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It’s time to rethink nukes

Sunday, April 26th, 2009

If climate change is the greatest threat facing mankind, what are the odds of the big environmental groups rethinking their longstanding opposition to nuclear power?

They appear to be slim. Here’s what Environmental Defense says on its website:

Serious questions of safety, security, waste and proliferation surround the issue of nuclear power. Until these questions are resolved satisfactorily, Environmental Defense cannot support an expansion of nuclear generating capacity.

And this comes from the Natural Resources Defense Council website:

New nuclear power plants are unlikely to provide a significant fraction of future U.S. needs for low-carbon energy. NRDC favors more practical, economical and environmentally sustainable approaches to reducing both U.S. and global carbon emissions, focusing on the widest possible implementation of end-use energy-efficiency improvements, and on policies to accelerate commercialization of clean, flexible, renewable energy technologies.

Supporters of nuclear energy—including those who strongly support climate regulation to curb emissions of global warming pollutans—say that doesn’t make sense.

“They (environmentalists) love to hate the biggest thing that can move the needle with respect to climate change,” says David Crane, the chief executive of NRG Energy. NRG is a member, with NRDC and EDF, of the U.S. Climate Action Partnership, an alliance of big companies and environmental groups that back a cap-and-trade program to regulate greenhouse gases.

Crane spoke last week during a lively discussion of nukes led by my colleague David Whitford at FORTUNE’s Brainstorm Green conference about business and the environment. I wish we’d invited an EDF or NRDC representative onto the panel, but the focus was money, not safety, security or waste. David began the conversation by inviting everyone to “consider the evidence and think anew about something about which many of us had made up our minds.”

Good idea. Many years ago, I covered protests again the Seabrook nuclear power plant in New Hampshire for a left-wing publication. My sympathies were with the protestors. Now I’m firmly undecided, and determined to learn more. Given the threat of climate change and the safety record of nuclear plants in the U.S. since Three Mile Island—especially compared the alternative of mining and burning coal—it seems like the right time to rethink nukes.

Here’s what the directors of the national energy laboratories said last year in a report called A Sustainable Energy Future: The Essential Role of Nuclear Energy:

Today, nuclear energy provides 16 percent of the world’s electricity and offers unique benefits. It is the only existing technology with capability for major expansion that can simultaneously provide stability for base-load electricity, security through reliable fuel supply, and environmental stewardship by avoiding emissions of greenhouse gases and other pollutants. Furthermore, it has proven reliability (greater than 90 percent capacity factor), exemplary safety, and operational economy through improved performance.

One of the signatories to the report was Steven Chu, now the energy secretary.

Here are some things I heard during the panel:

As thing stand now, we are unlikely to see the so-called nuclear renaissance that was talked about just a couple of years ago. The global economic slump is the reason why. Lenders are more risk-averse than ever, and few businesses need more capital and pose more risk than new nukes. Demand for electricity is slowing because of the recession. And natural gas prices are down, making it easier to meet new demand for electricity by building natural gas plants.

The U.S. government has set aside about $18 billion in loan guarantees for nuclear plants. That will underwrite perhaps three plants, our experts said. “I’m convinced that there will be three nuclear power plants built in the U.S. in the next 10 says,” said Kevin Book, a partner at ClearView Energy Partners, a research and consulting firm.

Beyond that, it’s anybody’s guess. The utility industry wants to build more—there are 24 applications for new nukes pending at the NRC, all of two to be located near to existing sites, where local support for nuclear energy is strong. No new plant has been approved since the 1980s. By contrast, there are 45 plants now under construction outside of the U.S., most in China, India and Korea, according to Book.

Like beauty, “clean” energy is in the eye of the beholder. Notice how the NRDC statement above says the group would prefer clean and renewable energy to nuclear. Well, Alan Hanson, an executive with Areva, the big French nuclear power company, says that the nuclear waste issue is closer to being solved than, say, the solar waste issue.

France, where more than 80% of the electricity comes from nuclear power, uses a safe and sophisticated system to recycle spent nuclear fuel, Hanson says. (You wouldn’t expect him to say anything else, but still…) Nuclear waste can be stored on the sites of plants “for the next 500 years in we want,” he said—plenty to time to ease the transition to a renewable, low-carbon energy economy.

By contrast, he says, burning coal creates not on CO2 but mercury and other pollutants. And many solar photovoltaic panels are made of cadmium, among other things, for which there’s no recycling plant. “I don’t know of any part of the electricity generating world that treats its waste as well as the nuclear industry does,” Hanson said.

