WRI: Beyond the beltway, some bright spots

“It was a tough year for the environment, and a tough year for environmentalists, especially in the U.S.”

So said Jonathan Lash, the CEO of the World Resources Institute, one of Washington’s most respected environmental groups, as he began his annual look at the state of the environment in the new year.

2010 was indeed a dismal year–marked as it was by record warm temperatures, natural disasters linked to climate change, the BP Deepwater oil spill, the Massey mine disaster and, most importantly, the defeat of  climate-change legislation in Congress.

Given today’s political realities, it was hard for Lash to summon much optimism about 2011,  at least when it comes to U.S. policy. But he was able to identify pockets of progress in the business world and elsewhere–particularly in China–that could, over time, drive the decarbonization of the global economy required to curb climate change.

Policy will be needed–specifically a price on carbon, in some form–but if and when governments finally manage to peenalize companies for their emissions,  they will  set off “an avalanche, a shift that will go much faster than policy requires” as businesses compete in a low-carbon world.

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Golly GE: a smart way to spur innovation

Take the creativity of countless startups, the heft of a big corporation, $200 million in prize money, savvy venture capitalists, the power of digital media and the wisdom of crowds.

Put them together and you have the ingredients of GE’s Ecomagination Challenge, a promising way to speed innovation towards a smart grid, clean energy and eco-friendly homes, buildings and cars.

Promising…because we won’t see results for a while.

Unveiled with fanfare by GE chief Jeff Immelt in Silicon Valley in July, the Ecomagination Challenge has generated more than 3,000 entries and 60,000 comments and votes. This week, GE will announce the top vote-getters and next month it will announce the winners, which are selected by a panel of expert judges.

GE and its four venture capital partners–Emerald Technology Ventures, Foundation Capital, KPCB and Rockport Capital Partners–have said they will invest $200 million into the most promising startups and ideas. Grants could range from $100,000, to further research a new idea, up to significant equity investments in existing startups, which would also get marketing and manufacturing support from GE. GE already has significant investments in clean tech companies like A123 Systems, which makes batteries, and Southwest Windpower, which makes small-scale wind turbines. This is an effort to find more.

How’s it going? Some of the ideas seem, to put in kindly, long shots. An electric generator powered by garlic? (See it on video here.) Rotating houses? A “Wind Turbine Electricity Generation Without the Wind.” What’s next: solar panels that don’t need sunshine?

Amidst the thousands of entries, several caught my attention, and the attention of voters:

Julie and Scott Brusaw

One is Solar Roadways, the  brainchild of a mom-and-pop couple in Idaho. Scott Brusaw is an electrical engineer, a former sergeant in the Marine Corps and a former Boy Scout scoutmaster, and his wife Julie Brusaw is a marriage and family counselor. They want to make roads out of solar panels, protected by a material similar to that used in the “black boxes” in airplanes. LEDs could be added to light up roads at night, and heating elements could be installed to melt snow, all powered by the sun. They’re even talking about putting sensors in the roads to warn drivers if animals are crossing. The Brusaws got a contract from the Federal Highway Administration to build a prototype in 2009, and he was invited to give an entertaining TEDx talk last spring in Sacramento.

Interesting, too, is Welectricity, which is described as “a social network that promotes household energy efficiency through behavioral nudges.” Think Facebook meets your utility bill. Electricity users could set up profiles, and their bills would be graphed and compared to one another. (You could send a boastful tweet when your bill is lower than your neighbors!) The idea comes from Herbert Samuel, an energy consultant from the Caribbean island of St. Vincent.

I was also struck by an entry called From Net Zero to Waste Zero which uses a combination of solar PV, wind and geothermal energy to design a low-cost house that lives off renewable power. (That’s an image of the house, above.) The idea comes from Sam Qin, a Canadian entrepreneur who coordinated the design of a zero net-energy house for the Canadian government during the 2008 Beijing Olympics.

Whether any of this is truly new–and, more important, scalable–is very much an open question. If we lived in a perfectly efficient economy, where any entrepreneurs could get a hearing at venture capital firms, and the best ideas would get funded, we wouldn’t need a competition like this. But we don’t, and that’s why new models for innovation–like the automotive X-Prize--are worth trying. If nothing else, GE’s challenge has spurred a lot of online conversation and positive buzz for GE.

GE: Good citizen, but where’s the payoff?

“Responsible business,” says Bob Corcoran, “is good business.”

And what’s responsible business? “Make money, make it ethically and make a difference.”

