Monday, September 25, 2006

Going Green with RFID!

RFID Law Journal
Newsletter No. 16
September 25, 2006

On the heels of Al Gore’s widely acclaimed documentary “An Inconvenient Truth,” demonstrating one’s “green” bona fides is more popular than wearing a pair of Crocs. Will any Hollywooders dare show up to next year’s Oscar’s without their Prius? In the past week, we’ve seen an unprecedented amount of “alternative energy” funds being announced by, among others, former President Clinton at his Global Initiative, including adventure billionaire, Richard Branson’s $3 billion effort to curb greenhouse gases and promote alternative energy.[1] Amazingly, President Clinton’s announcements came on the heels of two surprising initiatives in California, an incubator state that not only recently passed ambitious legislation to reduce greenhouse gases by 2020 but brought a sizeable lawsuit against the six largest auto companies for their alleged role in contributing to GHG buildup. And lest we forget about California’s private sector, VC powerhouse Kleiner Perkins Caufield & Byers announced plans for a 9-figure alternative energy fund earlier this year, making it clear that real business opportunities are arising in the alternative energy space.

While the American public could perhaps use a “We’re Going to the Moon” speech to outline a clear vision for achieving the dream of energy independence, there are some practical technological applications which may already be providing us with the foundation for progressively addressing some of the concerns identified by the Green movement. Reviewing the auto industry hybrid projections for 2010 doesn’t provide much encouragement for the notion that widespread adoption of “green” technologies is around the corner. However, there is hope that several simple applications of existing technologies, such as RFID and other auto identification technologies, could favorably impact the GHG problem long before American policymakers seriously move down the path of rolling out proven green technologies.

Presumably, Mr. Branson, who leads, among other organizations, Virgin Atlantic, is aware of potential for RFID, among other auto identification technologies, to serve not only as a positive ROI vehicle for airlines (e.g., substantial cost savings for spare parts maintenance, improved baggage systems, etc.) but also as a technology that enables achievement of his environmental vision.

Indeed, airlines understand quite well that photons are cleaner and far cheaper to move than paper. Extracting efficiencies out of the supply chain for manufactured goods, including the long, logistical supply chains which are largely enabled by international air cargo operators, may play a significant role in achieving, among other things, environmental goals.

Like virtually all of the world’s major airlines, Virgin Atlantic is a member of IATA. While IATA’s members aren’t necessarily motivated by environmental friendliness, RFID may present a potential “win-win” for both the aviation industry and environmental movement. IATA is testing a variety of auto identification technologies, including RFID, as enablers of its StB (“Simplifying the Business”) initiatives. Its e-Freight Initiative is targeted to eliminate paper from international shipments by 2010 among its participating carriers and nations. RFID is among the potentially enabling technologies for this initiative. According to IATA’s projections, this initiative could save annually the “paper” equivalent of 39 Boeing 747 aircraft. That’s a lot of trees!

There are a number of other organizations who are certainly well-positioned to save a few trees by implementing incremental changes in the way they go about their daily business. One can hardly imagine a better place to begin than the U.S. federal government.

The Under Secretary for Acquisition, Technology and Logistics adopted its UID policy to respond to a 1998 report of the GAO criticizing ATL’s management of its equipment inventory. The GAO had determined that the DoD’s inventory exceeded its war reserve and current operational requirements but lacked key spare parts due to inadequate accountability on material shipments and ineffective monitoring of spare parts. As discussed in several of our other newsletters, the DoD is at the head of the RFID adoption curve. Coupled together, these auto identification technology deployments could substantially impact the DoD's "green" bottomline, as it captures substantial efficiencies within its supply chain.

Other federal agencies are starting to roll out auto identification initiatives within their supply chains. In December, 2004, the GSA issued Bulletin FMR B-7 (Radio Frequency Identification) directing all U.S. federal agency heads to review their processes and consider strategies for the future use of RFID technologies with a view toward improving personal property management, asset visibility, and maintenance practices and facilitating supply chain management improvement. As a result of this RFID initiative, more than a dozen federal agencies are now rolling out RFID applications. The anticipated supply chain gains, coupled with other federal initiatives to reduce paper (e.g., the Paper Reduction Act), may eventually impact the “green” bottom line, though not necessarily initiated based upon such objectives. Just as we, acting as individuals, implement “green” policies at the local level by recycling our aluminum, plastics and paper, large organizations and governments can start making marginal improvements in their behavior by adopting more efficient technologies, such as auto identification technologies, at the organizational level and favorably impact environmental issues.

Obviously, government is not alone in implementing RFID and other auto identification technologies. A number of leading multinationals are in the process of substantially altering their supply chain technologies through such deployments. If, as the aviation example cited above is demonstrative of the types of potential "green" gains, then the attorneys and business managers representing such multinationals should be considering whether implementation of such auto identification technologies could qualify their companies for carbon credits. If so, that could be a potential "win-win" for all stakeholders.

© 2006 – RFID Law Journal, LLC.Learn more about RFID legal issues at You contact our editor about this publication at Usage of this material is subject to the terms and conditions set forth at This material is provided as an educational resource and is not to be construed as legal or other (including investment) advice. You should not act on any information contained herein without the advice of a trusted legal advisor.

[1] Be clear, tapping into the alternative energy market will undoubtedly provide good fodder for the 2008 Presidential Campaign Trail. Indeed, it’ll be interesting to see who can successfully define for us how America can transform itself into a “green” economy while sustaining its ability to earn “greenbacks.”


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