The politics of nuclear are complicated. Chu, who’s probably the smartest guy in the Obama cabinet, supports nuclear energy but Carol Browner, who’s an experienced Washington power player (no pun intended) is said to be a strong opponent. Liberal Democrats on Capital Hill—Nancy Pelosi, Henry Waxman, Barbara Boxer, Harry Reid—also oppose nuclear power. Given a choice between nuclear and coal as a source of baseload power, they’re likely to favor coal.

Crane said: “Right now the dominant wing of the Democratic Party knows they need to accommodate the coal wing of the Democratic Party in order to get energy and environmental policy passed.” That leaves nuclear out of the deal-making.

resident Obama hasn’t said much about nuclear. It may well be that technology breakthroughs in solar, geothermal, wind or battery storage will mean that we don’t need nuclear energy as a source of low-carbon power. But until those breakthroughs come along, shouldn’t we keep the nuclear option open?

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Posted in Climate Change, Energy, Environment, NGOs, Politics, Sustainability | 13 Comments »

Second thoughts on green jobs (and economists)

Saturday, April 18th, 2009

Here’s how page one of Saturday’s Wall Street Journal covered the big climate news from the EPA:

The Obama administration declared Friday that carbon dioxide and five other industrial emissions threaten the planet. The landmark decision lays the groundwork for federal efforts to cap carbon emissions—at a potential cost of billions of dollars to businesses and government.

The question of cost will dominate the climate debate in the weeks and months ahead. We’re mostly done arguing about climate science, thank goodness. Climate change is real. It’s here. It’s probably worse than most people understand. (As the amazingly prolific blogger Joe Romm wrote last week.) The questions now are all about money. If we choose to curb emissions, what will it cost? Who will pay? What will mean for to gasoline and electricity prices? What about jobs? These questions will decide one of the biggest fights Washington has seen in years.

Last week, I offered a few thoughts on the jobs question in a blogpost called The phony green jobs debate that made its way around the Internet and caused a kerfluffle. I argued, essentially, that the claims of environmental groups that climate regulation would create a wave of green jobs (especially in a couple of 30-second TV ads) were overblown and that it would be both more honest and more effective to engage people in a discussion of the costs and benefits of climate regulation. David Yarnold of the Environmental Defense Fund responded with his own blogpost. Folks in NRDC ‘s climate operation were displeased, as was economist Bob Pollin of the Political Economy Research Institute (PERI) at the University of Massachusetts, who has written widely about green jobs. (Disclosure: I’ve done freelance work for EDF and NRDC.) Evidently, I touched a nerve.

In retrospect, I think I was unfair to EDF, NRDC and to Pollin in at least one respect and for that I’m sorry. I lumped together the EDF and NRDC 30-second ads and Pollin’s analysis with a study from the Heritage Foundation and a report called Green Jobs Myths from the University of Illinois College of Law. The fact is, the Heritage study has been discredited (which I noted) and Pollin himself wrote an extensive rebuttal to Illinois study (which I didn’t know, because I didn’t ask him about it). By email, Pollin said:

In my view, the role of good journalism is not simply to seek out a safe middle position between contending positions, and quote someone who presents that safe, if unsubstantiated middle position.  The real job of serious journalism is to try to figure out whether one of the positions is right.  I haven’t seen anyone, including you, refute the main findings of my research.

He also wrote:

building a clean energy economy is a big source of job creation relative to spending money on fossil fuels.  The reason has nothing to do with “green” anything in particular.  It rather has to do with the shift to relatively more labor intensive activities, and to activities that have a higher domestic content and lower import content.  These basic results from my research have nothing to do with forecasting per se.  They fall right out of the industrial surveys of U.S. businesses, as organized by the Department of Commerce in their input-output models.

Both points are well taken. Pollin’s work is carefully done and as best as I can tell (see-I’ve learned my lesson) he’s right that no one has refuted him. So it stands to reason that any climate policy that moves us away from fossil fuels and towards clean energy and efficiency will be a net creator of jobs. What’s more, to the degree that a stimulus package or cap-and-trade program promote energy efficiency, they will help companies and individuals become more productive and less wasteful. That, too, should help create jobs. Of course, jobs will also be lost along the way—just not as many, if Pollin is right. Some manufacturing could leave the U.S. for countries without carbon caps or taxes. Building more Priuses might mean building fewer Hummers. More solar jobs might mean less coal jobs. Or so we can hope.

