CLIMATE CHANGE AND BUSINESSES

Some businesses are changing the way they operate to adapt to the coming effects of climate change. Others are seeking ways to cut down on the ways they impact the environment.

By Ava Garcia

Tucson brewery Borderlands Brewing Co. was celebrating six years of business when co-founder and president Mike Mallozzi sat down with his team of brewers and decided to take stock of what the Borderlands brand meant to them. They came up with a list of core values and wove them into a mission statement.

One of those values sticks out on its own tab on the Borderlands website. It's second only to "About Us," even appearing before the "Our Beer" tab along the top of the website: "Sustainability."

"The international panel on climate change released a report saying that we have 12 years to get our shit together ... or we're going to face some catastrophic consequences; those are just the facts," Mallozzi said. "And so, um, we need to start doing something, and so that's why it's important to me and to the company."

Mallozzi is part of a growing wave of business owners interested in greening their business practices to lessen their contributions to environmental problems or prepare for impacts to come.

Utilities: An example of industry-wide change

It's not just small businesses; whole utility companies are shifting their ways too. Spurred on by a movement toward mitigation of climate change-contributing emissions and coupled with declining costs, solar power is emerging as a growing industry.

Solar power now accounts for 6.5 percent of Arizona's power, according to the the Solar Foundation's 2018 Solar Jobs Census. With the Arizona Corporation Commission holding the state's electric utilities to a requirement of 15 percent renewable energy-sourced power by 2025, that percentage will only grow.

Tucson Electric Power plans to source 30 percent of its retail energy from renewable sources by 2030, according to the company's 2017 Integrated Resource Plan. The utility company Salt River Project has a goal to reduce its carbon dioxide emissions by 40 percent by 2035, which would require increases in renewable energy sources, according to its 2017-2018 Integrated Resource Plan. Arizona Public Service, which is the state’s largest electric company, plans to reach 18 percent renewable energy by 2032, according to its 2017 Integrated Resource Plan.

Derek Lemoine, an associate professor of economics at the University of Arizona, cites cheaper solar technology as a driver for the growth of the industry. He said the question is now not whether solar will grow but if it will grow fast enough to keep up with climate-management goals.

Utility Company Renewable Energy Goals

Tucson Electric Power: 30 percent renewable energy by 2030

Salt River Project: Reduce carbon dioxide emissions by 40 percent by 2035

Arizona Public Service: 18 percent renewable energy by 2032

"It's hard to imagine a world in which solar would not grow substantially," said Lemoine, who has been studying renewable economics for a decade.

The solar industry isn't moving full steam ahead. The renewable-energy movement lost some momentum when Proposition 127, which proposed increasing the state's renewable energy portfolio standards to reach 50 percent by 2030, was defeated by a "no" vote from 68 percent of Arizona voters last November.

Lemoine called the proposition an ambitious goal but said it raised hurdles for itself by mapping out intermediate increases in the percentage of renewable energy used along the way. These intermediate steps to reach the 50 percent target could have been difficult for utilities because they often plan for infrastructure 20 or 30 years in advance, Lemoine said.

Utilities aren't just shifting their energy sources for mitigation. Changes in the climate could affect how utility companies operate and may require some adaptation.

Increasing temperatures could shift the length of the high-demand energy period as people have to turn on their air conditioners earlier in the year to deal with the heat, according to Ben McMahan, research scientist at the University of Arizona's Institute of the Environment. That means utilities may have to find new ways of meeting a growing demand for power.

"If it's May-warm in April and it's June-warm in May,...then it's going to extend that period where people are going to be doing things like running their utilities," McMahan said. "That increased load, in addition to population increases that we're seeing, just means that there's more people requesting power longer periods of the day or for longer periods of the season."

A solar panel array above a parking structure at Arizona State University in Tempe, Ariz. Creative Commons photo by Aznaturalist.

In spring 2015 the UA's Arizona Business Resilience Initiative created a pilot project to address climate-related concerns with local utility company Tucson Electric Power.

"They were approached kind of as a test market," said McMahan, who worked on the project with TEP.

