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Shareholders say: Tell the truth about fracking

Sunday, March 7th, 2010

IMG_0697_hydraulic_ranch

No form of energy–not solar, wind, hydropower, obviously not coal or oil–comes without environmental tradeoffs.

One promising new energy source–a vast supplies of natural gas, trapped in shale deep beneath the earth’s surface–is getting renewed scrutiny these days, and for good reason.

While natural gas is often called a “bridge” to a clean energy future, critics are bombing the bridge with a frack attack, says energy policy analyst Kevin Book of Clearview Energy Partners.

Book was referring to the drumbeat of questions being raised by environmentalists, community activists, reporters and  members of Congress about  hydraulic fracturing, or fracking, a process during which water, chemicals and sand are pumped underground at  high pressure to cause tiny fissures in rock and force natural gas to the surface.

In the weeks ahead, new pressures will come from activist shareholders of a dozen energy companies. They’ve filed shareholder resolutions asking the companies to take a hard look at fracking and its risk, and they will raise the issue at annual shareholder meetings. (more…)

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Posted in Energy, Environment, Socially Responsible Investing, Sustainability, Transparency | 3 Comments »

Two cheers for Wal-Mart’s CO2 pledge

Thursday, February 25th, 2010

WMT-EDFUntil now, Walmart’s bold sustainability efforts were marred by a glaring omission.

The $405-billion a year retailer has worked hard since 2005 to save energy, reduce waste and sell more sustainable products.

But it resisted pressures to reduce or hold steady its own greenhouse gas emissions. In fact, its carbon emissions have grown, as the middle graphic below shows. (There’s a cleaner version in WMT’s responsibility report, here.) When it comes to global warming, Walmart would appear to be doing more harm now than it was three or five years ago.

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Today, Walmart made its first major commitment to reduce greenhouse gases–although, in typical WMT fashion, rather than set a tough goal that might affect its own growth curve, the company plans to turn up the pressure on its thousands of suppliers to reduce their emissions. (more…)

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Posted in Climate Change, Consumption, Energy, Sustainability | 1 Comment »

Nukes: Why small is beautiful

Sunday, February 21st, 2010

If anyone tells you they know what building a new nuclear power plant is going to cost, be skeptical.

No one has built a commercial nuclear power plant in decades in the U.S. During the 1970s and 1980s, cost overruns derailed more than 100 reactors. (Ever-increasing regulatory burdens and sky-high interest rates drove up costs, too.) In part because no reactor has built here in so long, no bank or group of banks wants to take on the risk of lending more for a new plant. That’s why the Southern Co., which plans to build two new reactors in Georgia, needs the $8.3 billion in U.S. government loan guarantees announced last week by President Obama. While all the other worries swirling around nuclear power—what to do with the waste, fear of proliferation, the threat of terrorism, safety and the rest—play some role, the most important thing standing in the way of a so-called nuclear renaissance in the U.S. is that building big new plants costs too darn much money.

And yet, if we want to stop burning coal, the dirtiest fossil fuel, to generate baseload electricity, we need to explore the nuclear option. That means finding ways to bring down the costs.

One option? Build smaller nukes.

Hyperion's small underground reactor, compared to a conventional nuclear plant

Hyperion's 12-ft tall underground reactor, compared to a 170-foot high above-ground conventional plant

Small nukes–sometimes called backyard nukes, because some of them could literally be buried in a suburban yard–were the topic of an excellent front-page story last week in The Wall Street Journal (Small Reactors Generate Big Hopes, subscription req.) and a panel discussion the following day at the Platt’s nuclear energy conference in Bethesda, Md.  Small nukes are a hot topic right now because three utility companies–Tennessee Valley Authority, First Energy Corp. and Oglethorpe Power Corp.–have agreed to work with Babcock & Wilcox, a longtime industry supplier, to get a small reactor design approved by the U.S. Nuclear Regulatory Commission.