Bob Corcoran

Bob is vice president for corporate citizenship at GE, a 30-year company veteran, and a good guy. We met in 2o04 when we traveled together in Ghana while I was reporting a story on GE’s values for FORTUNE. (See Money and Morals at GE.)  Recently we spoke about GE’s 2009 citizenship report, and about what GE has learned in the past five years from its corporate citizenship efforts, including its high-profile campaign around Ecomagination, which focuses the company, and its marketing, on products and services that help solve the world’s big environment problems.

Inside GE, Ecomagination is deemed a success, so much so that it has spawned a sister initiative (if you can spawn a sister) called Healthymagination, focused on profitably creating better health for more people. GE says that it expects Ecomagination product revenues to grow at twice the rate of GE’s overall revenue between now and 2015.

The logic behind both initiatives is simple, Bob noted. Big global problems demand big solutions from big companies. GE prides itself on “tackling the world’s most complex and pressing problems,” as chief executive Jeff Immelt writes in the report.

The trouble is, the payoff for GE’s shareholders have been disappointing. I didn’t realize just how disappointing until I put together this chart comparing GE’s stock-price performance to the S&P500 and to a couple of its conglomerate competitors, Siemens and United Technologies. [click to continue…]

Walmart: Still the green giant

051026_MB_GreenWalmart_exWalmart and GE are the superpowers of corporate sustainability. They have enormous impact (WMT) and influence (GE). Recently, I hosted a dinner about sustainability for Motorola where an executive named Bill Olson described how the company developed its Eco-Moto W233 Renew carbon neutral, energy efficient, environmentally friendly phone. To do so, Motorola needed a company that would sell it recycled plastic for the phone. That was GE. It also needed a retailer to enthusiastically sell the phones. That was Walmart. In fact, as Bill recalled, WMT exec told him that giant retailer would before long be selling nothing but “green” phones.

The point is, WMT and GE are changing business, often in unseen ways. So it’s worth keeping up with their efforts to meet their own ambitious sustainability goals. Where are they succeeding? Where are they falling short? How strong is their commitment?

WMT’s 2010 Global Sustainability Report, which was released recently, provides a snapshot of the retailer’s work. The 47-page report (available here) is, if nothing else, a reminder of the scope  and depth of WMT’s efforts—the company is buying renewable power, reducing packaging, reducing waste, making its fleet more efficient, and selling more sustainable products, and not just here in the U.S.

Here are some highlights:

Bentonville Buddies: Mike Duke and Environmental Defense Fund's Fred Krupp
Bentonville Buddies: Mike Duke and Environmental Defense Fund's Fred Krupp

When CEO Mike Duke took over last year from Lee Scott, there were questions about his commitment to the sustainability efforts. He now appears to be a believer. In the introduction to the report, he writes that  WMT has been able to “broaden and accelerate” its commitment to sustainability even during the recession. And he says:

Sustainability continues to make Walmart a better company by reducing waste, lowering costs, driving innovation, increasing productivity and helping us fulfill our mission of saving people money so they can live better.

That’s about as good a summary of the business case for sustainability as you’ll find. [click to continue…]

GE’s Immelt: I thought wind was a “hula hoop”

ge-logoGE’s chief executive, Jeff Immelt, opened the Net Impact 2009 conference this morning at Cornell University and, as usual, he was thoughtful and provocative. He was bullish on GE, of course, but, after this tough year for the U.S. economy, he sounded more pessimistic than usual  about where the country and its economy are going.

The American consumer, the financial services industry and the construction industry were the major drivers of America’s long boom, going back to the 1980s. None is likely to drive  economic growth in the future, Immelt said.

Instead, he noted, growth will be most robust in the developing world–places like China, India and Brazil that have bounced back more quicly than the U.S. from the global downturn–and it’s by no means clear that U.S. industry is positioned to capitalize on that growth.

Immelt said:

There’s more growth outside the United States than there is inside the United States. We have to recognize that our destiny is connected to the emerging world. We have to repurpose ourselves as an exporter.

The trouble is, the U.S. isn’t educating as many engineers as it should be, he said. Nor are the U.S. government and U.S. companies investing as much as China, say, in energy researchjeffrey_immelt_preview and development. Public policy. also remains a big question mark when it comes to energy because, so far at least, Congress has been unable to pass regulation of global warming pollutants. Other countries are moving faster.

“There’s going to be 10 million jobs created in clean energy,” Immelt said. The question is, will those jobs be in the U.S., in China, or elsewhere?

In the audience for Immelt were more than 2,000 members of Net Impact, a great organization whose purpose is “to inspire, educate, and equip individuals to use the power of business to create a more socially and environmentally sustainable world.” (Disclosure: I’m a new member of the Net Impact board.) Immelt has made GE’s “ecomagination” campaign a hallmark of his tenure as CEO and he said his focus at the company has been to marry capitalism and sustainability. [click to continue…]

Is small wind a big deal?

