCs, with a total expenditure of environmental protection of RMB 7.85 billion.
  • Energy Efficiency Technologies: In 2015, Sinopec implemented 128 energy-saving projects in its subsidiaries, which saved 270,000 tons of coal equivalent annually, reduced CO2 emissions by 660,000 tons, and generated RMB 360 million in economic benefits.
  • Diesel Vehicle Exhaust Treatment Liquid: Sinopec created a “Yuetaihailong” Diesel vehicle exhaust treatment liquid for heavy-duty diesel vehicles that reduces NOx and PM emissions for BH-IV standard diesel vehicles and has a good economic return.  Third party inspection data shows that NOx and PM emissions of GB-IV standard diesel vehicles are 41.7% and 89.7% lower respectively than GB-III standard diesel vehicles.  The current price for 10 kg of this exhaust treatment liquid is 50 yuan, which can be used to treat 2000 liters of diesel at a blending ratio of 5%. This translates to an additional average cost of only 0.02 yuan per liter, with the benefits of reducing diesel consumption by 6% as well as significantly reducing exhaust emissions.  Sinopec provided 800,000 barrels of the liquid, free of charge, for heavy-duty diesel vehicles operating within its system.
  • Remediating exhaust emission treatment and electronic data accounting: In April 2017, the Ministry of Environmental Protection detected problems with Sinopec Yanshan’s exhaust emission treatment and electronic data accounting.  An investigation was conducted to determine the root cause, and the employees responsible for the issues were dismissed from their positions.  To remediate the issues, Sinopec invested RMB 600 million to complete VOC treatment projects, which included the construction of 46 automatic VOC monitoring sites.  In addition, Yanshan constructed an 80,000 square meter wetland park in the Niukouyu Ecological Center where the site operations were located.  The park is open to the public for free.
  • Charitable Giving: In 2017, Sinopec’s total “Social Contributions” was RMB 457.4 billion with RMB 151.88 million in donations.  In 2015, Sinopec’s total donations of “charity activities and poverty-lifting work” was RMB 200 million, with a significant part of this amount focused on the Company’s “Lifeline Express” charity project.  The “Lifeline Express” is a unique mobile hospital that was built on a train, traveling to three different impoverished regions within China each year to treat cataract patients, free of charge.  By the end of 2015, Sinopec Lifeline Express had traveled to 29 cities/counties in 18 provinces with a total of 32 stopovers.  In 2015, the program cured 3,286 patients, bringing the total to 34,798 cataract patients cured since its inception in 2004, at a total cost of RMB 127 million.  By the end of 2017, the program had cured over 40,000 cataract patients.
  • Improving local living conditions and building livable communities: In 2015, Sinopec spent RMB 1.7 billion on renovating old communities and shanty towns, relocating remote residential communities, and providing better access to basic necessities and community services.  In 2017, Sinopec invested RMB 128 million in targeted poverty alleviation focusing on infrastructure construction, industrial assistance, educational support, and the provision of healthcare.

Biodiversity & Wildlife Conservation Performance Assessment

Sinopec has come a long way since 2004 when it used dynamite and heavy machinery for exploration and road construction in Loango National Park in Gabon.  Today, Sinopec is committed to using more environmentally friendly methods in its operations and being a leader in China in adopting sustainability best practices.

To strengthen its efforts around biodiversity and wildlife conservation, Sinopec may want to set quantifiable land use and biodiversity conservation goals, address the biodiversity threats of invasive species, and consider voluntary compensatory actions such as conserving a certain number of acres of wildlife habitat for every acre of land developed.  To address the biodiversity threat of overharvesting, Sinopec may have opportunities to green its supply chain through the use of supplier scorecards and audits that include biodiversity as part of the assessment criteria.

Sinopec deserves praise for its efforts to be transparent in sharing its environmental performance information, in the form of CSRs and other media, for the past eleven consecutive years.  I look forward to reading about Sinopec’s continued progress in biodiversity and wildlife conservation in the years to come.

Coming Attractions

For our next post, we’ll still be in Beijing where we’ll take a look at the profitable conservation strategies for the #4 company on the Fortune Global 500 List – The China National Petroleum Corporation.