The Babcock & Wilcox reactor, called mPower, would generate 125 to 140 megawatts of power, about a tenth as much as the big plants being proposed by the Southern Co. and others. Other modular nukes are even smaller: NuScale Power, a venture-funded startup, wants to build a reactor that’s 65 feet long and 15 feet in diameter, capable of generating 45 MW of power. Another startup, called Hyperion Power, is touting  a 25MW reactor, which would be compact enough (5 feet across by 12 feet high) to fit in a pickup truck, yet powerful enough to supply about 20,000 homes. (more…)

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Posted in Climate Change, Energy, Sustainability | 6 Comments »

The power of small changes

Tuesday, February 2nd, 2010

When Chris McKenna, who manages a fleet of trucks for Poland Spring, learned that the company’s drivers were racking up as much as 1,400 hours a month of idle time, he saw an opportunity to make a difference. Running truck engines in winter kept the cabs warm — the company is based in Maine — but it cost Poland Spring money and polluted the air.

To see which of the company’s 65 drivers were racking up the most idle time, McKenna ranked them, based on data from onboard computers. “All we did was talk to them about it, and put a list up in the break room,” he told me. “Human nature, no one wants to be at the bottom of the list.” To sweeten the deal, the 10 drivers with the lowest idling time got a gift card for fuel they could use for their own cars.

The results were dramatic. Idle time dropped from 1,400 hours in February 2007 to 1000 hours in February 2008 to just 380 hours in February 2009. Depending on fuel costs, cutting idle time has saved the company thousands of dollars a year—roughly $20,000 during 2008, for example.

There are two lessons here. First, as I wrote recently about OPower, changing behavior is a powerful and low-cost way to curb climate change. Second, small changes can add up to big impacts, as the Environmental Defense Fund makes clear in this cool video from its Innovation Exchange website.

As EDF notes, fleet vehicles are driven hard, averaging nearly double the mileage, fuel consumption and emissions of personal vehicles. Currently, EDF says there are more 3 million corporate fleet vehicles in the United States emitting 45 million metric tons of carbon dioxide per year.

I spoke with Chris McKenna last summer while helping EDF write a series of case studies on greening fleets. (The case studies (more…)

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Posted in Climate Change, Consumption, Economics, Energy, Environment, NGOs, Sustainability | 1 Comment »

GE and Washington: Too cozy?

Sunday, January 31st, 2010

Since 2004, when I wrote a story for FORTUNE called Money and Morals at GE , I have been an admirer of General Electric and its CEO, Jeff Immelt. My admiration deepened when GE unveiled EcoMagination, its effort to solve important environmental problems. Immelt and GE also led the U.S. Climate Action Partnership, an alliance of big business and big NGOs committed to getting the government to regulate greenhouse gas emissions.

Jeffrey Immelt

Jeffrey Immelt

But–and you knew there’d be a but, didn’t you?–I’ve got a couple of questions about GE and Immelt that have been nagging at me. First, has GE become overly focused on Washington? Second, when will Immelt deliver for GE shareholders?

The first question was prompted by an aside in John Harwood’s column in The Times a week ago, about the Obama administration’s all-out effort to get Ben Bernanke confirmed as Fed chief. He wrote:

The investor Warren Buffett and Jeffrey R. Immelt, the chairman of General Electric, helped contact senators, a senior official said.

There’s nothing wrong with this, of course; Immelt has the right to ask senators to support Bernanke. But it reminded me that this registered Republican and his company have closely aligned their interests with the administration. Immelt serves on the president’s Economic Recovery Advisory Board. Newly-released figures show that among big companies or unions, GE was second only to Exxon Mobil in lobbying expenses during 2009, spending $21.4 million. (Other sources put the figure higher.) This isn’t a surprise–GE is a huge company (2009 revenues were $156 billion) and it has a myriad of Washington interests, including taxes, trade, energy policy and financial regulation.

But there’s more. GE’s Washington operation is a case study in Washington’s revolving door. Nancy Dorn, who runs the office, (more…)

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Posted in Economics, Energy, Environment, Politics | 3 Comments »

Siemens energy plan: Diversify

Thursday, January 28th, 2010

When it comes to the energy, Randy Zwirn doesn’t play favorites. As CEO of the global energy service division of Siemens and president of Siemens Energy, Zwirn has a stake in the coal, nuclear, gas, wind and solar industries, as well as the smart grid and transmission business.

