“I am no environmentalist,” says Rüdiger Kreuzholz. “I switch off the lights when I don’t need them and shut down my computer at the end of the day because it simply makes sense.” True, you may not find Rüdiger strapping himself to a sequoia to halt a clear-cutting project, but you won’t catch him printing out an e-mail very often either. Rüdiger buys only energy-saving light bulbs. When he built his house a year and a half ago, he had district heating installed. But Rüdiger’s strongest contributions to “saving the planet” take place in his office – not by watering the carbon-munching ferns at his workspace, but by heading up an SAP application known as SAP Environmental Compliance.
Rüdiger is a solution manager for SAP ERP, where he concentrates on the solution SAP Environmental Compliance, an application that draws data from a company’s various SAP, non-SAP, and home-grown systems to give customers detailed information about the amount of emissions they expel, such as nitrous oxide, sulfur dioxide, and the increasingly menacing carbon dioxide. Not only does the application measure emissions, it also calculates emissions from resource consumption based on defined formulas. For example, a company may not have the infrastructure to measure the amount of emissions produced from burning fuel, but this SAP application can calculate the emissions based on the quantity of fuel consumed. The application also warns companies when they are at risk of exceeding their permitted emissions levels.
But this isn’t the first effort SAP has made towards green IT. “A little known fact,” Rüdiger adds, “is that SAP has been developing applications that help companies get greener for 12 years now.” In 1995, chemical companies such as BASF and Bayer approached SAP about the development of a database for their chemicals and material safety data sheets. The resultant application now goes by the name of SAP Environment, Health & Safety. Since then, SAP has added various features to the application, including functionality to check compliance with the transport of dangerous goods, such as gasoline, or liquid nitrogen. But it wasn’t until 2003 that SAP tackled the issue of emissions with a specific application. “At that time, we found out that there was a lot of discussion going on regarding greenhouse gas management and emissions trading in the European Union,” Rüdiger says. “We then made the business case for an individual application, one with its own release cycle so that we could keep pace with rapidly changing environmental policies.”
The cost of noncompliance
By culling the data using these technologies, SAP Environmental Compliance can quickly inform customer governance staff when emissions threaten to breach limits prescribed by federal, regional, or local environmental regulations – thus helping customers avoid hefty penalties and fines. In doing so, the application also strengthens SAP’s portfolio of solutions for governance, risk, and compliance For example, In the United States, companies can be fined thousands of dollars for not complying with environmental regulations. “Fines can be charged by the day,” Rüdiger says, “so one year of noncompliance can mean fines in the millions.”
Although companies obviously have a financial interest in implementing the SAP Environmental Compliance application, the benefits for the environment are on a grand scale. SAP has sold the application to 80 customers based in different parts of the globe, each faced with their country-specific environmental regulations – regulations that are becoming increasingly stringent as the issue of climate change gains attention in the public eye. SAP works with development, consulting, and implementation partner TechniData to stay on top of all the new and changing legislation. Environmental engineers from TechniData, a company with more than 20 years of experience in environmental compliance, consult with the scientific community, business leaders, and legislating bodies to map these requirements to the application on a country-by-country or even a project-by-project basis.
A higher purpose
But for Rüdiger, working in the development of SAP Environmental Compliance isn’t just about regulations and financial benefits. “I wouldn’t say I go to work each day to save the planet,” he says. “But I am very interested in the subject. Climate change is a fact. Just look at the signs: the rapidly melting glaciers in the Alps, and countries are already racing to claim the oceans under the retreating arctic ice caps for resource exploration.”
Indeed, if current carbon emission levels persist, the signs won’t only be climactic but economic as well. According to the Stern Review, a widely referenced tome on the economics of climate change written by economist Nicholas Stern, climate change “is the greatest and widest-ranging market failure ever seen.” In the review, Stern refers to climate models that predict an increase in global temperatures between 2 – 3° Celsius by 2050. This increased temperature would result in declining crop yields, and hundreds of millions of displaced persons due to flooding and rising sea levels, drastically increasing the strain on public finances. A 2 – 3° increase in temperature could result in permanent loss of up to 3% in global world output, and an increase of 5 – 6°, a real possibility by 2100 according to Stern, would result in losses of 5 – 10% in global gross domestic product. All models used in the Stern Review point to one conclusion: “The benefits of strong, early action on climate change outweigh the costs.”
And this is where Rüdiger’s and the development team’s work shines. By offering an SAP xApp that can be implemented quickly in any kind of IT landscape, companies can comply with relevant regulations sooner than later. “The hidden benefit for companies is that they actually become more efficient by complying with these regulations, which is good for their bottom lines as well,” Rüdiger adds.
The market for carbon
The name change from SAP xApp Emissions Management to SAP Environmental Compliance hints at a whole new scope of functionality for the application. Rüdiger is tight-lipped about upcoming features, but he does feel that there is a lot of promise in energy and emissions savings in the near future. And the application will continue to help companies take advantage of carbon markets. These markets allow companies to purchase carbon credits if they are in danger of exceeding regulated limits or to sell their credits if they have a surplus. Carbon markets are already in place in Europe and in development in the U.S. “The problem with the carbon markets in Europe is that the European Union started out by giving too many credits to the companies and the price quickly collapsed. But the EU will probably issue fewer credits to companies the next time around so that there will be a real market out there.” This has worked well for other emissions markets, where in some cases the value of credits has jumped 10-fold in one day.
Between releases however, Rüdiger will continue to think globally in the further development of the application, by including innovative functionality that can actually help turn the climate-change trend around. And he’ll keep acting locally as well, always thinking twice before pushing the “print” button.