Thanks for reading!
Mark

State Grid Corporation of China’s Profitable Conservation Strategies for Biodiversity and Wildlife Conservation

June 11, 2018 By Mark Aspelin

As you can imagine, the State Grid Corporation of China (SGCC) is huge. After all, the company’s 1.72 million employees construct and operate power grids that supply energy to over 1.1 billion people, covering 88% of China. SGCC also owns and operates grids in outside of China, in countries such as the Philippines, Brazil, Portugal, Australia, and Italy. Not surprisingly, this makes SGCC the largest electric utility in the world, and places the company at #2 on the 2018 Fortune Global 500 list.

In reading through SGCC’s 2015 and 2016 Corporate Social Responsibility Reports (the 2017 CSR Report was published in February 2018 but is not available on the SGCC website) and “White Paper on Green Development”, it quickly becomes clear that SGCC’s primary focus from an environmental perspective is on Global Energy Interconnection (GEI), which includes the use of ultra-high-voltage (UHV) electricity transmission, smart grid technologies, and the conversion to clean energy. The reasons for this approach are both practical and strategic. China’s energy resources are located far from the major population centers. For example, most of China’s abundant coal resources are located in the northwest, and its hydropower resources are located in the west, but most of the demand is in eastern and southern China. Ultra-high-voltage electricity transmission enables SGCC to reduce transmission losses to an acceptable level as the electricity is delivered to where it’s needed.

UHV grids also enable SGCC to build new, cleaner, more-efficient power generation plants that are based on wind, solar, and nuclear energy, and then deliver that electricity across long distances to major population centers. And when SGCC says “global energy interconnection” they aren’t kidding. SGCC intends to connect large energy bases and distributed generation at the North Pole (wind) and the Equator (solar) and deliver the energy to customers across the world. As SGCC Chairman Liu Zhenya puts it, “Global energy interconnection can connect power grids in different continents with time zone and seasonal differences to solve energy and environmental problems that have been bothering human development for a long time, ensuring safe, clean and sustainable energy supply. Life will be better as the world is turning into a bright, peaceful and harmonious global village with sufficient energy, green land and blue sky.”

With the help of Global Energy Interconnection, SGCC anticipates that global clean electricity generation will account for 80% of total primary energy by 2050, reaching 66,000TWh, which represents a nearly ten-fold increase from 2010.  This will replace 24 billion tons of standard coal every year, reducing CO2 emissions by 67 billion tons and SO2 by 580 million tons.

When it comes to biodiversity and wildlife conservation,  SGCC focuses on the link between climate change and biodiversity with the following quote from the Intergovernmental Panel on Climate Change, along with a photo of a polar bear: “If global temperature rises by 1.5 ~ 2.5 ℃, 20% ~ 30% of the assessed species could face extinction. If the temperature rises by over 3.5 ℃, 40% ~ 70% of the assessed species may become extinct. (“IPCC Second Assessment”, 1995).”  SGCC also points out that a large number of species are facing extinction risk due to the slow rise of sea levels that can be attributed to the receding and melting of glaciers and permafrost.

Let’s take a quick tour of the SGCC’s efforts to address the following four major threats to biodiversity: habitat destruction, invasive species, pollution, and overharvesting.  Even though climate change poses a major threat to habitats, I generally put corporate climate change activities under the Pollution section, since the actions that companies take usually come in the form of pollution prevention initiatives.

Habitat Destruction

Reduce Land Use: SGCC has a goal to reduce land use by 10% and to reduce construction areas by 20%. To accomplish this, SGCC uses several different strategies, which are illustrated by the following success stories.