Randy Zwirn

Randy Zwirn

It’s a big stake, too. When we spoke today, Zwirn told me that one-third of all the energy-generating capacity in the U.S. uses Siemens’ power-generating equipment. Impressive. Siemens Energy employs about 12,000 people in the U.S., mostly in manufacturing and services.

Siemens has factories that make rotor blades and nacelles for wind turbines in Hutchison, Kansas, and Fort Madison, Iowa. It operates a factory that make turbines for gas-powered plants in Charlotte, N.C. In nuclear, after pulling out of a joint venture with Areva in which it was a minority partner, Siemens has formed a partnership with Rosatom, a fast-growing state-owned atomic energy firm in Russia. Last year, Siemens bought a 40% stake in Arava, an Israeli firm that makes utility-scale solar thermal power plants. That’s a business that should work in the southwest U.S., Zwirn says.

As for coal, Siemens has turned to the U.S. Department of Energy for help in going forward with projects designed to capture and store carbon emissions from coal plants. It’s working with Tenaska, an independent power producer, on a $3,5 billion – not cheap! – clean coal plant under development near Taylorville, Illinois. That plant has been selected by DOE for a loan guarantee of up to $2.5 billion. Meanwhile, DOE has provided a $350 million grant for a coal plant near Odessa, Texas, proposed by Summit Energy that will use Siemens gasification and power generating technology. “We need to figure out a way to utilize coal,” Zwirn says. (more…)

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Posted in Economics, Energy, Sustainability | No Comments »

Electric cars: all systems go

Tuesday, January 26th, 2010

Despite the disappointments of Copenhagen, despite the inaction on climate-change regulation in Congress, despite the global recession, the momentum behind electric cars keeps building.

Yesterday, Better Place, the Silicon Valley-based electric car startup, raised $350 million in financing—the biggest clean tech investment ever, the company said, and a validation of a business model that has been scoffed at by the auto industry. The investment round, led by HSBC, values Better Place, which has yet to put a car on the road, at $1.25 billion.

“Electric vehicles are, at this point, inevitable,” said Jason Wolf, vice president of Better Place. “We’ve broken through, and there’s no turning back.”

Big automakers, meanwhile, are pushing forward with their electric offerings, as executives from Nissan and Ford affirmed yesterday during a “Green Car Summit” held at the U.S. Capitol.

Nissan Leaf

Nissan Leaf

Nissan has been taking its all-electric Leaf, which will be introduced next fall, on a 24-city U.S. tour.  “The market is ready,” said Scott Becker, senior vice president of Nissan North America. “We’ve had an incredible reaction from consumers.” He said more than 38,000 people have signed up to get more information about the car.

“This is going to be a vehicle designed and made for the mass market,” Becker said. The car will have a range of about 100 miles before needing a new charge, good enough to meet the needs of 90% of U.S. drivers.

Lots of forces will bring an array of new electric cars to market in 2010 and 2011–technological improvements in batteries, concerns about climate change (despite legislative foot-dragging), worries about the U.S.’s dependence on imported oil and, most of all, the increasingly attractive economics around electric cars, which we’ll get to in a moment.

Having said that,  significant disagreements remain even among electric-car advocates about how fast the new technology will be adopted, and what form it will take. Will gas-electric hybrids like the Toyota Prius or Ford Fusion dominate, or will the market shift to plug-in hybrids like the Chevy Volt or all-electrics like the Leaf? Will electric cars be a niche business, a mainstream product or–maybe, just maybe–will they come to dominate? Or are they being overhyped? Certainly, there’s no shortage of skepticism out there, particularly from auto-industry incumbents.

“Yes, you will have the intellectual guys who drive electric vehicles,” scoffed Stefan Jacoby, CEO of Volkswagen Group of America, who spoke at the “green car” event. But, he argued, mass-market consumers won’t pay a premium for electric cars and they don’t want to deal with the hassle of charging their car batteries.

When Jason Wolf of Better Place opined that 50% of new car sales could be electric by 2020, Jacoby shot back: “That’s totally impossible. We need to be realistic.”