The project identified several key climate-related concerns, including higher temperatures reducing solar panels' efficiency, increased risk of forest fires damaging power lines and increased electricity demand, according to a 2017 report. The report also suggested possible adaptations for those risks, such as monitoring wildfire hazards and increasing energy efficiency measures to reduce peak electricity demand.

Solar could be a potential resource to meet the growing demand for electricity, McMahan said.

TEP plans to add three wind and solar systems over the next three years, doubling its renewable energy resources, wrote Joseph Barrios, TEP supervisor of Media Relations, in an email. Currently, TEP has a capacity of 254 megawatts, or enough electricity to power 53,594 houses for a year, according to the TEP website.

The solar industry includes more than just utility companies. Its growth has helped smaller solar companies like Technicians for Sustainability flourish.

The Tucson-based company has been installing solar panels on homes and commercial buildings since 2003. Owner Kevin Koch said he's seen solar go from a fringe technology to mainstream in his nearly two decades with the company, which has grown to employ more than 50 people.

"I believe there's a growing awareness and mainstreaming of the fact that climate change is really going to have negative impacts and that there's an opportunity for us all to take action in one way or the other to slow the effects or diminish the effects that we might otherwise run into," Koch said.

The company's customer base has changed as well, going from a few people with "very environmentally minded or very engineering-minded" motivations to lots of people with a full spectrum of reasons for switching to solar, Koch said.

Small businesses stepping up

Some businesses are going beyond switching to solar in their quest to become more sustainable.

In Tucson a coalition of business owners in the downtown area joined forces to reduce their energy and water consumption. The group, which now includes the City of Tucson and the University of Arizona as partners, formed the Tucson 2030 District, the first such district in Arizona.

A national movement, the goal of a 2030 District is to reduce a particular area's average water consumption, energy use and greenhouse gas emissions from transportation by 50 percent by 2030. Property owners within a 2030 District track their buildings' performance portfolios and share best practices to bring down their emissions and consumption.

Map of the Tucson 2030 District. Credit: Tucson 2030 District.

The first district sprang up in Seattle seven years ago; now 20 such districts are sprinkled throughout the country. Tucson's 2030 District, which includes 10 million square feet of building space, is the only 2030 District in Arizona and has been in the making for three years, according to district executive director John Eisele, who worked as a realtor specializing in "green" homes for three years and was treasurer of the Southern Arizona Green Chamber of Commerce. He said the goal is to mitigate climate change and move the needle toward saving resources.

"There's no penalty for having your building not be performing," Eisele said. "It's a matter of looking at it as an opportunity to work toward the goals."

Eisele said the district offers an opportunity for the private sector to take the lead on climate change mitigation. He said many business owners often are so busy running their businesses that they don't realize how they could improve their sustainability.

That's where the 2030 District organization comes in. The nonprofit, volunteer-run group will come to a business at no cost and analyze its building's energy data to let the owner know how efficient it is. From there, the group can help a business identify potential improvements. The district also can connect owners to specialists and technicians to help make changes that will increase energy efficiency.

"There are times when people get together, and they talk about sustainability and they talk and they talk and they talk," Eisele said. "The fact that we actually go into a building and say, 'Your building is a 68 [out of 100 for efficiency],' that gives the building owners some real hard data to actually start making some decisions."

For some businesses, those decisions entail converting to LED lighting or simply turning off computers that aren't being used, while for others it can mean large-scale changes such as installing solar panels.

When Hotel Congress joined as the district's first participating private business, the hotel first tackled small things, such as resealing refrigerator doors in the bar and restaurant, according to Rita Dorsey Boutwell, Hotel Congress's director of operations.

Dorsey Boutwell, who is now on the board of the Tucson 2030 District, said Hotel Congress has to find a balance between increasing sustainability while preserving the historical integrity of the century-year-old building. For example, the windows on the building's second floor aren't as efficient as double-pane glass, but they are historical.

Dorsey Boutwell likens it to how people can approach sustainability in their private lives.

"You do what you can, and you don't sweat the things that you can't," she said. "As long as we're making strides in a lot of other areas, I think that it's okay to say we can't replace the windows."

