September 9th, 2009

Energy realism and a green recovery

Posted by: Jay Pryor

jay-pryor– Jay R. Pryor is vice president of business development for Chevron. The views expressed are his own. —

The concept of a “green recovery” is a compelling topic of discussion at the World Economic Forum this week in Dailan, China. It stems from the United Nations Environment Program calling for investment of 1% of global GDP (nearly $750 billion) to promote a sustainable economic recovery.

A “green recovery” speaks to two of the most important issues of our time –- the efficient use of energy and the realistic understanding of energy’s role in the global economy. It’s a role that can help lift millions of people out of poverty, while addressing a healthier environment.

We all aspire to a more environmentally sound approach to energy, but to address these aspirations we need to be realistic about energy. Call it “energy realism.”

“Energy realism” is a commitment to a long-term view of the role of all forms of energy in our lives, and the need to be realistic about the true scale and complexity of the energy challenges that confront the global community.

Every day, the world uses, from all energy sources, the equivalent of 245 million barrels of oil. Eighty-five percent of the global economy is powered by oil, natural gas and coal, despite the enormous progress we’ve made toward alternative energy sources.

Worldwide, we use 50 percent more energy than we did only 20 years ago. And 20 years from now, demand will have risen by another 30 percent or so.

Faced with this level of demand growth, energy realism requires that we develop all the energy we can, in every available form. No single source is the only answer. We need it all – oil and gas, nuclear and coal, solar and wind and biofuels.

Alternatives and renewables have strong promise, and over time, they’ll meet a far bigger share of global demand. But it’s unrealistic to suppose that they can replace conventional energy in the short term. Today’s global energy system is enormous and took more than a century to build. We must be realistic in how quickly technology and economics will permit a transition away from fossil fuels.

If one looks at the data, there is no avoiding one simple conclusion: the sheer scale of our energy needs is far beyond the capacity of any one source or technology. So we must balance energy aspirations with energy realism and agree that for the foreseeable future we need to develop it all.

We can do so with a shared goal of managing the transition to lower-carbon energy. But it will require a long-term commitment and, again, a grasp of the true size and scale of the undertaking.

For example, if we were to replace today’s global transportation system with a zero-carbon solution — all cars, trucks, buses, trains, planes and ships — we would reduce greenhouse gas emissions by only 15 percent. If we were to replace the entire global power generation system, we would reduce greenhouse gas emissions by only another 25 percent. So combined, that’s only a 40 percent reduction.

Yet there are serious and systematic ways of reducing carbon emissions for the long term. We need to set carbon reduction goals that are high – but goals that are also realistic. We need to willingly accept the associated costs that we all must bear. And we need to be realistic that an economy entirely free of fossil fuels may be beyond our reach.

But energy realism also holds the promise that we can make meaningful progress, and there are actions we can take today. The most immediate and cost-effective thing we can do is to maximize conservation through energy efficiency.

In the U.S., for example, we’ve made great strides in energy efficiency. In fact, we use half as much energy per unit of GDP as we did a generation ago.

For over a century, innovation, collaboration and partnerships have been the backbone of a global energy infrastructure that interconnects and powers the world.  Our ongoing challenging is to find the common ground we need for that enhanced collaboration.

As we look to the future, we must continue to seek common ground on meeting the world’s long term energy needs while addressing environmental concerns – balancing the energy aspirations with energy realism, for the common good of all.

May 5th, 2009

President Obama’s three percent solution

Posted by: Jonathan Hoganson

Jonathan Hoganson– Jonathan R. Hoganson is the deputy executive director of the Technology CEO Council, a public policy advocacy group that includes the CEOs of Intel, HP, Dell, Applied Materials, EMC, Motorola, Micron Technology and IBM. He previously was the legislative director for Rep. Rahm Emanuel and policy director for the House Democratic Caucus. The views expressed are his own. –

A few years from now, when our economy has regained its stride, we may look back to a little-noticed announcement last Monday that spurred the resurgence. Amid swine-flu hysteria and First 100 Days hoopla, President Obama quietly announced a commitment to spending three percent of the U.S. GDP on science research and development.