Having said that, I’m going to stand by my two main arguments about climate change economics. The first is that we need to be mindful about how little we understand about the economy, and how hard it is to forecast the future. That’s because unlike, say, physics or medicine, economics is a “science” in which it is all but impossible to do controlled experiments on a grand scale. There are too many moving parts. Economists still can’t agree on how and why the Great Depression ended. No wonder they didn’t forecast the Great Recession. On even as “simple” a matter as forecasting the price of oil—where you can extrapolate demand and know a fair bit about supply–their track record is horrible.

Peter Coy of Business Week had a big story the other day with the headline “Hey Economic Geniuses! What happened?” Among other things it said:

The rap on economists, only somewhat exaggerated, is that they are overconfident, unrealistic, and political. They claim a precision that neither their raw material nor their skill warrants. Too many assume that people behave like the mythical homo economicus, who is hyperrational and omniscient….

Critics are scathing. Nassim Nicholas Taleb, the scholar of rare events who wrote Fooled by Randomness and The Black Swan, says: “We have to build a society that doesn’t depend on forecasts by idiotic economists.” Says Paul Wilmott, a quantitative finance expert: “Economists’ models are just awful. They completely forget how important the human element is.”

I’m not suggesting we ignore economists. Most of the ones I know are smart and well-intentioned. Some of my best friends….oh, never mind. But I am saying that we approach them with a skeptical mindset, especially on an issue as fiendishly complex as the economics of climate change.

Bob Pollin pointed me to an appendix (PDF available here and surprisingly interesting) of one of his jobs reports where he makes a similar point:

Conducting economic forecasts through formal econometric models can produce useful information and predictions. However, by necessity, all such models must work with strong simplifying assumptions, since the actual operations of the U.S. economy are far too complex to be represented in full by any model. The difficulties in working with such models are compounded by the attempt not merely to describe the economy as it functions at present, but to attempt to predict how its operations will evolve into the future. The reason this is so difficult is because basic features of the economy’s future growth path are simply un-knowable at the time the forecasts are produced.

He goes on to write that “these problems deepen in the case of attempting to forecast the effects of cap-and-trade legislation on the U.S. economy over time.” So beware of economists bearing forecasts!

I’m also sticking with my second argument: That it’s a mistake for environmental groups to suggest or imply that climate change regulation will be cost-free. Now hold your fire, NRDC and EDF—I’m aware that you do serious work that acknowledges the costs of climate regulation. I’m a regular reader and fan of NRDC’s Switchboard and EDF’S Climate 411 where I learn from people like Laurie Johnson and Andy Stevenson and Gernot Wagner.

But in their political communications—emails, press releases and 30-second ads—the rhetoric can get overheated. So much so that the environmental groups could be putting their credibility at risk. Some headlines  and excerpts from NRDC, EDF and the Blue Green Alliance, an enviro-labor coalition:

Green Investment Creates Enormous Economic Opportunities: New Report Says U.S. Can Create Two Million Jobs in Two Years with Green Investment

Capping carbon is … an investment in our economy that will transform our energy sources and create millions of new jobs.

The President’s plan [on auto emissions standards] —including the next step of a cap on carbon pollution—means more new jobs, a rebirth for the American auto industry, and less global warming pollution.

A rebirth for the American auto industry! What’s next? Cap-and-trade as a weight-loss aid?

Environmentalists like to say that cap-and-trade is a win-win-win. Reduce the threat of global warming. Create “green” jobs. And lessen our dependence on foreign oil.

All true, but it’s also true that cap-and-trade will raise the price of gasoline and electricity. That’s what people mean when they talk about “putting a price on carbon.” That’s a good thing. It will encourage people and companies to use less coal and oil, and it will make low-carbon energy sources like wind, solar and nuclear more competitive.

Maybe I’m sounding too much like a reporter here. I’m asking advocates for cap-and-trade to acknowledge that the policy will cost some people their jobs, require others to stretch their household budgets, runs the risk of putting U.S. companies at a disadvantage if China and India don’t go along and, worst of all, might not even do the job of avoiding the worst impacts of global warming.

Guess what? We should do cap-and-trade anyway because, whatever the costs of action, the costs of inaction will be higher. As economist Frank Ackerman of Tufts said the other day on an NRDC call, the question of whether we should spend money to fight global warming isn’t like the question of whether you should spend money to buy a new car this year or wait until next. It’s more like the question of whether you want to repair the ever-widening cracks in the foundation of your house. This is serious, folks, and delay or indecision will only raise our costs. You don’t have to be an economist to know that.

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

Why don’t we pick the low-hanging fruit?