19-skystreamWhen it comes to energy, GE is all about big: big coal plants, big nuclear plants, big wind towers. So why would the $183-billion a year industrial conglomerate bother to invest a small amount of money—just a few million dollars – in a small company that makes wind turbines so small they can be erected in your backyard?

Perhaps because, under the right circumstances, homeowners can make their own wind-generated, low-carbon, electricity for less than it costs to buy power from their local utility. This could turn small wind into a big deal.

Southwest Windpower, the company backed by GE, has made quite a few of those small turbines–more than 140,000 since the company was started back in 1987. The company manufacturers the wind turbines in Flagstaff, Arizona, and in a 50-50 venture with a Chinese partner in Ningbo, China. Revenues were about $24 million last year.

I met Frank Greco, Southwest Windpower’s CEO, last month at the GE research center in Niskayuna, N.Y., where GE Capital was showcasing some of its venture investments. GE invested in Southwest Windpower early this year, along with Altira, Rockport Capital Partners, NGP Energy Technology Partners, and Chevron Technology Ventures, Chevron’s venture capital arm. Collectively, they invested $10 million. [click to continue…]

Buy American: Bad for America

440330328_aad335b857Congress should have known better.

Last winter, a long list of global companies—GE, Siemens, HP, Sony, Caterpillar, Cisco, Dow Chemical, IBM, Microsoft, United Technologies, Xerox and many more—warned the Obama administration in a letter [PDF] that a “Buy American” provision in the $787-billion economic stimulus package would make it harder to get the money out the door to create jobs.

Turns out they were right.

The Buy American regulations are complicating life for business, slowing down construction-ready projects and sparking trade tensions with, of all places, Canada.

I learned about this problem only recently during a conversation with Daryl Dulaney, who is the CEO of Siemens Industry, a large U.S. division of the German industrial conglomerate that includes “industry solutions, industry automation, drive technologies, building technologies, mobility and Osram Sylvania.” With its German roots, Siemens may be more sensitive than most to American jingoism. But Dulaney is as middle American as they come—he’s a graduate of Ohio State and Northwestern who lives in a Chicago suburb—and he’s just one of 69,000 Siemens workers in the U.S.

Siemens, in other words, employs more Americans than all but a relative handful of American companies.

Companies like GE, Cisco and Danaher, all headquartered in the U.S., have struggled with the Buy American rules as well, as the Wall Street Journal recently reported.

“The Buy American provision is centered very much on where you do manufacturing and assemble products,” Dulaney told me. Many state and local governments, he said, “view the Buy American act as meaning the products must be 100% made in the United States.”

That’s unrealistic. “We all have global supply chains,” he said.

Siemens had hoped to bring in $8 billion in revenues from stimulus-related projects, the company said. But it has struggled to sell some products–energy-saving building technology, for example–because some of the circuits are assembled in foreign countries. Dulaney said that less than 5% of the stimulus funds administered by the U.S Department of Energy has actually been spent.

For its part, GE needed a special exemption from the EPA to sell  a $100 million waste water treatment system to Frederick County, Maryland, because some of the membranes are made by a GE subsidiary in Canada.

Cisco, meanwhile, had to petition the National Telecommunications and Information Administration, an agency overseeing an initiative to roll out high-speed Internet access to rural areas, for an exemption from the Buy American rules. Requiring U.S.-made parts would be “grossly inefficient” and a “radical departure” from normal practice, said Cisco, the largest maker of networking equipment, according to Bloomberg News. The exemption was granted.

All this has slowed down the spending of money that was designed to create jobs.

Of course, the bigger danger of Buy American rules is that our trading partners will retaliate. Since more than 90% of the world’s consumers live outside of the United States, which remains one of the world’s three largest exporter—Germany and China are the others—we stand to be harmed more than anyone by a trade war.

As Dan Gross wrote recently in Slate’s The Big Money:

For much of the past two years, virtually all growth in economic activity has taken place outside America’s borders. As a result, U.S.-based companies are becoming even more reliant on non-U.S. customers and operations for sales.

Sales from outside the U.S. account for about 47.9 percent of  revenues for the 253 companies in the S&P500 that break out U.S. and non-U.S. revenues.

So if foreign governments acted like Congress, we’d be in trouble. Just this week, a left-wing Canadian think tank proposed that the government there develop its own Buy Canada campaign, according to the Canadian Press.

“Our governments should emulate what is best in the U.S. buy-local procurement policies and employ them to benefit Canadians,” said the Canadian Centre for Policy Alternatives. “This stance would undoubtedly irk certain American interests, but they could hardly cry foul.”

