Health Care Sustainability

Source: U.S. National Library of Medicine

Source: U.S. National Library of Medicine

On July 31 the Sustainability Accounting Standards Board (SASB) released sustainability accounting standards for the health care industry; their first in a set of ten planned industry-specific standards.  SASB is a non-profit founded in 2011 to develop standards for publicly-listed companies to disclose material sustainability issues in Securities and Exchange Commission (SEC) filings.  The health care industry standards are broken down into specific guidance for six sectors: biotechnology, pharmaceuticals, medical supplies and equipment, health care delivery, health care distributors and managed care.  For the third installment in the series on industry-specific sustainability standards we’ll review the standards for health care delivery.

The sustainability accounting standard for the Health Care Delivery sector is comprised of two parts: 1) disclosure guidance and 2) accounting standards on sustainability topics.  The disclosure guidance is the result of a multi-stakeholder process to identify material sustainability topics specific to the health care delivery sector.  The stakeholder group identified eight specific sustainability topics for the health care delivery sector:

  • Quality of Care and Patient Satisfaction
  • Access for Low Income Patients
  • Employee Recruitment, Development, and Retention
  • Pricing and Billing Transparency
  • Energy and Waste Efficiency
  • Climate Change Impacts on Human Health and Infrastructure
  • Fraud and Unnecessary Procedures
  • Patient Privacy and Electronic Health Records

Accounting standards define proposed metrics for companies to use when disclosing sustainability issues.  The goal is to increase the comparability of disclosures across the industry by encouraging the use of standard metrics.  The accounting metrics for the Energy and Waste Efficiency topic include:

HC0301-11

Total annual energy consumed (gigajoules) and percentage renewable

HC0301-12

Total weight of Regulated Medical Waste Generation and total weight by disposition

HC0301-13

Total weight of pharmaceutical waste generation and total weight by disposition. Break down by: (1) hazardous waste and (2) non-hazardous (solid) waste

The description of the Energy and Waste Efficiency topic points out that the Environmental Protection Agency estimates that U.S. hospitals spend $8.8 billion annually on energy; and that improved energy management could lower operating costs and enhance shareholder value.

The SASB standards are different than other reporting standards covered previously, such as the Dairy Industry Stewardship and Sustainability Guide, in that they are inherently integrated reporting standards.  Integrated reporting means that sustainability information is disclosed in the periodic financial disclosures required of public companies by the Securities and Exchange Commission (SEC); not in a separate document such as an annual sustainability report.  The contention here is that sustainability information is material, not just nice to know, and investors should consider it as part of the total mix of information when making investment decisions.

The next sector specific standards planned for release by SASB are for the financial sector.  The full list of the ten sectors that SASB is actively developing standards for are shown below.  Timelines and the status for standard development can be found on the SASB website here.

  • Health Care
  • Financials
  • Technology & Communications
  • Non Renewable Resources
  • Transportation
  • Services
  • Resource Transformation
  • Consumption
  • Renewable Resources & Alternative Energy
  • Infrastructure

Biofuels from Seaweed

NSF - kelp 1
Photo courtesy of the National Science Foundation

In the last blog post on EPA’s changes to cellulosic biofuel goal under the Renewable Fuel Standard (RFS) I touched on one of the challenges of growing feedstock for ethanol production – the land use conflict of food vs. fuel.   Cellulosic ethanol helps to address this question by using byproducts such as corn stover and wood waste as inputs to the ethanol production process; but, progress on advancing this technology to commercial scale has been slow.  For this Future Friday post we’ll look at research on seaweed-based biofuels that holds promise for addressing these problems while increasing the efficiency of biofuel production.

There are many advantages to using seaweed as the feedstock for biofuel production.  With 71% of the earth’s surface covered in saltwater biofuel production from seaweed does not run into the same constraints and conflicts as terrestrial-based biofuels.  Seaweed is up to five times more efficient at storing the suns energy in biomass, and it grows much faster than land-based plants.  Another advantage is that seaweed farming is already a multibillion dollar global industry; though production to date is focused on producing alginate (a food thickener), vitamin supplements, inputs to the cosmetics and plastics industries and animal feed.