Hotel Congress has made efforts to increase sustainability with solar panels, low-flow urinals in the men's restrooms and pillows made from recycled water bottle caps. The business has plans to install rainwater harvesting in the future and has established a Green Team that meets once a month to plan improvements to sustainability, Dorsey Boutwell said.

The outside of Hotel Congress on Congress Street. Photo by Ava Garcia.

She believes Hotel Congress will meet the 2030 goals.

"It's really gotten to the point where everything that we do has a consciousness towards the environment," she said. "Anytime we're trying to create a new service or bring in a new product, we always try to find the most eco-friendly version of that that we can possibly do. It's a shift in mindset."

A new class of sustainable businesses

While Hotel Congress was one of the trailblazers for the Tucson 2030 District, new businesses are joining the fold and learning how to make their enterprises more sustainable.

This past summer, 11 local businesses had the chance to do just that as the inaugural class of the SCALE UP program. Created by the local business coalition Local First Arizona, the program led local business owners through a six-week workshop to spotlight potential ways to reduce a business's energy and water consumption and transportation emissions.

The goal of the classes, which debuted in Tucson, was to give business owners a way to take action toward sustainability. Sometimes energy-efficiency programs give businesses a plan, but then business owners don't always have time to put that plan in motion, said C.J. Agbannawag, the SCALE UP Program Manager. The SCALE UP program wanted to fix that.

"We realized that sometimes those plans just kind of sit up on the shelf, and we wanted to actually help businesses and take that one step further," Agbannawag said. "So we have this workshop series where businesses actually kind of take responsibility for developing those plans."

A Local First Arizona member sticker in the window of a local business in Tucson, Ariz. Photo by Ava Garcia.

While Agbannawag said many changes can be small, the program offers a way to financially help businesses interested in making bigger switches, like installing new windows or solar panels. Businesses that complete the program can take out a micro-loan of up to $10,000 at low interest rates through a program-developed revolving loan fund. These loans can help with the upfront capital cost of items such as solar panels. They can save businesses money over time by reducing their energy bills, but they carry a hefty initial cost.

Borderlands Brewing Co. president Mallozzi completed the SCALE UP program this past summer and is now in putting together the business's first stewardship report to track changes in the company's energy use, Mallozzi said. Since participating in the program, Borderlands owners have looked into buying new gauges to more precisely measure the amount of propane they use in brewing, as well as possibly installing solar to power production facilities.

"The truth of the matter is it requires a tremendous amount of commitment and effort to track and do the metrics on your water and energy usage and then to identify inefficiencies and address them," Mallozzi said.

To help with that, Mallozzi has recruited three interns from the University of Arizona to analyze the company's sustainability data and publicize Borderlands' sustainability initiatives.

The brewery is also part of the 2030 District, though Mallozzi said he doesn't think the brewery will make the targets by 2030. Because water is a main ingredient of beer, there's no way to halve the company's consumption of water, Mallozzi said. He remains optimistic though, believing that overall the district can achieve its goal.

He remains dedicated to improving the brewery's sustainability and supports the business ideal of the triple bottom line, which calls for businesses to look at their impact on people and the planet along with their profit.

"Currently all we do accounting for is profit, but there's no accounting for the damage we're doing to the planet or the community," Mallozzi said.

What climate change action means for businesses' finances

Climate change mitigation and sustainability initiatives could have economic implications for businesses seeking to take action.

The initial costs of switching to environmentally conscious equipment can be difficult for some businesses. Mallozzi said his company looked into purchasing carbon-recapture technology to capture the fuel used in fermenting beer to cut down on emissions. But the technology can be very expensive and difficult to obtain for a small business, Mallozzi said, so his company is still figuring out how to purchase that equipment in the future.

In the long run, energy-efficient and water-efficient switches can save business owners money by cutting their utility bills. Shannon Riggs, co-owner of Tucson gift shop Pop Cycle said the store underwent a light retrofitting after she participated in the SCALE UP program. Lamps are nestled in corners of shelves lining the store, and quirky lighting fixtures illuminate the cozy shop. After updating those lights, Pop Cycle owners have since slashed their bills by $150 a month—from $350 to $200.

