The future

9780300176483The bet between the biologist Paul Ehrlich and the economist Julian Simon, which was described as  “the scholarly wager of the decade” by the Chronicle of Higher Education, was settled without drama–or graciousness. As Paul Sabin writes in The Bet: Paul Ehrlich, Julian Simon and Our Gamble over Earth’s Future:

One day in October 1990, Julian Simon picked up his mail at his house in suburban Chevy Chase, Maryland. In a small envelope sent from Palo Alto, California, Simon found a sheet of metal prices along with a check from Paul Ehrlich for $576.07. There was no note.

It was a victory not just for Simon but for optimists everywhere, and so a fitting way to start the year of 2014. The two men–who did not like one another–had in 1980, at Simon’s urging, placed a $1,000 bet on the price of five metals ten years hence. Ehrlich, whose book The Population Bomb warning of a coming global catastrophe had made him a celebrity, as well as one of the most influential environmentalists of all time, believed that food, energy and commodities would all grow scarce, and thus more expensive over the decade. Simon, a free-market economist, had enormous faith in the power of markets, prices and innovation to solve problems. (Before the bet, Simon was best known as the inventor of the auction system used by airlines to pay passengers not to take overbooked flights.) Between 1980 and 1990, the prices of the five minerals–chromium, copper, nickel, tin and tungsten–had fallen by an average of almost 50 percent.

Simon was lucky as well as smart. A global recession in the early 1980s depressed the prices of metals, and they never recovered. As Sabin reports in his first-rate and very readable book, economists who ran simulations of the bet during every 10-year period between 1900 and 2008 found that Ehrlich would have won the bet 63 percent of the time. Yet the history of the past 45 years, since Ehrlich published The Population Bomb, weighs heavily in favor of Simon’s worldview. Market signals, human ingenuity and technological progress have solved problems that Ehrlich said would doom us all. [click to continue...]

A bank that’s about more than money

628x471Kat Taylor is a piece of work. Last month at the Net Impact conference in San Jose, she began her prepared “remarks” by belting out a jingle for One PacificCoast Bank, the community thrift she founded in 2007 with her husband, Tom Steyer, the billionaire investor and climate-change activist. She can’t abide the fact that the big money-center banks like Bank of America and City finance the coal industry, so her bank has issued a credit card that is co-branded with the Sierra Club. She is surely the only member of Harvard University’s Board of Overseers who sports a half dozen tattoos.

When I met Kat at Net Impact, I knew that I wanted to learn more about her and One PacificCoast Bank. So, on a reporting trip to San Francisco, I visited the bank’s headquarters in downtown Oakland. The bank is small, but Kat has big plans for its growth, which I wrote about today at Guardian Sustainable Business.

Here’s how my story begins:

Like global billion-dollar corporations, every one of us manages a supply chain. You might be supplied groceries by Whole Foods, clothing by Gap, shoes by Nike, gas by Shell and electronics by Apple. Or not – most of us have dozens of retailers or brands from which to choose.

But when it comes to credit cards, the majority of Americans turn to a small number of big banks: JP Morgan Chase, Bank of America, Citi, Wells Fargo, Capital One and US Bancorp.

Kat Taylor, the founder and CEO of One PacificCoast Bank, has set out to change that. One PacificCoast Bank (“Welcome to Beneficial Banking”), based in Oakland, CA, offers a socially and environmentally preferable alternative: a bank with a mission to serve low-income communities and the environment.

And if the idea of switching checking your checking accounts (with their very sticky electronic bill-paying services) or your deposits to a regional bank (without its own nationwide network of ATMs) seems inconvenient, Taylor has a simpler proposition for customers who want to clean up their financial supply chain, just switch your credit card.

“We’re asking people to fund all of their purchasing activity from a bank with which they are aligned,” Taylor said.

But can a little-known bank with just $320m (£199m), in assets take on Wall Street? Certainly not on its own, but Taylor is enlisting some formidable like-minded allies, notably the Sierra Club, in her crusade. As America’s oldest and largest environmental group, with 2.1 million members, the Sierra Club has agreed to issue a credit card with One PacificCoast Bank. The club’s share of the proceeds will help support environmental campaigns, often targeted against polluters who are financed by Wall Street.