This is a profoundly important step, but if we are to continue to lead the world, the United States must also develop a comprehensive policy to foster innovation. For too long, the United States has lived in a “next month” mindset when it came to our economy. This short-termitis has led to sub-prime lending, credit card debt and a general lack of long-term planning. And in no place has this been more evident than in the sciences.

For the past decade our spending on research and development has been anemic at best, and beginning in 2005, federal funding of academic research actually began to decline. This was happening at the same time our overseas competitors were increasing their commitment. For example, China has increased its R&D spending by an average of 17 percent each year in an effort to catch and surpass developed nations’ spending.

Currently, the United States ranks seventh among developed countries in R&D spending as a ratio of its GDP. Is that a recipe for continued economic and technology leadership?

There is, in fact, a direct correlation between R&D and scientific leadership. As the commitment to science ebbed, so did the U.S. share of worldwide patents and research articles in peer-reviewed journals. And R&D has been proven to catalyze economic growth and enable comparative advantage for developed companies and economies.

Now is the time to make technology and innovation a cornerstone. In the last three months we have made a good start, making broadband, health-care information technology and green tech key components of the stimulus package. The president has proposed a 10-year extension of the R&D tax credit to give businesses the incentive to continue to invest in cutting-edge technologies and products. By advancing these initiatives, we are developing the foundation of a national innovation strategy, but Congress must work with the president to advance a comprehensive strategy.

In recent years, countries such as Germany, France, Japan, New Zealand, Finland, Australia, Denmark, and Australia have established or expanded agencies to promote technology and innovation. While the United States is unlikely to create a new agency, the White House can develop an inter-agency strategy that will restore America’s preeminence as the world’s leader in innovation.

This strategy could synergize the Obama administration’s efforts in clean energy, broadband, and health reform, with new initiatives in education and R&D. It could also develop a system for partnering with venture capital to foster entirely new companies and industries. At the same time, we could remove non-tariff trade barriers, enforce international agreements, open new markets and provide a globally competitive corporate tax structure. All of these are crucial components of any inter-agency innovation strategy.

The last time our government put this type of concerted effort into scientific research was President Kennedy’s challenge to land a man on the moon by the end of the 1960s. Not only did we achieve that goal, it also spawned a generation of scientists and technologies that shaped the 1980’s and 1990’s. What followed was an era of Internet, communications and medical advances that spurred an unprecedented period of economic prosperity.

President Obama’s bold commitment to R&D carries an important reminder that the 1960’s space race was more than a demonstration of increased federal funding; it was a comprehensive strategy to ensure that America led the world. The president seems willing and able to replicate that success today; Congress and industry need to work with his team to make this happen. It’s time for America to take another giant leap for mankind.

December 17th, 2008

The green-collar economy

Posted by: Poptech

van-jonesVan Jones is founding president of Green For All, and author of “The Green Collar Economy,” In this interview with PopTech! he describes a plan to create millions of new jobs that can’t be outsourced, wean the country off its dependence on foreign oil, and take bold steps to address the climate crisis.

December 12th, 2008

Green business and the conscience premium

Posted by: Bryan Welch

bryan-welch-ogden-publicationsWelch is the publisher and editorial director of Ogden Publications, home to Mother Earth News and Utne Reader. Any opinions expressed are his own.

Green business is arguably the most important marketing innovation of the century. And it’s here to stay.

When we talk about green business, we’re really talking about the provenance of the products and services we sell. A business is green if its creators take into account its impact on the environment, and on society. Like a historic work of art, a pair of running shoes now has a provenance – a chain of collaborators, stakeholders and events that led to its appearance in your closet.

Did the factory owner in Guatemala employ child labor? Are the materials carcinogenic? What about the environment downstream from the factory, is it threatened? Did the shipping company control the pollution from its freighters? Does the U.S. distributor pay a living wage?

Consumers care.

And because consumers care, businesses can charge a premium for conscience.

Take the green building sector for instance. People often mistakenly assume that the boom in green building technologies was driven by conscientious consumers. In fact, contractors and manufacturers largely invented green building, then introduced it to the consumer as a way of differentiating, and premium-pricing, new products and services.

