Iâ€™m just back from the Wall Street Journalâ€™s conference on business and the environment, called ECO:nomics. The WSJ brought together an interesting mix of big-name CEOs, investors, a few environmentalists, and a noisy contingent of die-hard conservatives including some people who still believe this whole global warming thing is a some kind of Al Gore-engineered socialist plot. (One measure of the crowd: In an informal poll, 42% favored McCain, 41% Obama, the rest Clinton.) FORTUNEâ€™s putting on its own conference, called Brainstorm: Green on Earth Day, around the theme: How can business profitably solve our biggest environmental problems? Weâ€™ll have CEO interviews, panels on climate change, renewables, biofuels and green cities, a debate on nuclear power, discussions of sustainable food and tourism, lots of talk about investing in green, and also some funâ€”a dinner featuring fabulous organic food and a concert by Shawn Colvin, the younger sister of my distinguished FORTUNE colleague and columnist Geoff.
In the meantime, here are some notes and quotes from ECO:nomiccs
Eyes on the prize: â€œWhat would a car designed by Apple look like,â€ Peter Diamandis asked. â€œIt would be white, of course, but beyond that?â€
Diamandis is chairman and CEO of the X-Prize Foundation, whose mission is to â€œbring about radical breakthroughs for the benefit of humanity.â€ Cool guy. Smart guyâ€”heâ€™s got an MD from Harvard med school and degrees in molecular genetics and aerospace engineering from MIT. Anyway, heâ€™s now creating a series of prizes around environmental and energy issues, worth as much as $100 million, beginning with a prize for a car that will get 100 mph or greater.
Diamandis says prizes are a great way to inspire creative people to come up with fresh solutions to big problems. Plus, theyâ€™re fun. â€œWe are genetically bred to compete,â€ he said. â€œPeople love to watch competitions.â€ The auto competition will become a TV series. Heâ€™ll announce a sponsor soon.
The answer is blowing in the wind: Most people know that the solar and wind businesses are growing rapidly, albeit off a small base, but I wasnâ€™t aware until last week that about 25 to 30% of the new power-generating capacity build in the U.S. last year came from wind.
â€œItâ€™s displacing new-build coal-fired generation in particularly,â€ said Miles George, CEO of Babcock & Brown Wind Partners. Thatâ€™s good news, of course. George said he thought wind power, which now generates only about 1% of the electricity in the U.S., could grow to a 15% share.
Then again, he conceded that the business depends on federal tax credits which account for nearly 25% of his revenue. Putting a price on carbon would help stimulate wind power, and ideally eliminate the need for other subsidies.
Biofuels or bust: Vinod Khosla does not lack self-confidence. The celebrated venture capitalist declared that when it comes to powering our cars in ways that are sustainable, affordable and scalable, â€œthere is one and only one choice and thatâ€™s cellulosic ethanol.â€ He could well be right, but it wonâ€™t surprise you to learn that Khosla Ventures is an investor in about eight to 10 biofuels companies.
Khosla is confident that one or more of his startups will come up with a biofuel that can be â€œcompetitive with oil at $45 a barrel, unsubsidized.â€ I hope heâ€™s right. There was lots of talk at the conference about the national security implications of depending on OPEC, especially with oil at $110 a barrel. It canâ€™t be good for the U.S. economy to be shipping billions a month to the oil powers. As Vinod put it, succinctly: â€œVenezuela. Saudi Arabia. Russia. Wonderful people.â€
Vinod is no fan of either hybrids of electric cars. (Heâ€™s got a report on his website arguing that hybrids are a costly and ineffectie way of reducing greenhouse gases.) Batteries, he argues, are just way too expensive.
â€œA Prius sells well, but so do Gucci bags,â€ Khosla says. â€œAre people in India going to pay $10,000 extra (for a battery) on top of a $2,500 car?â€
Shareholder vs. shareholder: Mindy Lubber of Ceres, a coalition of institutional investors who are concerned about the environment, squared off during one panel against Steve Milloy, co-founder of a conservative (to put it mildly) mutual fund called the Free Enterprise Action Fund. It was no contest.
Milloy argued that pressure groups use their power as shareholders to try to change the way big companies operate, to make them more socially and environmentally responsible. Well, duh. He accused GEâ€™s Jeff Immelt and Wal-Martâ€™s Lee Scott of caving into to liberal environmentalists, implying that he knows how to run their companies better than they do. Which is, not to put too fine a point on it, bonkers.
Later, Milloy told me that his fund has submitted a shareholder resolution to ExxonMobil asking the company to abolish all shareholder resolutions. Now thereâ€™s an ideaâ€”letâ€™s give CEOs the freedom to run their companies anyway they want, without having to answer to the pesky shareholders who just happen to own the place.
Milloyâ€™s mutual fund, by the way, has $11 million in assets under management. Lubberâ€™s Investor Network on Climate Risk includes pension and foundation funds with collective assets of $5 trillion. As Andrew Shapiro of Green Order noted, it sure sounds as if the free market has spoken.
Kleiner Perkins, hog wild: As always, John Doerr of Kleiner Perkins was worth hearing. He disclosed that KP has invested in Recycle Bank, a company Iâ€™ve written about before that could well go on to do great things. RecycleBank CEO Ron Gonen will speak at Brainstorm Green.
And Doerr dropped a hint about KPâ€™s next investment idea. â€œIn the central valley of California, there are big pig farms,â€ he said. â€œIâ€™m going to let it lay there.â€ While there are now ways to capture methan, a potent greenhouse gase generated by manure, and turn it into electricity, Doerr may be sniffing out a better way to turn crap into money.
A choice, not an eco: Fred Smith, the feisty president of a free-market think tank called the Competitive Enterprise Institute, talked a whole lot during ECO: Nomics. Or at least it felt that way to me. Smith has penned such books as â€œGlobal Warming and Other Eco-Myths.â€ Before that, he worked for five years as a senior policy analyst at the EPA. I kid you not.
Anyway, you wonâ€™t be surprised to learn that Smith, whose think tank gets oil and coal money, is no fan of carbon credits. He ridiculed the idea that countries in the developing world should be paid, for example, for preserving forests. (Never mind that deforestation produces about 20% of greenhouse gases.)
But if we are going to pay people not to product GHG, Smith suggested, heâ€™s entitled to a share because he and his wife chose not to have children and thereby reduced their familyâ€™s footprint. â€œIâ€™m owed a vast quantity of carbon credits,â€ he said.
I think he was joking.