Thursday, April 16th, 2009

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As a reporter who writes about business and the environment, I’ve heard the expression “low hanging fruit” used to describe energy efficiency countless times. Google the words “low-hanging fruit energy efficiency” and you’ll get 57,100 hits. Maybe 57, 101 by now.

For the last month or so, I’ve been helping the Environmental Defense Fund write a report on business innovations and the environment. It’s been a great learning experience, and we’ll release the report next week at the FORTUNE Brainstorm Green conference.  This work has helped answer a question that bugged me for years: Why don’t people pick the low-hanging fruit?

The answer is that business does not operate according to classic free-market principles. Business is messier. Human emotions come into play. As does human perfection, and the fact that companies are rarely (ever?) the lean and well-oiled machines envisioned by classical economics.

This is why companies that could (and should) easily save energy and money by becoming more efficient don’t.

Let me offer a couple of examples.

One comes from hotels. Hotels could save thousands of dollars a year by installing key-card systems that would automatically shut off the power whenever a guest leaves the room. A 616-room Westin hotel in Pittsburgh invested $120,000 in a key-card system and got all of that money back in energy savings in a year. After that, the hotel was free to use the savings to lower its room rates, increase its profits or both–and in a world of truly competitive markets, others would be forced follow. That hasn’t happened. Not in Pittsburgh or elsewhere.

And why not? Hotel owners apparently worry that some guests may not like the loss of control or the inconvenience of arriving at a slightly colder room in winter or slightly warmer room in summer–even though the owners could keep room temperatures just a few degrees from 70 or 72 and guests could enjoy something else (lower costs, more amenities) in return for a few minutes of waiting for the room to heat or cool. By the way, travelers in Europe and Asia have come to expect the key card system. How do markets account for that?

A second and better example involves corporate computer networks. They waste a lot of energy because most computers run at night or on weekends. If you work in an office, you know that networks are controlled by IT departments who want access 24/7 to fix bugs or deal with security issues. They want power (electric and corporate), and they don’t, as a rule, care about wasting power (electric) because they aren’t responsible for paying the electricity bills. They’ve got enough to worry about. That’s human emotion, too.

As it happens, there are software products out there that  allow the IT guys to control the network and save energy at the same time. So far, though, these products haven’t been selling widely. The people who pay the energy bills don’t buy software. The technical word for this in corporate America is “silos.” Most companies have silos, and they are another reason why the low-hanging fruit keeps on hanging.

EDF’s report, out next week, will highlight best practices in these two areas and others. We will also point to government policy that can help–some states, for instance, give rebates to hotel owners who install the key–card systems because in the end efficiency benefits all of us. It means that collectively we will emit fewer greenhouse gases and that we won’t need as many new power plants.

So take a look at the report next week and check out EDF’s new Innovation Exchange, which provides business people who want to improve their companies–and the planet–with valuable content, practical tools and a community of like-minded people. This post first appeared on EDF’s Innovation blog.

And then do me a favor–even if we can’t pick all the low hanging fruit right away, let’s retire the metaphor.

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

The phony green jobs debate

Tuesday, April 14th, 2009

As the battle over climate change legislation heats up, several Big Green groups–the Environmental Defense Fund, the Natural Resources Defense Council and the Sierra Club–are rolling out TV and Internet ads designed to persuade voters that regulating greenhouse gas emissions will create green jobs. David Yarnold, the president of EDF’s Action Fund, sums up the message in an email: “Carbon Caps = Hard Hats.” Clever. Here’s an ad from EDF’s campaign, launched in partnership with the United Steelworkers union and the Blue Green alliance, a group of enviromental groups and unions.
Think of this ad, and the one below, as the “Harry and Louise” ads of the campaign to pass global warming legislation. You remember Harry and Louise, right? They were the couple who turned a devilishly complicated issue, health care reform, into a soundbite (”If we let the government choose, we lose”) and helped kill the 1994 Clinton health plan. These ads take what may be an even more devilishly complicated issue, climate change regulation, and use images of brawny construction workers to turn it into an even shorter soundbite: “Green jobs.” Take a look at this spot from The Blue Green Alliance:

Maybe I missed it, but did you hear an environmental message in either of those ads?

Of course, there’s research to support the claims about green jobs. In the interests of full disclosure, I need to say here that I’ve been doing some freelance work for EDF and NRDC—organizations I admire a great deal. But these claims about green jobs deserve greater scrutiny.

Last June, for example, the Blue Green Alliance, Sierra Club, NRDC and the steelworkers issued a green jobs report from the Political Economy Research Institute (PERI) at the University of Massachusetts, Amherst. It said:

…millions of U.S. workers—across a wide range of familiar occupations, states, and income and skill levels—will benefit from the project of defeating global warming and transforming the United States into a green economy.

