April 02, 2012 {authors} {/authors}

Measuring the costs of sustainability anywhere you are

A way to determine the best use of investment for sustainable projects

{authors} By Measuring the costs of sustainability anywhere you are {/authors}

Quantifying sustainability isn’t easy. If it were someone would have done it before Ory Zik did.

Zik, an Israeli-born physicist and founder of several startup companies including solar thermal HelioFocus, recently netted $3 million in venture capital from Plan B Venture for his latest venture, Boston-based Energy Points.

Plan B Ventures is a Boston-based privately funded partnership that provides equity funding for early stage cleantech and life science projects in the United States and Israel.

For Energy Points, Zik developed a sustainability metric and a “calculation engine” using geospatial data and proprietary mathematical models that he believes will accurately determine the costs of water, fuel and transportation in any given location. The idea is to give companies — and eventually individuals — information that will allow them not only to save money, but also achieve sustainability where they live and operate.

To develop such a method, Zik needed a common measurement and he found it in a gallon of gasoline. Energy Points breaks down all energy and resource uses into their costs as measured by a gallon of gas. That’s the intuitive side of what Zik describes as Energy Points’ quantitative and intuitive design. The quantitative part is drawn from geospatial data and resource use by utilities on a regional level.

People understand an intuitive measure, Zik said, using calorie counting as an example: You don’t have to understand how the body burns calories and all the science that goes into that understand that if you eat more than a certain number of calories a day you are going to gain weight. In the same way, you don’t have to know the issues and cost intricacies surrounding water use, transportation or waste management to use Energy Points: the numbers are provided using a metric we all are familiar with.

Zik said that currently 10 companies, including a few Fortune 500 companies, environmental non-government organizations, and government agencies, are pilot testing Energy Points. Most clients are interested in identifying the best use of investment for sustainable projects,he said.

 

Financial costs and sustainability are not one and the same, Zik noted. “We have found that customers are struggling with sustainability decisions.  This is what happens in the absence of a quantitative metric.  Most corporations have budgets, commitments and, sometimes, compliance requirements to meet sustainability goals,” he said.  “But the question always remains — what do they do and where do they do it?  Drip irrigation, solar power, hybrid cars for the fleet, HVAC or boiler improvements? All decisions that need to be made, but [it is] difficult to determine which would make the company more sustainable. “

 

Zik said the commonality in looking at options he cited is that the options have similar financial capital investment and return on investment, “but from a sustainability standpoint, they have varying sustainability return.” Financial savings are likely to be achieved within a year or two following an energy efficiency decision, while the sustainable benefit is more long term.

 

One example of a sustainable benefit is peoples’ choice in baby diapers:  cloth vs. disposable. People often assume cloth is better, Zik says, because it can be washed and reused. Not always. If the buyer lives in an area where there is a shortage of water and landfill space is relatively low cost, a disposable diaper may be the more sustainable option. On the other hand, if the buyer lives in an area where water resources are plentiful and/or landfill space is at a premium, the cloth diaper makes more sense.

Another example can be found in a recent Coca Cola sustainability report that shows water consumption being reduced by 20 percent in a year. “This is a great accomplishment,” Zik said. “But the geographical context absolutely matters. What really matters is if they did this in dry places or wet places.” It’s easy to do in wet places, Zik noted, because there’s often wasteful water consumption in areas where water is abundant.

Zik said he developed Energy Points over the last two and a half years, consulting with other corporation executives, engineers and economists.  A former CEO with 20 years of experience in research and development, Zik said, “I knew how executives think about balance sheets.”

He said his “aha moment” for developing the gasoline metric came when reading an article written by Dan Ariely, a behavioral economist known for his study of laws that drive human choices. Ariely argued “that Americans understand oil prices more than any other price in the U.S.,” Zik said. And that made sense to him.

Zik expects Energy Points will have a staff of 20 by midyear. 

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