The idea of affinity credit cards isn’t new, of course. You can get credit cards emblazoned with the logo of your favorite retailer, sports team or university. Working Assets has since the 1980s offered credits cards that support groups including the Rainforest Action Network and Human Rights Watch, but the cards are now issued by Bank of America and donate only 10 cents per transaction (a miserly amount, since other cards give 1 percent of your spending back). By contrast, One PacificCoast Bank is owned by a foundation, and intends to plow 100% of its profits back into groups that support the environment and low-income communities.

After meeting Kat, I was fascinated read in The Times that she and Tom Steyer operate a small cattle ranch, called the TomKat Ranch, which sells beef under the Leftcoast Grassfed brand; it’s aiming to become a model of sustainable agriculture. Steyer was profiled in The New Yorker in September by Ryan Lizza; he’s working with New York Mayor Bloomberg and former California Governor Schwarzenegger to build a bipartisan climate movement. And if you would like to know how this power couple met, read the rest of my story, here.

Photo: Courtesy of sfgate.com

Novelis: Towards a circular economy

novelis_evercanAs regular readers of this blog know, I find the circular economy to be one of the most exciting ideas in corporate sustainability. This is the idea, sometimes called closing the loop, that when we are done with products, they can be recycled and made into something else, with zero waste. It’s inspired by nature, of course, where nothing goes to waste.

To show the way to the circular economy, consider the aluminum can. Aluminum has the wonderful property of being able to be recycled after use, with no degradation in quality (as opposed to say, PET plastic, which tends to break down every time it is recycled.) Recently I heard about a company called Novelis that has made aluminum recycling the core of its business model. A $9.8 billion company based in Atlanta, Novelis has created a new product called the ‘evercan’ which is guaranteed to have at least 90 percent recycled content–a breakthrough that the company hopes to produce and market with a big beverage company.

Novelis is profiled in my latest story for Guardian Sustainable Business. Here’s how it begins:

Recycling aluminum is a no-brainer – or, at least, it should be.

Producing aluminum beverage cans out of recycled scrap, instead of by mining bauxite and manufacturing new ingots, saves energy, carbon emissions and money. The same is true for the aluminum that goes into cars, planes, electronics and buildings.

If businesses and consumers want to get serious about creating a circular economy – where everything, once used, is made into something else and nothing goes to waste – aluminum is a very good place to start.

Yet the recycling rate for aluminum cans in the US is a mere 55%. That’s below the global average of about 70% and well below rates of better than 90% than Scandinavian countries can boast – or Brazil’s 98% recycling rate.

The low US rate represents an enormous waste of materials and energy – and a big opportunity. Atlanta-based Novelis is aggressively seizing that opportunity.

The $9.8bn firm converts aluminum into flat sheets, most of which is then turned into beverage and food cans. Novelis is already the world’s biggest aluminum recycler, and it aims to do more. Its chief executive, Phil Martens, says the company wants to turn its “whole business model from a traditional linear one to a closed-loop one”.

I’m delighted that Novelis’s CEO, Phil Martens, has agreed to speak at Fortune Brainstorm Green, the magazine’s conference about business and the environment. Next year’s Brainstorm Green will be May 19-21 at the Ritz Carlton in Laguna Niguel, CA. I’m once again co-chair of the event. Watch this space for future announcements of speakers and topics.

A libertarian joins The Nature Conservancy

Lynn Scarlett

Lynn Scarlett

Can conservatives be brought back into the conservation movement? That’s the question facing Lynn Scarlett, the new director of public policy at The Nature Conservancy, who joined the environmental NGO after working as president of the Reason Foundation and in the interior department of the Bush II administration.

As I wrote today at the Guardian Sustainable Business, Scarlett is taking on a big and important job:

Fortunately, she’s not alone. Bob Inglis, a former Republican congressman from South Carolina, leads the Energy and Enterprise Initiative at George Mason University, which aims to “unleash the power of free enterprise to deliver the fuels of the future”. A group called the Conservation Leadership Council, which is led by Gale Norton and Ed Schafer, who were interior and agriculture secretaries during the George W Bush administration, is “encouraging conservative voices to join the conversation about the environment”.

Furthermore, prominent business leaders, including John Faraci, the CEO of International Paper, and Jim Connaughton, a vice-president at Constellation Energy and a former White House official, also belong to the council.

“There are solutions to environmental problems that are consistent with conservative principles,” Scarlett told me last week at The Nature Conservancy headquarters in Arlington, Virginia. The business-friendly NGO works across party lines and has branches in all 50 states (and in 35 countries).