Though seaweed appears to be an ideal feedstock there are obstacles that must be overcome for it to be used for large-scale biofuel production.  As with cellulosic ethanol the primary challenge is finding or engineering bacteria that can break down the carbohydrates in seaweed into fermentable sugars.  One avenue being pursued is the collection of bacteria from the droppings of Scottish sheep that subsist on a diet largely of seaweed (Seaweed biofuels: a green alternative that might just save the planet).  In 2012 the Bio Architecture Lab (BAL) in Berkeley, CA patented a genetically modified bacterium that can break down the carbohydrates in brown seaweed.  Research shows that the bacterium is highly efficient, making 80% of the maximum sugar yield from seaweed available.  With this technology seaweed has the potential to produce 1,500 gallons of ethanol per acre, which is 50% more than sugar cane and three times as much as corn-based ethanol (Unlocking Seaweed’s Next-Gen Crude: Sugar).

Seaweed’s fast growing, carbohydrate dense characteristics confer many advantages, but economic viability of seaweed-based biofuels will likely depend on it being part of a larger interconnected value chain.  For example, seaweed is being integrated into aquaculture operations (e.g., fish, shrimp, oysters) because of seaweeds ability to clean the water and maximize nutrient use.  The ability to extract a high value product to serve an existing market, and then produce biofuel could make the economics more favorable and increase the likelihood of a future with seaweed-based biofuels.

EPA Lowers 2013 Cellulosic Biofuel Goal by 99%

RFS
Photos courtesy of the U.S. Department of Energy

On Tuesday the Environmental Protection Agency (EPA) finalized the Renewable Fuel Standard (RFS) volumetric requirements for 2013, cutting the goal for blending biofuels produced from cellulose by 99.4%.  The original 2013 goal for cellulosic biofuel blending was 1 billion gallons, but the EPA was forced to lower this goal because cellulosic biofuel production has not increased fast enough to meet the blending goals envisioned when Congress passed RFS2 in 2007.  The table below shows the final 2013 volume blending requirements and the blend percentage (the ratio of renewable fuel to petroleum-based gasoline and diesel consumed in the United States).  The final row, Total Renewable Fuel, is inclusive of the three other fuel categories, so just under 10% of liquid transportation fuels in 2013 will come from renewable sources.  It should be noted that the overall renewable fuel blending requirement for 2013 remains unchanged at 16.55 billion gallons.

Final 2013 RFS Standards

Fuel Type Volumes Blend Percentage
Cellulosic biofuel 6.00 mill gal 0.004%
Biomass-based diesel 1.28  bill gal 1.13  %
Advanced biofuel 2.75  bill gal 1.62  %
Total Renewable fuel 16.55 bill gal 9.74  %

Cellulosic biofuels are seen as the future of renewable fuels because they have lower lifecycle greenhouse gas (GHG) emissions and do not raise the same food vs. fuel questions that producing corn ethanol does.  Cellulose is a polymer, or long chain of linked sugar molecules that is present in the cell walls of all green plants.  This means that cellulosic biofuels can be made from waste products such as corn stalks, wood chips, or fast growing plants such as switch grass that require little or no inputs and can grow on marginal lands not suited for traditional agriculture.  The sugars in cellulose are not as easy to free from the rest of the plant and the challenge has been scaling up processes to produce commercial volumes cost effectively.  Only 20,000 gallons of cellulosic biofuels were produced in 2012, highlighting the difficulty of commercializing the technology.

Despite the low production volumes progress is being made scaling up cellulosic biofuel production.  At the end of July Ineos Bio announced that their Indian River BioEnergy Center began producing cellulosic ethanol at commercial scale.  The BioEnergy Center uses a gasification and fermentation process to convert cellulosic biomass to ethanol and renewable power.  Inputs have included citrus, oak, pine, pallet wood waste, and the facility is permitted to use municipal solid waste (MSW).  The plant is expected to produce eight million gallons per year of ethanol and six MW of renewable power.  Ineos hopes to use the plant to demonstrate the viability of the technology at the Center with the goal of leasing it to others.  The Energy Information Administration summarizes the outlook for cellulosic biofuel production through 2015 here.

In addition to the challenges of ramping up new technologies for cellulosic biofuel production there are political challenges as well.  Demand for cellulosic biofuels is primarily created by the RFS2 mandates.  The American Petroleum Institute has called on Congress to scrap the Renewable Fuel Standard (API Press Release) because volume blending requirements have not been adjusted to reflect reduced U.S. consumption of gasoline and diesel, and over concern that more than a 10% ethanol blend will harm vehicles.  A discussion of the political issues around cellulosic and corn ethanol can be found in a recent Fortune article here.