Builders are finding value in that differentiation. Every year about 20,000 building professionals attend the annual GreenBuild conference organized by the U.S. Green Building Council. Every day, about $500 million worth of construction registers for the LEED (Leadership in Energy and Environmental Design (LEED) rating system. There are LEED projects in 69 countries.

Then there’s the legendary Toyota Prius. Sales climbed from 29,000 cars sold in 2001 to 126,000 in 2004 to 281,000 in 2007. From January to April of this year, over 107,000 Prius hybrids were sold, and that number would likely have been even higher if production had kept pace with demand. Until the financial meltdown a couple of months ago, the waiting list for new Prius hybrids averaged around six months in the United States. No other fuel-efficient car came anywhere close to those growth numbers.

Yet the Toyota Yaris, which gets 80 percent of the Prius’ gas mileage and costs about half the cost of a basic Prius, sells about half as many units. You’ll never earn back the difference in fuel savings. Even more mysteriously, the Honda Civic Hybrid has been a relative dud. Why? It’s not reliability. It’s certainly not durability. What’s the quality difference? The uniquely styled Prius, as it goes down the road, advertises the driver’s conscience. The Civic looks like any other Civic.

The consumer cares about the product’s provenance, and the brand is enhanced when it’s widely recognized as more conscientious than its competitors or, in the case of the Prius, it’s merely more recognizable.

MAINSTREAM GREEN

The decline in traffic at Whole Foods stores this year has been cited as a sign that consumer interest in sustainability is on the wane. That’s not what it looks like from our perspective.

The biggest retailer of single copies of Mother Earth News is not Whole Foods — it’s Wal-Mart. That’s right, Wal-Mart. In fact, the big discounter sells two-and-a-half times as many copies of Mother Earth News as all the health-food and luxury grocers put together. Mother Earth News has about 2.3 million readers of the magazine and almost a million unique users at the Web site each month. And Wal-Mart is its best ally.

Subscription circulation is up significantly, too, but it’s the newsstand we look to for signs of new trends, and sales have continued to grow through the recession so far.

In fact, it looks like the declines at Whole Foods may be a sign of the mainstreaming of the green consumer. Wal-Mart is, according to a 2007 study from Scarborough Research, the nation’s largest organic retailer. Scarborough reported that 29 percent of organic consumers had shopped at a Wal-Mart Supercenter during the previous week, in spite of the retailer’s relatively poor reputation among the green elite.

The discount grocer Aldi is the biggest retailer of organic food in Germany. In Switzerland, the world’s most enthusiastic organic consumers (6 percent of all food sales) have made a mainstream grocer, The Coop, the nation’s largest organic retailer with the nation’s largest grocer, Migros, close behind in second place.

In a recession, a luxury retailer will naturally suffer more acutely than other retailers. Evidently, the same is not true for green products in the retail aisles.

And sometimes, blessedly, a greener product that preserves energy is also less expensive to manufacture or operate, making it even more attractive in a down economy.

Several times a year someone meeting me for the first time says something like, “I’m not an environmentalist, but I love Mother Earth News.” The first time I heard that it surprised me. Then it occurred to me that clean air, clean water, self-sufficiency and social conscience are universally popular qualities. It’s the political labels that sometimes alienate customers.

In their groundbreaking 2007 report, “Sustainability from a Consumer Perspective,” The Hartman Group suggests that one of the greatest value enhancements to a product or company, today, is the attachment of an “origin narrative” that connects “consumers to the people, places and processes that epitomize your company.”

Narratives are necessary to define products as green. They are the newest tools of product engineering.

Genuine narratives that translate easily across cultural borders are, of course, no small feat of engineering. Like all good engineering, it must produce a genuine improvement in quality, specifically the quality of the story and quality of the conscience with which a company does business. In today’s world, an ad slogan is a relatively weak differentiator. “Coke: The Real Thing” had its day. In tomorrow’s marketing environment marketers will need thorough narratives and companies will need verifiable value systems to rise above the competition.