The story goes on to say that no major environmental law has been enacted by Congress without bipartisan support. But, for reasons that have mostly but not entirely to do with the climate-change debate, Republicans and conservatives have broken away from the environmental movement since the 2008 presidential election.

Bringing Republicans and conservatives back into a climate movement will be tough. Some in the Tea Party wing are anti-science; they simply reject the notion that man-made greenhouse gas emissions are warming the earth. Many climate-change solutions are big and complicated, and similar in that sense to Obamacare, which has united Republicans like no other issue. And the big business lobbies that could help bring back conservatives are dominated by fossil fuel interests.

Still, there’s something fundamentally conservative about the idea that people and companies should clean up after themselves and be responsible for the messes they make–even if the mess, in this case, is CO2, the colorless and odorless gas that drives climate change.

You can read the rest of my story here.

Bankers, behaving badly, backing coal

india-coal-power-007The  big Wall Street banks say all the right thing about sustainability and corporate responsibility but investment bankers are, above all, driven by the deal. Turning away business is just not part of their skill set, or mind set.

That’s the best explanation that I can come up with for the fact that Bank of America, Goldman Sachs, Credit Suisse and Deutsche Bank, along with three India-based banks, are managing a share offering for Coal India, a company with an environmental and human rights record that is, at best, spotty.

Their decision to do so is the topic of my story today at Guardian Sustainable Business. Here’s how it begins:

If you’re an investor seeking to profit from the coal industry and you’re indifferent to the issues of climate change, forest destruction and human rights, Bank of AmericaGoldman SachsCredit Suisse and Deutsche Bank have a deal for you.

The four US and European banks, along with Indian investment banksSBI Capital MarketsJM Financial and Kotak Mahindra Capital Co., are managing a share offering in Coal India, one of the world’s biggest coal-mining companies.

They’re doing so despite Coal India’s dismal environmental record, despite the climate impacts of burning coal, despite allegations that the state-owned firm has run roughshod over tribal communities and despite objections by the Sierra Club, Greenpeace and the Rainforest Action Network, as well as by Indian environmentalists.

They’re also doing so despite their own rhetoric about sustainability and corporate responsibility.

I hope you take the time to read the story. It’s tough, I think, but it’s a reflection of the difficulty that the corporate-responsibility and environmental movements have had gaining traction on Wall Street. Most of the big financial institutions have made “green” commitments, and that’s great, but if they continue to finance fossil fuels on a grand scale, they could wind up doing more harm than good.

None of the banks would talk to me on the record for the story, and I imagine that if they did, they would say, correctly, that burning fossil fuels is perfectly legal in India, and everywhere else, as is dumping emissions into the atmosphere at no cost. That’s a political problem, and not a Wall Street problem, they could argue. True enough. But if the banks believe what they say about climate change and the environment, they should then make their voices heard more forcefully in the climate debate in Washington and elsewhere.

Until they do, their rhetoric about sustainability will remain hollow.

Will solar power disrupt regulated utilities?

Applications_ResidentialOne of the business megatrends of my lifetime has been decentralization. Mainframe computers gave way to laptops and PCs. The AT&T monopoly exploded, and landlines led to a proliferation of cell phones. Airlines were deregulated, creating space for startups like Southwest  and JetBlue. Newspapers have been rattled by the Internet, where anyone and everyone has a voice.

Could distributed power–specifically, rooftop solar–nowbe poised to disrupt regulated utilities?

That’s the topic of my latest contribution to the YaleEnvironment360 website. Some utilities evidently feel threatened, so they are pushing back against subsidies for solar.

Here’s how the story begins:

Issues of electricity regulation typically play out in drab government hearing rooms. That has not been the case this summer in Arizona, where a noisy argument – featuring TV attack ads and dueling websites – has broken out between regulated utilities and the rooftop solar industry.

An Internet web video attacks the California startup companies that sell rooftop solar systems as the “new Solyndras,” which are spending “hard-earned tax dollars to subsidize their wealthy customers.” Meantime, solar companies accuse Arizona Public Service, the state’s biggest utility, of wanting to “extinguish the independent rooftop solar market in Arizona to protect its monopoly.”

Similar battles about how rooftop solar should be regulated have flared in California, Colorado, Idaho, and Louisana. And the outcome of these power struggles could have a major impact on the future of solar in the U.S.