Agbannawag said business owners may not see the payback from these capital investments right away. He said it can be financially difficult to make a change, so rebates and incentives from the government can help make the transition easier.

He also said financial incentives can come in another way: marketing. By billing themselves as sustainable, environmentally focused businesses can bring in new customers. He pointed to Hotel Congress and the signs heralding its no-straw policy at its bars as an example.

"People have responded really well to that," he said.

Popcycle has saved around

$150 a month

after retrofitting their store lighting

Dorsey Boutwell said she thinks being sustainable attracts a certain kind of guest to Hotel Congress.

"It definitely brings in a specific kind of guest who wants to patronize businesses that are thinking about the future and thinking about socially conscious ways to improve our community for everybody," she said.

Installing double-pane windows or solar panels also affects another facet of the economy: the job market. Eisele said his work with the Tucson 2030 District connects business owners with workers who specialize in those kinds of trades, creating an increased demand for their work.

That shift in employment opportunities can be seen in the solar industry. Solar photovoltaic installer was considered the fastest growing job in the nation in 2018, with a projected growth rate of 105 percent, according to the U.S. Bureau of Labor Statistics' Occupational Outlook Handbook.

In Arizona the solar industry accounts for 7,524 jobs, according to the Solar Foundation's census. That number may increase: The census predicts an industry job growth of 5.7 percent. All those jobs contribute to the growing amount of solar panels in the state, which together are currently capable of powering more than 550,000 homes, the census reports. According to the U.S. Census Bureau, as of July 2017, there are nearly three million homes in Arizona.

A shift in mentality for some

For some businesses, the balance between saving money for consumers and focusing on the environment can be hard to manage, especially when it comes to mandated environmental regulations.

Not all businesses in Arizona support environmentally focused policies. For some, increasing environmental regulations clash with their focus on keeping costs low for consumers and business operations.

Take Proposition 127, for example. The solar power proposition was opposed by the Arizona Small Business Association because it believed the measure would lead to higher electricity costs for consumers, according to the Arizona Daily Star. The since-defeated proposition was also opposed by numerous chambers of commerce in Arizona, including the Arizona Chamber of Commerce and Industry, the Greater Flagstaff Chamber of Commerce, the Greater Phoenix Chamber of Commerce, the Buckeye Valley Chamber of Commerce, and the Tucson Hispanic Chamber of Commerce, according to the Arizona Clean Elections Commission. No chambers of commerce were listed on the Clean Elections Commission website? in support of the measure.

"If passed, the measure would dramatically harm Arizona’s competitiveness, put our utilities’ reliable delivery of power at risk, and would send the wrong message about Arizona’s economic development environment," wrote Glenn Hamer, president of the Arizona Chamber of Commerce and Industry, in a statement opposing the measure.

Many statements by the chambers of commerce opposing the proposition cited fears of job losses and increased electricity costs.

"This measure sends the wrong message about Arizona's business environment," wrote Gonzalo de la Melena, president of the Arizona Hispanic Chamber of Commerce President, in a statement. "It will cost our state thousands of jobs, jeopardize the affordability and reliability of our energy future and weaken the economy we've worked hard to rebuild since the recession."

But for some businesses, taking action on environmental issues is a priority worth the potential hit to profits.

Mike Mallozzi speaks during a Tucson 2030 District monthly meeting on April 10. Photo by Ava Garcia

Mallozzi said businesses have a primary role in climate change mitigation. He supports a carbon tax system, despite the potential costs that such a tax could add to his business. Such a tax would establish a price on carbon emissions and charge companies for these emissions.

"Honestly, I feel like if you’re not part of the solution, then you're part of the problem," he said. "Our current economic system does not account for the environmental damage that our economic activity does, and we need to start accounting for it."

Dorsey Boutwell said it's important for businesses to have a take a lead in environmental action, especially because the largest polluters are often corporations. But she sees a shift in mindset in her own business and those around her.

"Businesses are made out of people, and people have shifted their mindsets," she said.