Harvesting Hidden Value from Your Industrial Plant Site
Congratulations! You are now in charge and have been given the unenviable task of maximizing value from your industrial operation. Whether you are new to this role or are a seasoned pro, the challenge is still the same: How do you squeeze more revenue from a facility that has already been streamlined, updated and optimized over and over again by those who came before you? Sure, there’s the usual suspects … process upgrades, additional automation, and energy efficiencies … but these typically require capital outlay that will take time to secure and implement. So how can you make an immediate splash when the low-hanging fruit has already been picked over? Well, one option may be to assess and then monetize your environmental assets.
Environmental Assets? Really?
Yes, many industrial plant sites contain environmental attributes that may serve a purpose beyond what they were originally intended for. The growth in recent years of environmental markets as a means of driving real emission reductions is responsible for much of this “new” value. But harvesting such value requires a different mindset than what is typically employed in environmental management circles; while environmental managers and consultants naturally take a risk-management approach to their work, viewing the same waste streams as potential assets or revenue-producing sources tends to turn that thinking upside down. Further complicating matters are a number of different variables that may impact the value of the asset, site location being one of them. The key is to know what to look for and what value those potential assets may have in the open market.
Inside the Plant
The first natural place to look for environmental asset opportunities is in the various waste streams of your industrial processes, particularly if you are in an environmentally-sensitive area where there may be one or more moratoriums in place. For instance, if your plant has a state-issued air quality permit and is located within a currently-designated NAAQS nonattainment area, then some of your permitted capacity could be converted to emission reduction credits (ERCs). There is a need for ERCs in high-growth areas; this is particularly prevalent in certain areas of the U.S. Mid-Atlantic and Gulf Coast regions that are positioning for the next phase of refinery and petrochemical plant expansions.
Likewise, water programs also provide opportunities. If your facility holds an NPDES permit for direct discharge of wastewater into a nutrient-sensitive water body, then there may be opportunities to create nutrient trading credits. On the other hand, if your plant discharges to a municipal treatment system that is under a sewer tap moratorium, then the development of a sewer-rights trading program may prove valuable to your community. Meanwhile, in drought-stricken rural areas where groundwater supply may be in jeopardy, moratoriums are often put in place to protect aquifers from over-production, so your excess water supply permit capacity may prove valuable to someone in need.
Finally, some of the chemicals used in your plant operations that have high global warming potential (GWP) may prove valuable in the fight against climate change. For instance, certain industrial refrigerants, such as R-12, can command significant value by being destroyed and converted into carbon offsets instead of being returned to the market through recycling. Ditto for certain applications of industrial chemicals, such as sulfur hexafluoride (SF6) in magnesium production.
Outside the Plant
After a thorough review of your plant’s processes is complete, look outside of your facility walls to see what value may be stored within the fence line. Many industrial complexes own hundreds of acres of unused property, often referred to as the Back 40, that may not have posed any value for current operations but could prove valuable for other purposes. For instance, many old industrial sites contain closed landfills; can landfill gas be captured for use as a renewable fuel or for creating carbon offsets? Or are there natural habitats, such as wetlands, forests or endangered species, that can be protected through conservation easements and generate carbon or ecological offsets?
The key to identifying environmental asset opportunities and capturing value from them is to start early. This is extremely important in situations where a plant is either being sold or closed; once permit-closure and/or land-transfer activities are underway, the opportunity to capitalize on them is typically gone. So, before you start the planning process, ask an environmental commodity professional to assist you in identifying opportunities and assessing the markets for them. They will gladly work together with your environmental consultants and corporate resources to maximize value for you!
And who knows, once your environmental assets have been monetized, maybe you’ll be able to fund those process upgrades!
About the Author
David Priddy serves as Vice President, Project Development at ClimeCo, where he leads the company’s sales, marketing, and commodity-generating project development programs. He holds a Bachelor of Science in petroleum engineering from the University of Louisiana, Lafayette and has more than 28 years of experience in the field of environmental management.