So Buy American sounds great—until you think about it.

By the way, Siemens’ Dulaney and I talked about the company’s energy efficiency business as well as the Buy American issue. He told me that the single  biggest obstacle to energy efficiency in building is the difficulty that building owners have in borrowing money to retrofit their properties. I’ve asked The Energy Collective to post a podcast of our conversation, and it should soon be available here.

UPDATE: I’ve just been sent this story from the National Post of Canada. The headline is “Buy American horror stories building” and it says that pipe fittings for a public water system in Sacramento are literally being ripped from the ground because they were made in Canada. Crazy. Some Canadians are calling for surcharges on American movies being show in Canada. Even crazier.

Smart Grid: On its way…slowly

Today, President Obama travels to Arcadia, Florida, home to one of the nation’s biggest solar power plants, to announced 100 grants providing a total of $3.4 billion in recovery-act funding for the smart grid. The federal money will unleash $4.1 billion of private investment that, according to the government, that will bring smart meters to about 18 million American homes, or 13% of homes. It’s a big deal.

Nelson_River_Bipoles_1_and_2_Terminus_at_RosserWhat would a smart grid mean to you? In theory, you could save money by running appliances like dishwashers or dryers at night when electricity is cheaper. You’d know how much it costs you to watch that big-screen TV. (Care to take a guess? Read on.) If you installed solar panels on the roof, you could sell electricity back to the grid. Or recharge that electric car you may buy in 2010 or 2011.

The laudable goal is to empower consumers to buy electricity the way we buy groceries or gasoline or airplane tickets –where we know what we are getting and what it costs when we make purchasing decisions. Right now, we consume electricity without knowing how much we are using, understanding where it’s going or knowing the price until an unintelligible utility bill arrives in the mailbox once a month.

The trouble is, layering intelligence and transparency into the electricity grid requires action by two of the slowest-moving entities in all of America–the federal government and the regulated utilities. So you can be certain this won’t be an overnight transformation.

In fact–irony of ironies–the news that Uncle Sam was going to be subsidizing smart-grid rollouts has inadvertently slowed down the process, albeit temporarily. About 570 applications were filed seeking a total of $14 billion in grants. While waiting to see who got the grants and who didn’t, some utilities put their plans on hold. [click to continue…]

GE, clean tech and your tax dollars

271_home_img1_ge_ecomagLet me state my bias upfront: I’m am admirer of GE and its chief executive, Jeff Immelt, and the company’s ecomagination initiative. GE and Wal-Mart are, as I have written, the most influential companies in America, and it’s great that they are serious about becoming more sustainable, and working with their customers and suppliers to do so as well.

But I can’t help but be struck by the extent to which GE’s clean-energy businesses depend on federal and state tax and regulatory policy, along with grants and loans from the government. Wind energy, solar energy, nuclear power, cleaner coal, smart-grid initiatives, energy-efficient appliances, compact fluorescent light bulbs—all of these either benefit from current policy, get stimulus money or Department of Energy grants, or stand to benefit if the climate-change legislation strongly supported by GE is enacted into law, or all of the above.

This is fairly obvious, admittedly, to anyone paying attention to the energy and climate debate, but it was brought home to me vividly last week, at a GE Ecomagination Forum [click to continue…]

GE, biomimicry, wind and nanopants

Earlier this week, I visited GE’s Global Research Center in Niskayuna, New York, near Albany. Cool place, the home base for about 1,900 scientists, and one of four GE research centers around the world. The others are in Bangalore, Munich and Shanghai.

I wrote a column for FORTUNE’s website about GE’s venture investments (GE brings good things to startups), about which I’ll blog a little more next week. But for today, a look at how GE’s research into how nanotechnology, which is the study of matter on a molecular and atomic scale, could help drive the wind turbine industry. This technology is inspired, in part, by lotus plants leaves that are able to repel water–an example of biomimicry, which studies nature’s best ideas and using them to solve human problems. GE’s goal, as the video below shows, is to come up with nano-coatings on wind blades or aircraft engines that repel water. This technology is inspired, in part, by lotus plants leaves that are able to repel water–an example of biomimicry, which studies nature’s best ideas and using them to solve human problems.

Materials that do a great job of repelling water are called superhydrophobic. An example would be nanopants–spill a soda on them, and the liquid would roll right off. Check out this video to see how it works–the water droplets below really, really don’t like the nanocoating. My only critique: GE should have set this video to music.

You can read a blogpost from GE engineer Joseph Vinciquerra about superhydrophobic technology, “Creating anti-icing surfaces,” on GE’s global research blog.