Still, Better Place has made more progress in the last couple of years–during a global economic meltdown–than most people would have expected. It’s got the support of the governments of Israel and Denmark for widespread rollouts, which require

Renault Fluence ZE

Renault Fluence ZE

building charging stations as well as battery-switching operations throughout those two countries. (The Better Place model envisions battery switches for long trips.) It’s got a commitment from Renault build 100,000 electric cars, a new model known as the Fluence ZE (for zero emissions, a car that I wrote about here.) And yesterday’s round of Series B funding brings in new investors including HSBC, Morgan Stanley Investment Management, and Lazard Asset Management. Charles Stonehill, Better Place’s CFO, wrote on the company’s blog:

Our investors represent some of the largest financial institutions in the world, employing exceptionally thorough due diligence processes that are commensurate with the size of investment.

Given Renault’s commitment and the infusion of equity, don’t be surprised if the next country where Better Place rolls out its cars and its unique business model is France. Higher gasoline prices in Europe make Better Place a better business there.

Which brings us to the economics. While you’ll get arguments about the specific numbers, most people who have looked at electric cars will tell you that as battery costs come down, electric-powered engines are more efficient and less expensive to operate that gas-powered ones. Better Place’s Wolf says the cost per mile of fueling an electric car is two to three cents for the electricity, plus another five to six cents for the battery when amortized over the life of the car. Figure a dime a mile. In the U.S., with gasoline priced at $3, powering a car with gas costs 12-14 cents a mile. In Europe, where drivers pay $6 to $8 per gallon of gas, you can double that. The point is, there’s enough money to be made so that carmakers and consumers can both do well as electrics roll out, even though the upfront costs of an electric car are higher.

Not surprisingly, the start-up companies who are building only electric cars expect the technology to be embraced relatively quickly and widely. Established automakers, even those committed to electrics, are more cautious.

“We view this as a revolutionary journey,” said Nancy Gioia, director of global electrification at Ford Motor. Evolution might be more like it: By 2020, she said, Ford expects that between 10 and 25% of its new car sales will be electric. The bulk of those, she added, will be hybrids like the Fusion. With a hybrid, a gasoline engine can be used to overcome what the industry calls “range anxiety”–the driver’s worry that a battery could run out on long trips.

But Kevin Czinger, the dynamic CEO of CODA Automotive (who will be speaking at FORTUNE’s Brainstorm Green), proudly says that his company will be “100 percent independent of the oil industry.” CODA intends to start small, selling cars only in California beginning later this year, but Czinger is counting on market dynamics to both improve the product and drive sales.

“Do I think I can sell 1,000 high quality electric cars in California? Absolutely,” he said. That will signal markets that the business is real. “Do I know what the market will do with that signal? No. But market forces should work to drive down costs and drive up performance.”

He’s got a point. You never know what will happen with a disruptive technology comes along. When is the last time you bought a CD? Or a a new landline phone?

Says Czinger: “We envision an affordable electric car in every American garage.”

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Posted in Consumption, Economics, Energy, Sustainability | 2 Comments »

Next steps: Climate action and green business

Monday, January 25th, 2010

Under the category of shameless promotion of self and friends, I want to call your attention to three upcoming events where I’ll be asking questions of some very smart people.

Tomorrow (Tuesday, January 26), I will be moderating a webinar for my colleagues at The Energy Collective called Is Global Action on Climate Change a Pipe Dream? Breaking Down What Was (Or Wasn’t) Achieved at COP15.

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Next Thursday, February 4, I’ll be in San Francisco to join my colleagues at Greenbiz.com, led by executive editor Joel Makower, at their annual State of Green Business Forum at the PG&E Auditorium.

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The following Tuesday, February 9, Joel and I and the Greenbiz crew will reconvene for a State of Green Business Forum at the Chicago Mart Plaza.

Here are some details:

We’ve got a great panel for The Energy Collective webinar, which is free of charge. Robert Stavins, the Albert Pratt Professor of Business and Government at the Kennedy School at Harvard, as well as director of the Harvard Environmental Economics Program. Prior to Harvard, Stavins was a staff economist at the Environmental Defense Fund. You can read one of his thoughtful blogposts about Copenhagen here. Aimée Christensen is an activist and consultant who’s worked in government, business, law and the nonprofit world on climate, human rights and development issues. She’s now got her own company, Christensen Global Strategies, which advises corporate, governmental,  and non-profit clients seeking to address the global challenges of climate change, ecosystem degradation, and resource scarcity. Her clients have included the Clinton Global Initiative,  Swiss Re, the United Nations Development Program, Virgin United, and Wolfensohn + Co.  Our third panelist will be Dirk Forrister, managing director at Natsource, a leading carbon finance company. Dirk previously worked for the Clinton White House and the Department of Energy, so he knows the Washington scene.  We’ll begin our conversation at 1 p.m. ET, and allow plenty of time for questions from the audience. You can register for the event here.