The politics of this debate are unusual, as the story goes on to explain. Please read the rest here.

A couple of thoughts. First, it’s important to keep some perspective here. Solar is growing fast but off a very, very small base. It generates less than 1 percent of the electricity in the US. Some coverage of this issue–notably a long story in Business Week with the absurd headline, Why the U.S. Power Grid’s Days are Numbered — conveniently overlooks that context. Regulated utilities are not going away anytime soon and if the grid’s days are, in fact, numbered, it’s a really really big number.

Having said that, a regulatory system that tilts heavily towards solar–by allowing solar customers to sell their excess power back into the grid at inflated rates, for example–will create problems for the utilities, as well as inequities for other customers. While the regulatory debate has become politicized in places like Arizona–the Koch brothers make a cameo appearance at the end of my story–what’s needed is fair treatment for solar customers and the utilities.

What’s fair, you ask? That’s why we have regulators.

Peak suburbs

The End of the Suburbs Book Cover(2)I grew up in the suburbs (Croton-on-Hudson, NY), and raised my children in suburbs (Grosse Pointe Park, MI, and Bethesda, MD) and so, obviously, I’m among those who believe that there’s lots to like about suburbs: spacious homes, good schools, safe neighborhoods, lawns, at least when you don’t have to mow them.

But as I read Leigh Gallagher’s terrific new book, The End of the Suburbs, which argues that suburbs, and particularly newer suburbs, are in decline, I felt like cheering.

In the book, Leigh, who is a colleague of mine at Fortune, argues persuasively that social, economic and demographic forces are converging to end a half-century of suburban growth in the US. Young people seem to prefer cities. Energy prices are rising. People have come to hate long commutes. Some like to walk or bike. Hurray!

Since finishing the book a couple of weeks ago, I’ve come across more evidence here and there that Leigh is onto something. Take, for example, this New York Times story about how water scarcity in southwest cities like Phoenix and Los Angeles have prompted local governments to pay people to get rid of their lawns. Lawns–like so much else in the suburbs–are incredibly wasteful.

I interviewed Leigh by email for a story about “peak suburbs” and what they mean for sustainability in Guardian Sustainable Business.  Here’s how it begins:

Have we reached “peak suburbs”? In her new book, The End of the Suburbs, Fortune magazine editor Leigh Gallagher argues that powerful social, economic, environmental and demographic forces are converging to end a half-century of suburban growth in the US.

This is good news for those who believe that the US economy must become more sustainable, and that big houses, big cars and big commutes are wasteful. “No other country has such an enormous percentage of its middle class living at such low densities across such massive amounts of land,” Leigh writes. Acerbic critic and author James Howard Kunstler, who’s interviewed in the book, more bluntly calls suburbia “the greatest misallocation of resources in the history of the world.”

leigh_gallagher

Leigh Gallagher

But if cul-de-sac living is approaching a dead end, what’s next? And what opportunities for more sustainable businesses will arise as the suburbs decline? Those are among the questions I put to Leigh in this Q&A.

Let’s start with the basics. Why are suburbs in decline? Are rising energy prices – or, dare we say it, concern about the environment – playing a role?

You can read Leigh’s answers here. Better yet, read the book.

What Ben Franklin can teach US companies about climate

Benjamin-Franklin-006Given the inability, or unwillingness, of political and business leaders to curb global greenhouse gas emissions, it’s no surprise that governments and companies are increasingly talking about adaptation or resilience. It’s only prudent. We need to prepare for climate disruption.

But it seems strange that businesses would tackle the question of adaptatation without, simultaneously, doing all they can to push for climate regulation. At least, that was my reaction last month when I attended a Washington event on adaptation organized by the nonprofit Center for Climate and Energy Solutions (C2ES). Everyone acted as if extreme weather and a warming planet were all but inevitable.

And perhaps they are. But as companies, understandably, prepare for a warming world, it’s incumbent upon them to engage politically in any way they can to slow down emissions. That’s the topic of my latest story for Guardian Sustainable Business. [click to continue...]

Will electric cars enter the mainstream?

Nissan Leaf

Nissan Leaf

Of all the clean technologies out there, few generate as much buzz as electric cars. If only they generated more sales.

My story for Guardian Sustainable Business this week looks at electric cars, why they have been so slow to enter the mainstream and what the prospects are for quicker uptake of electric vehicles.