  • In North China Grid Company’s ”11th Five-year Plan”, 50,225,100 square meters of land has been spared by applying compact lines and multi-circuits on the same tower, 533,600 square meters of land were saved by utilizing GIS and HGIS, and 3335 square meters of land was saved by promoting large capacity transformer technology.
  • SGCC implemented an “Electricity Caravan” concept to minimize environmental impacts in a fragile plateau environment in the area of Sanjiangyuan National Nature Reserve (pictured below), known as “the water tower of China”. This project between Golog and the main grid of Qinghai needed to adhere to strict environmental and water protection requirements. To do this, workers from SGCC Qinghai Electric Power Company didn’t build any roads or bridges, but used horse caravans known as “Electricity Caravan” to transport the material and facilities needed for the project.
Sanjiangyuan National Nature Reserve

  • The Fujian Baihua-Bili 220kV Transmission Project includes 2-circuit 220kV and 4-circuit 110kV lines. “The project performs remarkably with less land occupation and less consumption of materials and resources, reducing the crossover of 25 civil buildings, 114,724 square meters of land occupation, over 120m of corridor width, and 13% of steel consumption, on the other hand, increasing the unit corridor transmission capacity by 235%, thus bringing down the total investment of RMB 5.32 million.”
  • SGCC estimates that it reduces the amount of land needed by 25% – 50% by using EHV AC lines rather than transporting coal by railroad and sea.

Charitable Giving and Volunteer Efforts: In 2015, SGCC gave 128 Million RMB (~$19 Million US Dollars) in public donations, provided 15 Million RMB (~2.2 Million US Dollars) via the State Grid Foundation for Public Welfare, and staff provided 2 million hours of volunteer work to support various efforts, such as poverty alleviation and scholarship funds. In addition, 2.8 million employees have participated in 1,365 tree planting activities, resulting in the planting of 677,811 trees over a period of 5 years.

Invasive Species

There is no mention of any efforts to address invasive species in SGCC’s various reports and website.

Pollution

Climate Change and Renewable Energy: The primary effort that SGCC is focused on from a biodiversity and wildlife conservation perspective is to reduce its contribution to climate change through the development of a strong and smart grid.  SGCC is actively pursuing the use of clean energy alternatives to fossil fuels, such as wind, hydropower, solar, and nuclear energy. In addition SGCC has actively supported the development of electric automobiles by building 1,537 charging stations, 29,600 charging piles, and a quick charge network that covers 81 cities and 11,000 kilometers of highways. In rural parts of China, SGCC is also partners with the government to implement projects that substitute electricity for coal, oil, and firewood.

Pollution Control: SGCC’s primary pollution control efforts come through its reduction of greenhouse gases. For example, one of its pollution control strategies is focused on recollecting sulfur hexafluoride (SF6). SGCC established SF6 gas recollection and treatment center at a provincial level to strengthen the regulation on the recollection, treatment, and recycling of air, which contributes to the reduction in the emission of greenhouse gases. In 2015, these provincial centers recollected and treated 47.1 tons of SF6 gas, which is equivalent to a reduction of 1.126 million tons of CO2 emissions.

Training: SGCC organizes a variety of environmental protection training activities. “In 2015, the company organized 112 training courses on environmental protection with 4,550 participants, and organized more than 180 activities concerning the development of grid, energy conservation, and emission reduction.”

Overharvesting

Overharvesting and overhunting threats to biodiversity are not addressed in SGCC’s website or reports.

Profitable Conservation

The CSRs and White Paper do not provide much in the way of return on investment data for the company’s environmental efforts. Nearly all of the RMB figures in the two reports specify how much the company has invested, rather than return on investment. For example, SGCC reports the following environmental investments:

  • Total investment in environmental protection: RMB 5.72 billion
  • Investment in environmental protection for construction projects: RMB 5.32 billion
  • Investment in environmental protection during grid operation: RMB 230 million
  • Investment in environmental research and special areas: RMB 170 million
  • Investment in environmental protection management: RMB 120 million
  • Investment in environmental protection governance: RMB 93 million
  • Cost of environmental protection facilities’ operation and maintenance: RMB 15 million

We can compare SGCC’s clean energy capacity figures with the company’s overall revenues, as summarized below, to give us a rough idea of what priorities SGCC is focused on in the world of clean energy, with the assumption that these efforts must be profitable in some way or else SGCC would not pursue these options.