In San Francisco and Chicago, after Joel Makower and Greenbiz release their annual State of Green Business report, we’ll spend the day talking about where green business is going with an impressive array of business leaders. In San Francisco, they will include Carl Bass, the president and CEO of Autodesk, Rob Bernard, chief environmental strategist for Microsoft, entrepreneur and MacArthur fellow Saul Griffith, Rich Lechner, v.p. of energy and environment at IBM,  Rick Rommel, who leaders emerging businesses for Best Buy and Kevin Surace, CEO of Serious Materials. (Van Jones, the former White House green jobs czar, is also on the SF agenda, but he will be appearing by telepresence from Washington, D.C.) In Chicago, we will be joined by David Baum, president of the Baum Realty Group, Jim Davis, executive director for sustainability at SAP, Donna Ducharme of the Delta Institute, Rich Lechner, Sonia Medina, U.S. country director for EcoSecurities, C. David Myers, president for building efficiency at Johnson Controls, and Richard L. Sandor, chairman and founder of the Chicago Climate Exchange, among others. To register for either event, or obtain further info, visit the State of Green Business website. We’ll be talking about these topics:

Carbon Management After Copenhagen: How are companies considering carbon now that the Copenhagen summit is behind us? Hear how companies are viewing carbon as a strategic issue, implementing sophisticated new accounting schemes, realigning their products and processes, and preparing to compete in a low-carbon economy.

Green Marketing in the Age of Radical Transparency: In a world in which vast amounts of information are available about companies and products, the rules of green marketing have changed. Today, companies must respond to green ratings and rankings from websites, media companies, nonprofit organizations, and big players like Walmart. In a world where consumers have unparalleled access to data about products and companies, how does a company truly be seen as green?

Can IT Solve the World’s Problems? The information technology sector is responsible for 2% of the world’s greenhouse gas emissions, but its impact on the other 98% is growing rapidly. Hardware, software, and service providers are creating new products and services that are enabling large and small companies to better measure and manage their environmental impacts.

When Green Business Meets Cleantech: It used to be that green business and clean technology were separate realms. No longer. Today, the two are converging, as global companies and start-ups alike are harnessing clean technology as the foundation for a new generation of green business opportunities. The result are some unlikely corporate players and alliances.

On a personal note, it’s been about a year since I began working with The Energy Collective and Greenbiz. Robin Carey at TEC and Joel Makower and Pete May at Greenbiz are great partners, and their support for my writing makes this blog possible. So, thanks guys!

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Posted in Climate Change, Economics, Energy, Sustainability | No Comments »

A Naval officer’s “Atomic Insights”

Thursday, January 21st, 2010
Rod Adams

Rod Adams

Rod Adams has not followed a typical career path: Formerly the chief engineer on a U.S. Navy submarine, he’s now a prominent blogger on nuclear power.

Rod is well qualified to preside over Atomic Insights, the blog where he writes about energy supplies, technology and politics from an atomic point of view.

For one thing, he knows nukes–not only was he an engineer on a nuclear-powered sub, he has taught “the principles of naval weapons systems” at the U.S. Naval Academy.

For another, he’s trained to do without sleep. “You get four hours of sleep, maximum,” he says, about submarine life. Now, he is able to hold down a day job as a Navy commander (assigned as a ship and submarine maintenance analyst) and still write, prolifically, averaging four to 10 posts a week. That’s because he often posts to his blog between 3 a.m. and 5:30 a.m.