A second report from PERI, issued last September under the auspices of the Center for American Progress, got more granular. In my home state of Maryland, for example, the authors project that a $100 billion green economic recovery program would create 36,739 jobs. They would be created in such industries as building retrofitting, mass transit and freight rail, smart grid, wind power, solar power and advanced biofuels.

It sounds great, doesn’t it?

Not according to the four lawyers and economists who produced “7 Myths About Green Jobs,” a 97-page report published by the University of Illinois College of Law.  They argue that “the green jobs literature is rife with internal contradictions, vague terminology, dubious science, and ignorance of basic economic principles.” Studies by conservative think tanks go further, claiming that climate legislation will destroy millions of jobs. A 2008 Heritage Foundation study claimed that passage of last year’s Lieberman-Warner bill would create “extraordinary perils for the American economy” and cause annual job losses of between 500,000 and 1,000,000 after a few years of job gains. (This report was pretty thoroughly discredited by NRDC.) The best thing I’ve read about this debate (and one of the most balanced) is this fine Slate article by Eric Pooley, my former editor at FORTUNE, who finds that there’s an emerging economic consensus that the costs of dealing with climate change are significant but manageable–and that given the risks, those costs are likely worth paying.

My point here is not that economists disagree. My point is that the climate change debate shouldn’t be about green jobs. It’s intellectually dishonest to pretend that we can forecast, with any degree of accuracy, the impact of a complicated government policy on a dynamic global economy decades into the future. Both sides know that their projections are based on a host of assumptions which may or may not come true. What if we decide as a nation to turn to nuclear energy as a source of low-carbon power? That probably won’t create many long-term jobs. What if there’s a breakthrough in the solar PV business in China? That may not bring green jobs here. Are farmers who grow corn for ethanol doing green jobs? That hasn’t turned out so well.

Let’s get real: We can’t predict oil prices 12 months out. Last spring, virtually no one anticipated the global financial crisis of last fall. And we are projecting the number of green jobs that will be created or lost on a state-by-state basis by a law that won’t take effect until 2012? Who are we kidding?

I called Russ Roberts, an economist at George Mason University who hosts the fine EconTalk podcast, for some guidance on how to think about green jobs and the economics of climate regulation.  “Creating green jobs is easy,” he told me. “We could employ millions of people picking up litter, and we could make them very good-paying jobs if we want. But of course that would make us poorer as a nation. There’s a cost to providing those jobs that would have to be borne by other people in the economy.”

It’s not just the cost of higher taxes that needs to be factored into the equation, he noted. To the degree that the government makes policy that favors, say, vast construction of wind turbines throughout the upper Midwest, the people doing those jobs will be drawn from somewhere else, maybe even from more productive work. If policy leads to the hiring of  thousands of contractors to do energy efficiency, the cost of building a new home or renovating your basement may go up because many of the good construction workers are busy.

“As voters and citizens and readers, what we want to think about is the big picture—are we moving in the right direction when it comes to environmental policy?” Roberts says. Put another way, are we spending enough money today to head off the threat of global warming in the future? Because if anyone tells you that we can deal with climate change at no cost, they probably shouldn’t be trusted.

Maybe that’s what bothers me about the green jobs ads. They’re like political campaign ads. They promise something for nothing. They treat the voters like children. They’re emotional and not educational. And they’re not helping to build a movement around climate change.

Other than that, they’re fine.

And I do hope they work.

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Posted in Climate Change, Energy, Environment, Media, NGOs, Politics, Sustainability | 13 Comments »

KKR, cutting costs–and pollution

Wednesday, February 18th, 2009

When Casey Stengel managed the woeful ’62 Mets, he’d lament, famously, “Can’t Anybody Here Play This Game?” Some days, I ask that question about the people who run corporate America, and I’m not just talking about mortgage brokers and Wall Street risk managers.

The latest data point leading me to wonder whether executives running big companies know what the heck they are doing comes from the nonprofit Environmental Defense Fund and the private equity firm KKR, which formed a partnership last spring, and announced today that, after studying the operations at three KKR-owned companies, they had identified about $16 million in cost savings that also produced meaningful environmental benefits. Here’s the press release.