Energy Source (Integrated Capacity in GW)

  • Nuclear Power: 6.4 GW in 2011, 17.02 GW in 2015
  • Hydropower: 156.17 GW in 2011, 207.82 GW in 2015
  • Solar (Photovoltaic) Power: 2,320 GW in 2011, 44,465 GW in 2015
  • Wind Power: 35,190 GW in 2011, 116,640 GW in 2015

Total Revenues (Billion RMB)

  • Total Revenues 2011: 1675.4
  • Total Revenues 2015: 2075.0

SGCC does provide some return on investment data for the following efforts:

  • Jinyun, Zhejiang In Jianchuan County, Xinjian Town, implement pilot projects of distributed PV (solar) generation for 60 low-income families. These projects earned over 2,000 RMB per household every year, and most of the farmers were able to get out of poverty.
  • The Fujian Baihua – Bili 220kV Transmission Project includes 2-circuit 220 kV and 4-circuit 110kV lines. The project performs remarkably with less land occupation and less consumption of materials and resources, reducing the crossover of 25 civil buildings, 114,724 square meters of land occupation, over 120m of corridor width, and 13% of steel consumption, on the other hand, increasing the unit corridor transmission capacity by 235%, thus bringing down the total investment of RMB 5.32 million.

Biodiversity & Wildlife Conservation Performance Assessment

SGCC has adopted climate change as its key issue of concern.  This shouldn’t come as a big surprise given that SGCC is in the electric power industry, coupled with the fact that China has an abundance of dirty coal and a shortage of electricity.  China needs to look at alternative energy options in order to make progress on its commitment to achieve a 40-45% reduction in CO2 emissions per unit of gross domestic product from by 2020, using the year 2005 as a baseline.  To its credit, SGCC is aggressively pursuing alternative energy and smart grid technologies to help achieve that objective.

I was also happy to see SGCC’s goal to reduce land use by 10% and to reduce construction areas by 20%.  However, SGCC’s CSRs and White Paper are relatively weak when it comes to discussing the company’s direct impact on biodiversity and wildlife. With 889,900 km of transmission lines in China alone, SGCC’s operations certainly have a significant, direct impact on biodiversity and wildlife.  As the U.S. Fish & Wildlife Service points out on its website:

“Transmission lines and other linear developments like pipelines, roads and trails, can increase human access into natural areas, displace wildlife from their habitat, act as barriers to wildlife movement and affect migration routes. They have the potential to impact sensitive ecosystems such as wetlands, impact high quality fishery resources when waterways are crossed, and create pathways for the spread of invasive species.  Operation and maintenance of transmission line right-of-ways (ROWs) may also result in environmental impacts. ROW maintenance often involves the chemical or mechanical control of vegetation that can contribute to the loss of native plant species diversity.  Cleared ROWs may be a continuous source of sedimentation into waterways.  In addition to these potential impacts, transmission lines can pose collision and electrocution risks to migratory birds.”  

In addition to transmission line corridors, the utilities industry also has the potential for significant biodiversity and wildlife impacts through extensive water use and the siting of new infrastructure.  Any company with such a large ecological footprint and direct impact on wildlife should have more to say on the topics of biodiversity and wildlife conservation.  This is an opportunity for SGCC to consider in future CSRs.

However, based on SGCC’s stakeholder and customer analyses, where the company plots environmental topics on a graph with a value creation dimension (relevance, importance, and feasibility) on the x axis and a social concern dimension on the y axis, biodiversity is not even on the list of contenders.  The top environmental issues that were identified include governing air pollution, combatting climate change, constructing electric vehicle (EV) charging facilities, and improving energy efficiency.  In addition, a major reporting standard, the Sustainability Accounting Standards Board (SASB), considers biodiversity to be “not likely a material issue” for companies in the utilities industry, although SGCC uses the GRI reporting standard for its CSR.  These factors may explain why SGCC chooses not to cover biodiversity and wildlife conservation in more detail in its various communications.

SGCC was the first state-owned enterprise in China to issue a Corporate Social Responsibility Report (in March of 2006), and I applaud SGCC’s efforts to share its environmental performance in its CSRs and White Paper.  I hope to read more about SGCC’s progress in its efforts to protect wildlife and biodiversity in the years to come.

Coming Attractions

For our next company, we won’t have to journey far.  We’re just headed down the street in Beijing to learn about Sinopec, #3 on the list of the Global 500.  We’ll explore what Sinopec is doing in the areas of biodiversity and wildlife conservation.  Zàijiàn!

Thanks for reading!
Mark