Recently, Rod and I met at 7 a.m. (early for me, mid-morning for him) for coffee at a Starbucks in Crystal City, Va., near his office, to talk about nuclear power. I wanted to get the perspective of an expert who has, literally, lived with nukes. He handed me this:

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“You know what that is?” he asked me. “It’s the equivalent of a ton of coal.” It would be, that is, if the tiny metal cylinder was made of uranium. (more…)

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Posted in Climate Change, Energy | 9 Comments »

OPower, peer pressure and climate change

Tuesday, January 19th, 2010

We can solve the climate crisis with the right tools–solar panels, wind turbines, electric car batteries, No. 10 envelopes and smiley faces.

Envelopes? Smiley faces?

Yep. A startup called OPower has learned that by mailing utility customers personalized reports on their energy consumption–and then by comparing them with their neighbors–people can be persuaded to save energy, reduce emissions and help fight global warming.

opower1

Energy hogs learn that they are most wasteful than the Joneses. Energy misers get smiley faces in the mail, and they want more.

Turns out we never escaped high school–we’re always influenced by what other people are doing.

“If I tell you that you’ve spent $1200 on heating this year, you don’t know what that means,” says Dan Yates, the company’s co-founder and CEO. “But if we tell you that you spent $500 more than your neighbor, that tells you something.”

I recently met Dan Yates at OPower’s offices in Arlington, Va., just outside of Washington. Yates is just 32, but OPower is his second startup. He sold his first, an educational software firm called Edusoft, to Houghton Mifflin for $20 million in 2004. He made enough money to spend a year traveling with his then-girlfriend, now wife, from the Artic Circle in Alaska to the southernmost tip of South Africa.

That trip turned him into an environmentalist, he says. Dan then started OPower with Alex Laskey, a friend from Harvard, who had worked in advertising and politics. Dr. Robert Cialdini, a renowned social psychologist who has spent his life studying ways to shape human behavior, is an investor in OPower and the company’s chief scientist, albeit not on a full-time basis. The company’s biggest investor is New Enterprise Associates, a venture capital firm.

How’s the company doing? So far, so good. Customers who get the peer-to-peer companies cut their energy consumption by 1.2% to 2.8%, on average, studies have found.

“Peer comparison reports can create significant net costs and carbon savings, benefiting both individual households and the environment,” said a report by  Yale Law professor Ian Ayres and two students.

A couple of percentage points may not sound like much but it’s enough to interest utility companies, who are OPower’s customers. Because regulators in about 20 states reward utilities for helping their customers become more efficient, utility companies can make money by using OPower. The company’s reports are currently being used by 24 utilities that distribute them to between 1 and 2 million customers.

“If we could get across the country, we could have the emissions impact of the entire wind and solar industry,” said Yates.

Efficiency, it’s often said, is the cheapest form of renewable power. According to Michael Sachse, OPower’s senior director of regulatory affairs and general counsel (and another Harvard man),  the company spends about 3 cents to save a kilowatt hour of electricity. Building a new coal plant to generate that same kilowatt would cost 5-6 cents, wind would cost 10-12 cents and solar can be 25 to 30 cents.

As Cialdini told David Roberts of Grist, social psychology is

the least capital-intensive way of making change…Technology costs a lot. Incentive programs cost a lot (and as soon as they are discontinued, the behavior flops back). Legislation, legal constraints, taxes, penalties of one sort or another–those are costly in terms of social capital, which organizations and governments are loathe to spend these days.

What you have with social psychology is a set of procedures that are essentially costless to enact, but product levels of change that are comparable to those other mechanisms.

While there’s nothing high-tech about sending energy usage reports to customers by mail, OPower is actually a sophisticated operation. It uses  advanced software, customer data analytics, direct-mail techniques as well as the insights of behavioral economics to persuade people to change. Executives have been hired from Amazon (whose personalized software is key to its success) and Capital One (which built a huge credit-card business through direct mail). “We’re constantly experimenting,” Dan Yates said.

Eventually, by combining OPower’s data analysis with smart grid technology, utilities will be able to help people decide whether to conserve energy and save money by replacing an inefficient refrigerator, unplugging a big-screen TV or turning the air conditioning down at night. If we understood the costs of our energy consumption habits as well as we understand the costs of buying food at the supermarket, we’d consume differently. You can listen to a podcast of my interview with Dan Yates at Greenbiz.com.

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Posted in Consumption, Economics, Energy, Transparency | No Comments »

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