This is welcome news, of course. U.S. Food Service, a big food distributor, saved $8.2 million in fuel costs through better driver training and technologies that turn off trucks when idling or set maximum speeds. Primedia, which publishes magazines and websites for home buyers and tenants, saved $2.9 million in material costs by shrinking paper sizes and putting more content on the Internet. Sealy Corp., the nation’s biggest bedding manufacturer, saved $4 million by recycling the raw materials, like cotton and wood, used to make mattresses. These initiatives all delivered environmental as well as cost benefits, so EDF and KKR have reason to be pleased.

“We were just experimenting, and look what we found,” says Gwen Ruta, EDF’s vice president of corporate partnerships. An EDF news release described the results as “a high note in a low economy.”

Well, sure, but doesn’t it make you wonder why all that money was wasted before a bunch of young and likely underpaid environmentalists came along to kelp KKR and its managers run their companies? I had always thought that what the private equity guys did best was to improve operations (i.e., squeeze costs) at the companies they buy.

When I asked Gwen Ruta about this, she acknowledged that none of the changes ushered in by the EDF-KKR partnership required technology breakthroughs or top-to-bottom reengineering of manufacturing processes. “None of this is rocket science,” she said. “You just need to be more thoughtful about what you are doing.”

U.S. Food Service, for instance, advised the drivers of its trucks not to step too hard on the pedal when starting up after making a full stop. Funny, I recall hearing that in a driver ed class, oh, about 40 years ago.

Ruta further explained that KKR had found the efficiency gains after working with EDF to devise new ways to analyze company operations. U.S. Food Service decided to measure how many gallons of fuel the company burned to move each ton of product. By tracking that metric, they improved efficiency by 4%, a significant gain. Similarly, Primemedia began looking at paper use per dollar of revenue and Sealy began to measure how much scrap it throws away per manufactured bed. There’s an old adage in business that “you can’t manage what you don’t measure,” and so by measuring waste and fuel efficiency, these firms are better able to manage them.

The argument here—and I think it has merit—is that by looking at company operations through the fresh lens of sustainability, managers will discover new opportunities to save money and reduce their environmental impact. If they are smart, they also will unleash the creativity of their workers, who really know how and where money is being wasted. Wal-Mart learned that when it began  rethinking its operations as part of a company-wide sustainability campaign.

KKR and EDF now plan to extend their efforts to other KKR-owned firms in North America and Europe. They will also make their methodology available to anyone who asks; that’s required when companies engage with EDF, which doesn’t take any corporate donations for its advice. I’m very pleased that Gwen Ruta (below), Ken Mehlman, the head of global public affairs at KKR, and Bob Aiken, the CEO of U.S. Food Service, have all agreed to speak in April at FORTUNE’s Brainstorm Green conference about business and the environment.

(Disclosure: I’ve got a contract with EDF to write a report about environmental innovations in business.)

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Posted in Energy, Environment, NGOs, Sustainability, Workplace | 3 Comments »

Brainstorm Green 2009

Sunday, January 11th, 2009

Not long ago, Big Business and environmental activists were sworn enemies. No more. Today, companies and NGOs come together to work creatively around a variety of issues—from climate change to recycling to protecting the Amazon, from cleaning up dirty businesses like gold mining and to “greening” professional sports. One place they literally come together is at Brainstorm Green, FORTUNE’s conference about business and the environment, which will be back on Earth Day, 2009.

Helping to create Brainstorm Green was a highlight of my 12 years at FORTUNE, and I’m pleased that I’ll be back this year, co-chairing the event with my colleague Brian Dumaine, FORTUNE’s global editor. The program for this year’s Brainstorm Green is still a work in progress, but a group of us got a draft agenda down on paper last week and I’m confident that it will again be a lively, exciting, information-packed event. The theme, once again, will be: How can business help solve the world’s biggest environmental problems?

We’ll discuss and debate climate change regulation, “clean coal,” nuclear power, electric cars, the smart grid, investing in green, renewable energy, sustainable consumption (if there is such a thing), carbon finance and too many other topics to list here.

What makes Brainstorm Green special is the diversity of the crowd. This year, we’ll again hear from many of America’s most important environmental leaders, including Fred Krupp of Environmental Defense, Glenn Prickett of Conservation International, Mark Tercek of The Nature Conservancy (who was there last year on behalf of Goldman Sachs), David Hawkins of the Natural Resources Defense Council, Mindy Lubber of Ceres and Mike Brune of Rainforest Action Network. At least two dozen CEOs of big and medium-sized companies have agreed to speak, including Shai Agassi of Better Place (the electric car company), Ray Anderson of Interface, Carl Bass of Autodesk, David Crane of NRG Energy, Jeff Hollender of Seventh Generation, Fisk Johnson of S.C. Johnson, Donald Knauss of Clorox, Mike Morris of American Electric Power, Ralph Peterson of CH2M Hill, Jim Rogers of Duke Energy and Tom Werner of SunPower.

