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...]

For green business, blue skies ahead. For climate policy, who knows?

The renewable energy and clean tech industries let loose a collective sigh of relief today. President Obama’s re-election means they still  have a friend in the White House.

Clean energy was a big winner yesterday,” said Frances Beinecke, president of the Natural Resources Defense Council. “American voters not only re-elected a president who made green jobs a cornerstone of his first term and his campaign, they also rejected some of the shrillest champions of Big Oil and Big Coal.”

As Nick Robins, HSBC’s climate research analyst, said today:

Obama’s victory essentially protects key climate policies from repeal, particularly the regulation of carbon dioxide by the EPA, most notably in the power and auto sectors. It also offers the chance of extending the Production Tax Credit for wind energy when it expires at the end of this year.

True enough, but the today’s inefficient, hodge-podge collection of EPA rules, clean-energy subsidies and state mandates — while better than nothing — is no substitute for a rational economy-wide policy to deal with climate change.

Could this election usher in a carbon tax or cap-and-trade regulations to limit global warming pollution? That’s impossible to know,  but there’s no evidence that climate action has climbed to the top of the president’s to-do list.

Obama made a passing reference to climate change in his acceptance speech, saying: “We want our children to live in an America that isn’t burdened by debt, that isn’t weakened by inequality, that isn’t threatened by the destructive power of a warming planet.”

But his all-but-absolute silence about global warming during the campaign means that he has no mandate from voters to act on the issue. Worse, he has made close to zero effort to persuade Americans that the issue matters, a failure that will surely cast a shadow over his legacy if it isn’t rectified during a second term.

To see what’s next for climate and green business after the election, I reached out to some smart people in the business world and in Washington to see what opportunities, if any, they see.

The first, and maybe the best, opening will arise when the president and the lame-duck Congress face the so-called fiscal cliff in the next 60 days. The government will need revenue to avoid painful spending cuts and tax increases, and a tax on carbon emissions could become an option. [click to continue...]

Time for a carbon tax?

“I was a huge supporter of cap and trade,” said Wayne Leonard, the CEO of Entergy, a $11 billion utility company.

“We developed enormously elegant solutions, but they couldn’t get done.”

Taxing carbon emissions is the next best way to deal with the threat of global climate disruptions, he said, in part because it would give the energy industry a degree of certainty about how to deploy its capital.

“A simple tax on every one is a starting point,” Leonard said. Proceeds could be used to reduce the federal deficit or rebated to consumers.

Leonard spoke today (Nov. 9) at a launch event for the Center for Climate and Energy Solutions, a new organization that is succeeding the Pew Center on Global Climate Change. Eileen Claussen, who has directed the Pew Center for 13 years, will lead the new group, which has raised money from three so-called strategic partners — Entergy, HP and Shell — as well as Alcoa Foundation, Bank of America, GE, The Energy Foundation, Duke Energy, and the Rockefeller Brothers Fund. Pew is no longer a backer.

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What’s beyond cap-and-trade?

Given that cap-and-trade is dead–yes, dead, dead, dead–what’s next for energy and climate policy in Washington?

Perhaps more than you might think, even though the incoming Congress will likely be more conservative that the outgoing crew.

So, at least, argued some of the Beltway  insiders and business executives brought together today at the Atlantic Green Intelligence Forum (streaming live on Oct 26-27). They agreed that comprehensive climate and energy legislation is off the table for at least a couple of years, and likely even longer. The political debate, instead, will evolve around such smaller-scale but significant ideas as renewable energy standards, investment in nuclear power and “clean coal,” and energy efficiency rules, all of which enjoy bipartisan support.

“It’s remarkable, the level of support, for a return to nuclear power,” says James Connaughton, an executive vice president at Constellation Energy. “If you focus, sector by sector, there’s a lot of opportunity for bipartisan agreement. But we have to dedicate ourselves to that.”

Jason Grumet

Jason Grumet, president of the Bipartisan Policy Center, said a reframing of the current renewable energy standards as a national “clean energy standard” could become  a political winner. So-called clean energy standards would provide incentives for nuclear power and natural gas, as well as solar and wind projects that are favored by today’s renewable energy standards.

Still another area to watch is EPA’s pending regulation of toxic pollutants emitted by coal plants. Grumet said: “This is kids and mercury and acid gases. What’s the chance that a majority of Congress will preempt EPA’s ability to protect kids from acid gases? Slim. And there will be carbon benefits.,”

The trouble is, without consistent and long-term energy and climate policy, the capital needed to finance clean energy on a mass scale will likely remain on the sidelines.

The current low prices of natural gas also make it harder to justify investment in cleaner but more expensive energy sources such as solar, wind and nuclear.

“With gas at its current prices, it’s very hard to justify the economics” of nuclear,  said Jeffrey Holzschuh, chairman of the Morgan Stanley Global Power and Utility Group.

The same goes for renewable projects, he said: “I do think we will see a material decline in capital put to work in the space…It’s a very difficult environment for a board of directors or a management team, to try to figure out the right answers for shareholders.”

Connaughton, of Constellation, agreed: “You make minimalist decisions. You make conservative choices. What you’re going to see is a lot of small ball.”

