Google: Energy innovation will pay off but..

The folks at Google, not surprisingly, have enormous faith in the power of technology. So a group of them set out to see what technology breakthroughs in clean energy will mean to the economy, the environment and the typical American household.

They found good and bad news.

The good: Energy innovation could pay off big, benefiting GDP, jobs, energy security and reducing carbon emissions. It’ll even save homeowners money, over time.

Specifically, as Bill Weihl and Charles Baron write on the Google blog, here are the benefits of energy breakthroughs, when compared with a business as usual scenario. In their parentheses is even better news; those numbers reflect what clean energy technology can do when combined with stronger U.S. policy to promote clean energy and discourage the burning of fossil fuels:

  • Grow GDP by over $155 billion/year ($244 billion in our Clean Policy scenario)
  • Create over 1.1 million new full-time jobs/year (1.9 million with Clean Policy)
  • Reduce household energy costs by over $942/year ($995 with Clean Policy)
  • Reduce U.S. oil consumption by over 1.1 billion barrels/year
  • Reduce U.S. total carbon emissions by 13% in 2030 (21% with Clean Policy)

The not-so-good news is the last bullet: Reducing U.S. carbon emission by 13% by 2030, or even 21% under the more favorable clean policy scenario, won’t do much to reduce the threat of catastrophic climate change. The report also found that by  2050, innovation in the modeled technologies alone reduced CO2 emissions by 55% and by 63% when combined with policy. Those are under best-case assumptions.

But, while there’s lots of disagreement about all this, many reputable scientists, using respected climate models, say the world needs to reduce CO2 emissions by 70 to  80% by 2050, and that the U.S. share should be close to 80%. Here’s the argument, as articulated by the Union of Concerned Scientists. [click to continue...]

Walmart: The power–and limits–of efficiency

Arguably, Walmart has done more than any environmental group, politician, government regulator or Silicon Valley clean tech firm to nudge the U.S. economy towards sustainability in the last five years.  Walmart’s 2011 Global Responsibility Report, published last week, makes clear that despite the recession and some revently rough going for the company–lately its stock has lagged the S&P500Walmart is pushing ahead towards its big goals: To generate no waste, to be 100%-powered by renewable energy, and to sell lots more products that sustain people and the environment.

Yet a closer look at the report demonstrates that there are limits to what any company, even one as vast as Walmart, can do. Most of its environmental gains have come from doing what Walmart has always done very well–driving efficiency in its stores and supply chain. When sustainable initiatives cost more money, as they sometimes do, progress has been halting.

Still, Walmart deserves at least two cheers, maybe two-and-half for its efforts, particularly in the current, dispiriting political climate.

As Elizabeth Sturcken of the Environmental Defense Fund, which works closely with Walmar, told me:

Leadership on environmental issues is coming from Bentonville these days, not from Washington. Some people in Washington want to roll back basic environmental protection on clean air and clean water, saying it’s bad for business. Our work with Walmart proves that’s not true….Generally,  all the signs that I see are full speed ahead.

Andrea Thomas, who has led Walmart’s sustainability work for the past six months, made a similar point. The company set big, bold, broad goals back in 2005, without knowing how it would meet them. Since then, it has discovered unexpected business benefits.

Rather than being paralyzed by (the goals), they ignited  a lot of energy behind doing experiments, trying different things. Today, there’s a lot of interesting work going on, not just in the U.S., but all over the world. I’m very encouraged by the progress we’re making.

Here’s one success story from the report, a promising new initiative and an arena in which Walmart’s progress appears to have stalled:

Walmart recycling with "super sandwich bale"

Waste: WMT has turned its garbage into an asset, just by thinking about the stuff it throws away in a more disciplined fashion. Across California, more than 80% of waste has been diverted from landfills and made into something else, turning what was a cost center into a source of new revenue.

Said Thomas: “We would pay for people to haul our trash away. And we paid to put it in a landfill. Now people are paying us.”

Success hasn’t come as easily as it sounds, of course. To help find an outlet for food waste, Walmart’s foundation donated 100 refrigerated trucks to food banks. “ Now they have a means to pick up and deliver some of the food that we can’t use in the stores, but that’s still good food,” Thomas said.

Supporting small, local farms: Last fall, WMT announced an array of targets related to agriculture. In the U.S., the company promised to double sales of locally-sourced produce, so that it accounts for 9 percent of all produce sold by the end of 2015. Globally, WMT said it will sell $1 billion in food sourced from 1 million small- and medium-sized farmers in emerging markets by the end of 2015.

To achieve those goals, Thomas told me, WMT has to simplify its supply chain to deal directly with farmers and eliminate some middlemen. “The logistics aren’t as difficult as you might think,” she said. “The farmer can actually drop off produce at the distribution center or at the store.”

If all goes according to plan, WMT  should be able to sell fresher, local food at lower prices, and eliminate some of the greenhouse gases generated by a global supply chain for food. Like the waste initiative, the agriculture initiatives mostly dovetail nicely with the culture of efficiency at Walmart.

Clean energy: To achieve its goal of being powered by 100% renewable energy, WMT has made its fleet, stores and distribution centers more efficient. But its commitment to wind and solar power  has been limited because they cost more than electricity from fossil fuels. The report says:

During FY11, we successfully completed several renewable energy projects, including the installation of 35 solar projects in Arizona, California and Puerto Rico. Eight of the solar projects installed in FY11 utilized thin-film solar, which created manufacturing jobs and accelerated this new technology’s entry to market. We installed seven fuel cell projects in California this year and completed two microturbine wind projects on the parking lot light poles at the Walmart in Worcester, Mass., and at the Sam’s Club in Palmdale, Calif.