Other companies sending speakers include Wal-Mart, McDonald’s, Coca-Cola, Goldman Sachs, Mars, Intel, Boeing, McKinsey, the private-equity firm KKR and architectural firm HOK. That list is sure to grow.

We’ll also be joined by speakers whose ideas are shaping the sustainability debate. I’m looking forward to spending time with Paul Hawken, whose books have shaped much of my own thinking about business and the environment. The dynamic Van Jones, who is profiled in the current issue of The New York by Betsy Kolbert,  will talk about green jobs. The always-inspiring Janine Benyus, who spoke last year, will be back to show us how biomimicry works in practice. My friend Joel Makower, the guru of green business and author of Strategies for the Green Economy, will return as well.

Venture capitalists from some of America’s top firms and entrepreneurs touting exciting startups will round out the group. We’re hoping to attract senior officials from the new Obama administration as well.

You can find a full list of speakers on the Brainstorm Green website. That’s also the best place to propose new speakers or to sign up for the event. (FORTUNE screens all participants.) We’ll meet in a beautiful setting—the Ritz Carlton Hotel in Laguna Niguel, CA, and I’m looking forward to seeing many of you blogreaders there.

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Posted in Environment, Media, NGOs, Sustainability | 3 Comments »

The upside of the meltdown

Thursday, November 27th, 2008

While there’s little to like right now about what’s happening to the global economy, or about the government’s never-ending rescue efforts—did you really want to become an owner of Citigroup?—there is this: The possibility that Americans will at long last rethink our habitual consumption. I stopped by my local mall (for a haircut) the other day, and it sure looked busy, but the statistics tell a different story. Consumer spending fell by 1 percent in October, the largest drop since the 2001 terrorist attacks, according to the Commerce Department. November is likely to be worse.

This is welcome news. While I’m mindful that a pullback on consumption will claim some victims—shop clerks, fashion designers, Chinese laborers who make toys or electronics for the global market, maybe even a U.S. automaker or two—and while people losing their jobs is always regrettable, the rate at which we Americans have been spending money is unsustainable both in economic and environmental terms. To put it simply, we’ve been living off cheap credit and cheap energy, neither of which can last.

U.S. financial markets collapsed for many reasons–the recklessness and greed of lenders and mortgage brokers, the willingness of investment banks to repackage and sell junk, the breakdown of the bond ratings agencies which are supposed to investigate the value of securities, the ineffectiveness or indifference of government regulators and the blind faith that markets will take care of everything. But one more very big reason that we are in such trouble now is that is that Americans have borrowed a lot more money than they could afford to repay to buy bigger homes and cars, and more stuff of all kinds. As a government and as individuals, we’re borrowing more each year just to stay even. This massive intergenerational transfer of wealth—from our children and grandchildren to ourselves—is not only unjustified but certain to end badly.

Environmentally, we quite literally cannot fuel our current levels of consumption without destroying the planet, until we radically transform the way we use energy and materials, a process that will take decades. “Sustainable consumption” is, for now, pretty much an oxymoron—just think about how much gasoline, coal-fired electricity and plastic you use every week. Deforestation, the depletion of the ocean’s fisheries, loss of biodiversity and, of course, climate change are all driven by the fact that we are living beyond our collective means.

OK, enough of a rant. Now I want to pose a question, and humbly make a suggestion as the holiday shopping season kicks off. (Friday, November 28, is Buy Nothing Day and Black Friday.) The question is, why don’t the U.S. environmental groups talk more about consumption?

I don’t know the answer (and I will try to ask Fred Krupp of Environmental Defense Fund or Frances Beinecke of NRDC, next time I run into them) but I think it’s in part because they are focused on policy and they don’t want to place too much of the blame for our environmental crisis on consumers. They also don’t want to come across as scolds (Unlike me!) because that hasn’t been an effective message for environmentalists. I can’t help but wonder if it is also because they depend on the kindness of rich people to stay afloat. Their boards and major donors come from Wall Street, corporate law firms and big companies. (Check out the EDF board and the NRDC board.) This leaves the consumption issue to much smaller groups like the Center for the New American Dream, which has found creative ways to get people to think about their buying habits. The economist Juliet Schor, who is co-chair of the New Dream board, has an article on the group’s website calling for “a local, frugal, just, and fun holiday season” filled with more music and less wrapping paper!