Here’s how it begins:

Pardon my metaphor, but is the tank half-empty or half-full when it comes to electric cars?

The bad news: start-up electric-car makers Aptera, Better Place, Coda and Fisker are out of business, or close to it. Of the 14.4m cars sold last year in the US, only 52,835 – one out of every 270 cars sold – were plug-in hybrids, like the Chevy Volt, or pure electric cars like the Nissan Leaf. Even with generous government subsidies, including a $7,500 (£5,000) tax credit for electric-car buyers, there is no hope of getting a million electric vehicles on the road by 2015, a goal set by president Obama in his 2011 State of the Union address.

And yet, virtually all the big auto-makers are charging ahead, with GM, Ford, Toyota, Honda, Volkswagen and BMW expanding their electrified offerings. So far this year, sales of electric cars are up by 123% over 2012, the Electric Drive Transportation Association (EDTA) reports. Influential publications such as Consumer Reports and Motor Trend rave about electric cars – in particular the new Tesla S. And all indications are that electric car owners are pleased with their vehicles.

“There is no buyer’s remorse,” says Arun Baskota, owner of a pure electric car and, more importantly, the president of eVgo, a startup company owned by utility NRG Energy that is building out electric-car charging infrastucture.

To get a sense of where the market is going, I sat down with Baskota after EDTA’s annual convention in Washington, and spoke by phone with Siddiq Khan, the co-author of a new report called Plug-In Electric Vehicles: Challenges and Opportunities, from the American Council for an Energy-Efficient Economy (ACEE). Both are optimistic about the future for electric cars, but they caution that mass adoption will take longer than most people (including, evidently, the president) expected.

The story goes on to argues, as I have before [See my blogpost, If electric cars are the answer, what's the question?] the the electric-car industry has yet to give car buyers a compelling reason to go electric. And the economics remain a challenge. With a very few exceptions–notably, the all-electric Nissan Leaf–the fuel savings that come from driving an electric vehicle are not big enough to pay back the higher initial costs of the vehicle.

Of course, predicting the future is very hard. Battery costs could drop, and battery performance could increase; in fact, they almost surely will. But until they do, electric cars will remain a niche product.

You can read the rest of the story here.

What Warren Buffett could learn from Bill Gates

Buffett and GatesBill Gates and Warren Buffett have been billionaire buddies for decades. There’s a lot to admire about both men. They have promised to give away most of their vast fortunes and, even better, created The Giving Pledge to persuade many of the world’s richest people to do the same.

But on the issue of climate change, Gates has been a leader and Buffett a laggard. That’s the topic of my column this week for Guardian Sustainable Business.

Here’s how it begins:

Last week, Bill Gates wrote an essay for LinkedIn called Three Things I’ve Learned from Warren Buffett.

Gates and Buffett have been friends for decades. They play contract bridge together, they travel together and together they launched theGiving Pledge, an estimable campaign that has persuaded dozens of billionaires to commit half their wealth to good causes. Buffett sits on the board of the Gates Foundation; Gates is a director of Berkshire Hathaway, Buffett’s holding company.

In the essay, Gates wrote that he is “very lucky” to be able to ask the 82-year-old Buffett for advice on a regular basis. One of the lessons he cited is: use your platform. That got me thinking that Gates has an important lesson of his own to teach to Buffett: that climate change matters.

The story goes on to describe how Gates invited some of the world’s leading climate scientists and economists to teach him about the issue, how he has spoken out in Washington and elsewhere about climate change and clean energy, and how he has invested his own money in energy and climate research, as well as a nuclear power startup and an algae company. Gates has also taken an interest in geoengineering research, which I wrote about in my e-book, Suck it up: How capturing carbon from the air can help solve the climate crisis.

Buffett’s track record is mixed. Berkshire Hathaway’s utility company, MidAmerican Energy Holdings, has invested in solar and wind power, but Berkshire’s BNSF Railway has lobbied on behalf of the coal export facilities in the Pacific Northwest and on behalf of the coal industry in Washington. BNSF is also trying to build a coal-carrying railroad in eastern Montana, a story I reported on for Sierra Magazine, under the headline, Warren Buffett’s Coal Problem.

As a director of Berkshire Hathaway, isn’t it time for Bill Gates to have a talk with his friend Warren Buffett about climate? Imagine the difference that Buffett could make if he spoke out on the issue.