This is all to the good. By buying renewable energy in selected markets, WMT will help bring costs down. But because wind and solar power generally cost more than electricity from coal, nuclear or natural gas in most places, WMT can’t or won’t buy clean energy on a  scale that matters. (If the company says in its report how much of its energy now comes from renewable sources, I couldn’t find it. I’d guess it’s well under 10% of  WMT’s total energy spend, but I’m ready to be corrected.) Buying renewable energy would drive up its costs, with no tangible benefits to customers, and put the company at a competitive disadvantage, as the company says in the report:

In our efforts to ensure our operations are contributing to everyday low prices for our customers, it has sometimes been difficult to find and develop low-carbon technologies that meet our ROI requirements.

This, then, is where we run up against the limits of efficiency and, more broadly, what any company can reasonably be expected to do to become more sustainable.

More broadly, it’s a reminder that the rhetoric of green business — how green is gold, how green is green, how clean energy will generate jobs and growth — hasn’t always served the cause well. Sometimes, indeed often, “green” is more expensive than “brown,” or to be more precise, the full costs of “brown” (air and water pollution, GHG emissions) aren’t captured in its price. This is why policy matters. This is why we need to price carbon emissions into the energy economy.

Put another way, so long as environmental leadership is coming from Bentonville and not Washington, we’re in trouble.

 

 

 

 

 

 

My $100 solar power deal…in Ghana

298x231Meet Georgina Teye. She sells plastic housewares–baskets, bowls, mugs and the like–at an outdoor market in Somanya, Ghana. She’d like to install solar-powered lanterns at her shop, which is also her home, so that she can remain open later and so that her three children can study at night.

I’m loaning her $100.

I made the loan through a startup nonprofit called Energy in Common.

I did so mostly to make a point–that the problems of energy, climate change and poverty are all tied together. Getting clean energy to poor people is one of the best ways to help them to escape poverty, to combat global warming and to deal with food and water shortages and poor health as well.

This isn’t easy for those of us in rich countries to grasp. We live in a world of cheap, abundant energy. Sure, you may nag your spouse or your kids to turn off the lights or turn down the thermostat. But when was the last time you thought about the energy needed to power your laptop, your TV, your stove or even your car? Probably the last time your power went out during a storm.

In the global south, and particularly in Africa and south Asia, energy is a daily worry for the more than 1.5 billion people who don’t have access to electricity. Without safe and reliable energy, people can’t grow crops beyond subsistence levels, operate a factory, get water to where it is needed, refrigerate food or drugs, or study  at night.

Worse, some of the alternatives to clean energy for the poor–cooking or heating by burning wood, dung, agricultural residues or coal, or using expensive, dirty kerosene lamps–are not only bad for the planet, they’re terrible for human health.

This set of problems led Hugh Whalan, a 26-year-old Australian, to start Energy in Common.

“Energy, he said, is at the base of just about any development outcome you’d want,” he said. “Yet it isn’t a Millenium Development Goal. We’d like to give energy a higher profile.”

Hughprofile1Hugh traveled widely in the global south–he volunteered at refugee camp on the Sudanese border, helped victims of land mines in Cambodia, and taught English in Uganda–before coming to the United States where he landed a job at a carbon finance company called Environmental Credit Corp. There, he met Scott Tudman, with whom he co-founded Energy In Common. They wanted to combine their knowledge of energy and carbon finance with their desire to bring clean energy to the poor.

“I wanted to make an impact in Africa,” Hugh told me. “I was torn between development work and business.”

Think of Energy in Common as a green Kiva. Entrepreneurs, most of them women, are featured on the website. Donors decide how much money they want to lend. Local microfinance institutions deliver the funds to the borrowers, who are expected to repay. Of course, there are no guarantees.

For borrowers, there’s an added bonus–carbon credits. Here’s how Energy in Common explains that:

A little team of brainy people here at EIC analyze the carbon data over the period of your loan and add up the amount of emission reductions created by the entrepreneur. These emission reductions are then sold to lenders (like you) as carbon offsets, which means you can buy the very carbon offsets that you helped to create allowing you to reduce your carbon footprint too. That tax-deductible purchase then goes straight back into finding and helping even more entrepreneurs – and so the cycle begins again.

If Georgina Teye succeeds with her solar lanterns, replacing electricity from the grid, she will save 0.8 metric tons of CO2 per year, which is the equivalent of a U.S. family not using electricity for 49 days. And I’ll get my loan repaid, and be able to lend the money to someone else. Nice.

Which raises a question: Why have markets and aid groups failed, so far, to deliver energy to the poor. “Part of the reason,” Whalan told me,  “is that for many years, investment was channeled into large-scale projects.” Only recently, and in large part because the work of the late C.K. Prahalad and Stu Hart, have entrepreneurs look at the billions of people at the bottom of the pyramid as consumers and entrepreneurs and not charity cases. Technologies like solar power and LED lights are also relatively new.

Of course, Energy in Common is a very small group; so far, it has funded fewer than two dozen entrepreneurs.  Whalan says his goal is to deliver clean energy to 15 million people in the next five years. Even if Energy in Common succeeds, it will put only a small dent in the energy divide between rich and poor.

Fortunately, there are lots of other businesses and nonprofits working to bring clean energy or to the poor. Among them are Kiva, Global Giving, Kopernik (which I wrote about here) and Dissigno (which I blogged about last month). There’s plenty of room for all of them, and many more,