The purpose of this paper is to evaluate the results of the simulation that was performed on March 22, 2013 with CEO2: The Climate Business Game. The goals to be achieved with this simulation were “to maximize profit, significantly cut CO2 emissions, and develop low-carbon products by 2030.” After the two rounds of required play with the simulation, I was able to achieve a stock price of $118, which reflected a gain in the stock price of $43 and I was able to decrease CO2 emissions by 59 percent, which is almost double the required amount of 30 percent. In the end all four groups of stakeholders, the investor, the research, the customer, and the environmentalist were satisfied with the performance of the “Best Power Company.” This paper will describe the steps that were taken to achieve these results and explain the rationale behind the strategy that was used.
From the beginning, the intent of the strategy used was to use an all-around approach to reduce CO2 emissions. The plan was to come as close as possible to achieving the goal of 30 percent CO2 emissions reduction during the first 10 years, which could be added to with the second 10 years. I knew that I wanted to ay away from increasing the amount of coal-burning plants and nuclear facilities because both are highly regulated and many citizens have a preconceived negative attitude toward them in addition to environmentalists who stress the harm they may cause to the environment.
The first step was to retrofit the existing plants. While this was a costly investment at 40 percent of the existing budget and provided only a 10 percent reduction of CO2 emissions, it was chosen because it was a starting block to improve the existing plants over spending much more building new plants, which would take longer to implement. This was a quick solution to meeting the current needs of Best Power Company. The next move was to implement a green energy source that would make a big impact on reducing CO2 emissions, therefore building off-shore wind farms was chosen because it reduced emissions by 20 percent and would increase generation capacity up to 20 percent by the year 2020. These were chosen over land turbines because the winds are stronger offshore.
Smart meters were invested in even though they only provided 5 percent reduction in CO2 emissions because the benefit was that this level of communication would help match energy production with consumption and over time, the meters would pay for themselves. Finally, the carbon capture awareness campaign did not provide a reduction in CO2, but it was an effective tool to advise the customers of efforts to reduce carbon pollution from our existing coal-fired power plants and help our image.
The results for the first round were that the investor, research, and customer were happy, but the environmentalist was not happy that the CO2 emissions reduction was only at 27 percent; however, it was within a suitable range according to the goal that I had initially set. The stock price at 2020 was raised to $100 per share.
The strategy for Round Two was to build upon the initiatives that begun in Round One. The first action was to improve efficiency at all our power plants, which cost 14 percent of our budget, but provided a 10 percent reduction in CO2 emissions. This was less of a risk to the company than building new plants that might be rendered useless if full decarbonization became mandatory before 2040. The next step was to build combined heat-power plants that would assist our commercial customers improve their efficiency and reduce costs while reducing CO2 emissions by 15 percent. We chose to expand Best Power Company’s energy services to our industrial and retail clients to help them save energy and cost savings. This resulted in a CO2 reduction of 10 percent. This program was geared toward the customers who were not in a position to take part with our combined heat-power plants because of their size of business.
Round One focused on building off-shore wind farms, therefore attention needed to be paid to the existing land wind farms by repowering them with newer and larger turbines. This was expected to provide a CO2 reduction of 10 percent. The next step was to institute a green marketing campaign. The cost to the budget was only 5 percent and there was no immediate impact to reducing CO2, but the intent was to make the public aware of green sources of energy with the hope that by educating them, it would pay off in the future with reduced CO2 emissions. This would be because many might choose power from green sources and reduce their own usage. The energy saving campaign that was implemented provided a 15 percent reduction in CO2 emissions and was intended to spur future reductions as customers continued to save more energy.
By the end of the second round, all the stakeholders were happy with the progress that the Best Power Company had made. The investor was satisfied that we had a smart, future-oriented portfolio and were heading toward future profitability. The researcher felt that the investments made in research and development and new products kept the company abreast of the changes to the energy industry. The customer was happy that the company was investing in low-carbon energy, which makes her feel that she is doing something positive each time she pays her electric bill. The environmentalist was happy that the company was being proactive by employing the green energy options. I felt justified in my choices to take an all-around approach to improving existing facilities, creating green options, and educating our customers to make a combined effort to reduce our CO2 emissions while still making a suitable profit for our investors.