I’d like to suggest that you substitute a gift to charity for your next trip to the mall. This is a win-win-win-win because you can help out a nonprofit (and many are feeling squeezed right now), avoid purchases that deplete our natural resources, save on gas and lower your personal carbon footprint. There are many websites that can help with this, but you can start with Redefine Christmas. They have this eye-popping statistic on their website:

the amount of money spent on candy alone during the holiday season is greater than the annual budgets of the American Cancer Society, The American Heart Association and Habitat for Humanity combined.

Stunning, isn’t it. Another site, Just Give, includes a database of 1,000 charities, grouped by category, that have met stringent reporting requirements, and makes it easy to send gift cards, collect tax receipts, etc. Still another nonprofit that does good work makes holiday giving easy with gift cards is Global Giving (disclosure: I’m friendly with its founder, Dennis Whittle), which enables you to directly support small NGOS all around the world. Imagine sending blankets and clothes to needy families in India or contributing to a school for AIDS orphans in South Africa instead of buying a new sweater or tie for a family member or friend.

Whatever you choose to do, I hope your holidays are filled with peace and love–which, incidentally, are infinitely renewable resources.

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Posted in Climate Change, Consumption, Environment, Global Poverty, NGOs, Sustainability | 7 Comments »

Biz and NGOs: too cozy?

Friday, November 14th, 2008

Only a mindless anti-business zealot (and unfortunately there are still too many of those) would argue that environmental groups should not cooperate with big business when they have shared interests. Even activist groups like Rainforest Action Network and Greenpeace work closely with big companies like Citigroup and Coca-Cola, to help them make their operations more efficient or their strategy more environmentally friendly.

But there’s lots of debate about whether NGOs should accept money from their corporate partners. Does it compromise their independence? Threaten their credibility? Or enable them to bring in more money, and therefore have a bigger impact? That’s the topic of today’s Sustainability column.

By coincidence, I spent the day at the Net Impact conference in Philadelphia where corporate-NGO partnerships were one topic on the agenda. (Net Impact is an organization of business students and young business people who are committed to using business to make the world a better place. Some 2,400 people attended the very impressive event at Wharton.) I moderated a conversation about a corporate-NGO alliance with John Brock, CEO of Coca-Cola Enterprises and Carter Roberts, CEO of the World Wildlife Fund, and then listened to another where Ken Mehlman of private-equity firm KKR and Elizabeth Seeger of Environmental Defense Fund talked about their work together. CCE’s Brock and KKR’s Mehlman both said their firms got real value out of the partnerships—in terms of advice on how to better manage their operations, and from the public-relations value of the association with a green group. ”If we’re going to save the plant, we’re going to do it by making a profit,” says Mehlman. “That is the only way tit will be truly sustainable.” (When private equity firms, which are notoriously unsentimental, get serious about “going green,’ then you know the business case has become truly compelling.)

Interestingly, CCE and its sister company, Coca Cola, pay the WWF for its advice, and make donations to the group to help restore rivers and streams. But no money changes hands between KKR and EDF.

There are good arguments for both models, and you can read them in the column. My belief is that the NGOs, at a minimum, need to be transparent about their dealings with business. That is, they need to disclose how much money they are taking from their corporate partner over what period of time, and what services they are providing in return. One controversial partnership, a deal between the Sierra Club and Clorox, fails to meet this test. Here’s how the column begins:

Some environmentalists attack bottled water. Not Conservation International, a Virginia-based nonprofit that aims to protect the earth’s biodiversity.

When Fiji Water announced a sustainability initiative last spring to help protect forests on the remote Pacific Island of Fiji, Conservation International Peter Seligmann praised the move.

“We applaud Fiji Water for offsetting the climate impact of its products, reducing the impact of its operations, and funding crucial conservation efforts that support local communities and protect some of the last remaining forests in the South Pacific,” he said in a Fiji Water press release.

The endorsement didn’t surprise anyone who understands the relationships between Fiji Water and Conservation International. The privately-owned bottled water company pays Conservation International – neither party would say how much – to finance the work they do together. Stewart Resnick, who owns Fiji Water with his wife, Lynda, sits on Conservation International’s board and donates to the group.

Such cozy arrangements are increasingly common as big companies work side-by-side with big NGOs (non-government organizations). Clorox secured the endorsement of the Sierra Club – and the use of its logo — for a line of eco-friendly cleaning products, called GreenWorks that the company introduced late last year. Neither will disclose how much cash is involved.

You can read the rest here.

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Posted in Business Ethics, CSR, Environment, NGOs, Sustainability, Transparency | 3 Comments »

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