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Shipping Pallets, and other Clean Technologies
Joel Makower, 27 Mar 05

Joel Makower is a widely respected writer and consultant on issues of sustainable business, clean technology and green markets. His essays on environmental business and technology are a regular feature of Sustainability Sundays. Take it away, Joel:

Last week’s Cleantech Venture Forum in San Francisco was, like the several that preceded it over the past few years, a celebration of the growing clean-tech industry. But each year, the crowds get bigger, the presenting companies get more sophisticated, and the insider talk gets more self-assured.

I started going to these events -- at which 15-20 companies present their business plans in rapid-fire succession to an assembled gathering of qualified investors -- in 2000, when they were produced by a now-defunct nonprofit, a precursor to the Cleantech Venture Network, which now produces them. The sector was born into a post-boom, dot-bomb world in which venture capitalists were holding on to their wallets, and technology companies were lucky to get any funding at all. Many of them didn’t. My colleagues and I at Clean Edge saw dozens of companies, some with impressive and promising clean energy and advanced materials innovations, wither and die on the vine for lack of the $200,000 or so they needed to get to their next stage of development.

How things have changed.

The world’s growing resource needs and environmental concerns have ripened markets for solar, wind, and fuel cell energy, advanced bio-based materials, water-saving technologies, and other innovations that fall within the clean-tech rubric. And investors have started pouring money into the space -- slowly at first, with signs of much more to come. At least two traditional Silicon Valley venture capital firms are readying quarter-billion-dollar clean-tech funds. The state of California is pumping hundreds of millions more into the market. Oil companies, utilities, electronics manufacturers, and chemical companies are investing even larger sums. And smaller investor groups, like Expansion Capital Partners, are raising money to target the clean-tech space.

Last week’s two-day event saw the typical assortment of entrepreneurs pitching solar and hydrogen energy technologies, advanced battery storage technologies, and other energy-related innovations. There were also firms offering water-conservation products and services, and one with a technology to convert manure and other farm waste into organic fertilizers. One of the most talked-about companies, MBA Polymers, makes recycled plastics from “complex mixed plastic streams.” It is building a plant in China to capture the waste plastics from computers and other used plastic detritus and turn it back into the raw materials for making new plastics.

As the MBA Polymers example suggests, the presenting companies at Cleantech have gone well beyond the business-plan stage. Most have significant capital and intellectual property, impressive management teams -- every firm, it seems, has a passel of PhDs on board, if not a Nobel Laureate or two -- and a few customers. And all were looking for their next $2 million or $20 million to get them to the next stage.

What was my favorite? All that high-tech wizardry notwithstanding, I was seduced by the potential of a decidedly low-tech company: EcoDuro, a manufacturer of high-strength shipping pallets engineered from recyclable paper and glue.

It may not sound all that world-changing until you begin to appreciate the world of pallets -- those ubiquitous wooden shipping platforms that are the workhorses of industry. American businesses send hundreds of millions of wooden pallets into landfills every year, spending a billion or so dollars in the process. About 40% of all hardwood harvested in the U.S. is for pallets, about two-thirds of which are used only once before being tossed out. A fourth of all wood in landfills is from used pallets.

EcoDuro makes a pallet out of corrugated cardboard and recycled paper. It's 100% recyclable, lighter to ship, doesn’t require fumigation (as wood does, to eliminate wood-boring insects), and can be recycled along with other paper and cardboard. And the company’s manufacturing process also allows pallets to become marketing and merchandising tools -- which makes great sense, given the number of shoppers who now patronize “warehouse” stores.

I don’t mean to geek out on cardboard pallets. The Cleantech forum contained many other impressive technologies and companies. But EcoDuro reminded me that for all the promise of solar energy and the hydrogen economy, that cleaner, greener innovation often comes in rather low-tech forms -- a simple idea that has the potential to cause dramatic shifts in resource use at very large scales.

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Comments

And speaking of low-tech, but having a potentially dramatic effect, I recommend a review of the sunpipe at http://www.sunpipe.com I know that someone mentioned this on a comment for a hybrid lighting post, but the more I think about this idea the more I think it should get some in-depth attention. (Note: I do not work for nor do I know anyone who works for Sunpipe.)


Posted by: Tavita on 27 Mar 05

WHAT ?!? "a billion dollars....40% of all hardwood harvested...a fourth of all wood in landfills." Wow. What a fantastic quick win. If you tell me they're like half the price of wooden pallets........


Posted by: Daniel N Smith Jr on 27 Mar 05

Joel, I'm curious to know the source of those statistics.


Posted by: Joseph Willemssen on 28 Mar 05

The added bonus to "clean" pallets that should be shouted from the rooftops is that they will not be a source for invasive wood boring pests. Raw wood pallets are a serious transport mechanism for tree beetles and other insects that are a huge economic and ecological pest to forests and forest resoures as well as urban trees.

In response to the threat from species such as the asian longhorned beetle the US is phasing in a requirement that all raw wood packing materials be kiln dried or fumigated (with methyl bromide) and that this process is documented before shipping. This is not only a costly process but, with the additional demand for methyl bromide, a more toxic process. A "green alternative" to wooden shipping would be great.