Nuclear power, in particular, will languish in a policy vacuum because of the huge capital bets required to build new plants. Constellation has, at least for now, dropped its plans to build a new plant in Maryland because, it says, the cost of obtaining a federal loan guarantee is too high.

As Daniel Weiss, director of climate strategy for the Center for American Progress, put it: “Financing, in my view, is going to be the biggest impediment to advancing any of these technology, particularly nuclear.”

The fact is, it’s difficult for anyone to know what’s going to happen in Washington after next week’s elections. Few of the signs look good. As Ronald Brownstein of the National Journal, has written:

..it is difficult to identify another major political party in any democracy as thoroughly dismissive of climate science as is the GOP here.

It’s no wonder that Eileen Claussen, president of the Pew Center on Global Climate Change, says: “I don’t see Congress doing very much that’s constructive in the next two years.”

Grumet recalled that for a year after the 1994 election, when Republicans captured the House and fiercely opposed President Clinton, not much got done. But by 1996, Clinton and the Gingrich-led Congress worked together on tax reform and welfare reform.

“A divided government, sometimes, actually works pretty well,” he said.

“The alternative is that it’s just a friggin’ food fight. And that’s possible, too.”

E-commerce: Good for the planet?

I’m not much of a shopper, but when I buy stuff, I prefer to do it online. I don’t like shopping malls, driving in traffic, crowded stores or dealing with “customer service” people. I do enjoy getting packages at home.

Now, it turns out, there may be another reason to shop online: E-commerce is a way to help  fight climate change.

So, at least, says eBay and a carbon-footprint consulting firm called Cooler, in a report due out today. (I’ll post a link to the report when it goes public.)  In particular, the report argues, eBay’s business of enabling peer-to-peer selling and small retailers generates significant environmental value. You’d expect eBay to say that, of course, but there’s logic behind the claim. The report says:

By minimizing infrastructure, reducing the need for warehousing, and maximizing transportation efficiency, small online retailers
have created a climate-friendly way to buy and sell. All-electronic, with no need for everything from mannequins to signage to giant rooftop air conditioning units, they have dematerialized considerable parts of the retail process.

John Donahoe

This morning, I’ll be moderating a discussion about the study at the National Press Club with John Donahoe, eBay’s president and CEO; Michel Gelobter, the founder of Cooler and author of the white paper; and Eileen Claussen, president of the Pew Center on Global Climate Change. [Disclosure: eBay is paying me to host the event.] This Washington showcase for Donahoe, to which environmental leaders have been invited, is the latest effort by eBay’s  to position itself as an environmentally-friendly company, largely because it sells used products. [See my blogpost Why eBay is a green giant and this Greenbiz interview with Donahoe.] To its credit, eBay is also a founding member of BICEP, a coalition of companies pushing for climate change regulation.

I have to admit that I was skeptical about eBay’s claim that e-commerce is climate-friendly when I heard about it from Amy Skoczlas Cole, who leads eBay’s Green Team. After all, aren’t big retailers like Wal-Mart renowned for their efficiency, their logistics, their fine-tuned global supply chains? The economies of scale and all that? Well, yes, but peer-to-peer retailers–the small businesses supported by eBay–tend to be pretty efficient, too, because they have to be. (The last time I bought a book online from a small store, it came in a previously-used box.) These small e-tailers operate out of their own homes and garages. They don’t need big parking lots of warehouses. They ship by delivery services like UPS, FedEx and the post office which move goods around a lot more efficiently than suburban shoppers do when they drive to and from a big-box store.

They’re also a force in the economy. In 2009, the report says, peer-to-peer online sales operations generated more than $31 billion in sales and despite the recession, their revenues grew, as did their market share of all online sales, to about 20.9%.  Using admittedly rough estimates, the report says:

Compared to a single big box retail store grossing $100 million per year, the day-to-day operations of $100 million in sales through Web-based peer-to-peer marketplaces generate approximately 1,400 tons fewer CO2-equivalent emissions per year.

Three types are savings are significant, the report argues:

1. Without the need for stores, or chains of them, peer-to-peer retailing saves everything from the carbon cost of making bricks and cements to the everyday costs of heating and lighting retail spaces, not to mention the giant neon signs outside big box stores.

2. Warehousing in garages and spare rooms can eliminate big warehouses that eat up land and consume energy

3. Home deliver is more efficient than people driving mostly empty cars around.

I’ll be interested to learn more during today’s discussion. Did Cooler take the energy costs of operating the data centers than run the Internet, as well as individual home computers into account? How much of eBay’s business comes from the mom-and-pop retailers, and how much from big companies that operate warehouses and manage global supply chains? And, while the big box model has its obvious problems, shouldn’t “green” consumers at least consider supporting retailers like Walmart and Best Buy that use their clout to promote environmentally-friendly practices. (See Walmart, bully for good and Best Buy wants your electronic junk at fortune.com.) Will peer-to-peer sellers recycle phones as Sprint does, or support sustainable forestry practices as Staples does?

None of this is simple. I love the fact that eBay sells used stuff–that’s almost surely better than buying new–and I’ll remain a fan of Internet shopping. But let’s not forget that when it comes to saving the planet, the best buying decision we can make is not to buy at all.