"The Animal and Plant Health Inspection Service (APHIS) is amending the regulations for importing logs, lumber and other unmanufactured wood articles by adding treatment and documentation requirements for solid wood packing material imported from China. This change means that wooden pallets, crating, dunnage, and other wooden packing material imported into the United States from China will have to be heat treated, fumigated or treated with preservatives prior to departure from China. This action will affect anyone who uses solid wood packing material in connection with exporting commodities from China to the United States. This action is necessary to control the risk that solid wood packing material from China could introduce dangerous plant pests, including forest pests, into the United States, a risk demonstrated by many recent incidents where exotic pests were detected in solid wood packing material from China."

—Committee on Sanitary and Phytosanitary Measures - Notification - United States [G/SPS/N/USA/137, 30 September 1998]


Posted by: rose bengal on 28 Mar 05

Where can I get more information on the Cleantech Venture Forum? I would be very interested in attending one of these events. I think the clean-tech industry NEEDS to be celebrated and applauded.


Posted by: Eric on 28 Mar 05

Don't overlook the benefit to the recycled paper market. Due to the low value of recycled paper, many communities don't recycle it. By increasing the value and recycled volume of waste paper, we get a 'double' effect on landfill savings.

On the point of green/clean funds, I've been sort of looking around for a green/clean mutual fund. I know about the Parnassus fund and other socially concious funds, but I'm hoping to find something more focused on the green/clean side. Any suggestions?


Posted by: Erik Ehlert on 28 Mar 05

Thanks, all, for the comments. A number of responses:

* PALLET STATS: The statistics about pallets come from a variety of sources, many of them old, though I’ve been told that things haven’t changed much.

I first wrote about pallets in 1992, in my book "The E-Factor." Unfortunately, I can't document all of what I wrote then. But I found a few sources online, some of which offer stats different from mine, but which still express the magnitude of the pallet problem. A sampling:

-- “[Big City Forest] says the national recycling rate for wooden pallets, crates, and packaging is about 10%, with the majority ground into low-value applications like fiber or chips and more than half of the ground wood burned for fuel. BCF estimates that harvesting just the discarded wooden packaging in big U.S. cities would conserve about 300,000 acres of virgin timberland a year. The 88 million pallets discarded annually in the 49 largest urban areas contain about 1.5 billion board feet of usable lumber, or roughly three times the amount of virgin timber used to produce all the hardwood flooring sold in the U.S. every year. -- source: http://web.indstate.edu/recycle/9619.html

-- “According to Wastebusters, Inc., about 4.7 billion feet of solid hardwoods were consumed for the production of wooden pallets in 1992. Experts now estimate that the current annual production level of 600 million new wooden pallets requires the cutting of nearly one million acres of hardwood trees - trees that take up to 40 years each to replace.” -- source: http://www.loadek.com/menace.htm

-- “[m]ore than half a billion pallets are manufactured each year, of which about 57 percent are used just once before disposal, consuming an average of 5.8 cubic feet of landfill space each. Pallets discarded in the U.S. each year contain about as much lumber as is used in framing 300,000 average-sized homes.” -- source: http://www.srs.fs.usda.gov/pubs/viewpub.jsp?index=29

* INVASIVE SPECIES: Yes, this is another benefit of avoiding wood for pallets. And it’s become a global trade issue. Last year, the European Commission published a directive, which went into force on March 1, 2005, with a controversial requirement that all wood packaging must be made from debarked wood and could affect an estimated US$80 billion worth of U.S. agricultural and commercial exports to the EU that are shipped on wooden pallets or in wood packaging materials. It’s currently being adjudicated. (See http://www.useu.be/agri/woodpack.html for more.)

* ANOTHER STORY: While we’re on the subject of pallets, here’s another story that I wrote about 10 years ago regarding General Motors. As part of a waste-reduction initiative, the company decided that it would eliminate wooden shipping pallets at its (then) 25 North American assembly plants. Thousands of GM suppliers were required to switch to corrugated cardboard pallets, which are recyclable. At the time, GM was tossing out some 36,000 wooden shipping pallets a day. By switching to corrugated pallets, GM calculated that it would save $100,000 in reduced disposal costs, and earn $40,000 selling used cardboard -- every business day. From pallets!

* CLEANTECH VENTURE FORUM: The next one is in Washington, D.C., October 24-26, 2005. Then it returns again to the West Coast (usually S.F.) in March 2006. The Web site is http://www.cleantech.com.

* CLEAN/GREEN FUNDS: If you’re talking about mutual funds that invest in clean/green technology, there aren’t any of which I’m aware. The main reason: there are very few publicly held pure-play clean-technology firms, so not many stocks to trade (and the few out there aren’t doing particularly well, for a variety of reasons).

However, if you’re looking for funds with strong environmental records, there are several, including Portfolio 21 (http://www.portfolio21.com), Green Century Funds (http://www.greencentury.com), and the Sierra Club Mutual Funds (http://sierraclubfunds.com).

By the way, please note that I’m probably the last person you should turn to for investing advice.


Posted by: Joel Makower on 28 Mar 05



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