Here's an op-ed that I penned with Dan Rosen that appeared in the Tacoma News Tribune. If you haven't joined Business Leaders for Climate Solutions, you should. 

For a long time, "green" in Washington state has stood for Granny Smith and pine trees. With the Legislature's passage last session of the Climate Action and Green Jobs bill, the state took a big step in creating a future based on the new green – a vibrant economy based on clean technology (cleantech), the green consumer and green exports.

Gov. Chris Gregoire deserves congratulations for requesting and championing the bill. But we all still have more work to do. The window for establishing leadership in the cleantech economy is fast closing. The opportunity to have a strong voice in shaping federal climate policy is closing fast, too. According to the Cleantech Network, while the total amount of venture capital invested in clean technology grew explosively in the last year, the Northwest accounted for just four percent of the total. The Northwest's share was $261 million out of a national total of $6.4 billion, barely placing it in the top 10 regions. And that's not just Washington state, but Oregon and British Columbia as well.

 

Discount the investment in the local biodiesel company Imperium Renewables in 2007, and Washington easily trails the Vancouver, B.C., cleantech cluster and is arguably far behind Oregon, where business leadership has articulated a much clearer vision for establishing an industrial base around the theme of sustainability. California and the Northeast have taken significant leads, and places like Austin, Texas, and Chicago are mobilizing civic leadership around this sector.

As members of Business Leaders for Climate Solutions, we are proud to have supported the Climate Actions and Green Jobs bill. We were joined by 32 other state business leaders, representing cleantech entrepreneurs, investors, energy consultants, service providers or simply business people passionate about sustainability.

But if the Evergreen State is going to emerge from the ongoing cleantech boom with a significant piece of the green that is being created, the broader business community must rapidly and definitively elevate its game.This is not a niche issue; the challenge of using energy more efficiently and developing sustainable products and services affects every sector of the economy and will provide both opportunities for leadership and tremendous risks for the laggards. A recent survey found 61 percent of business executives around the world expect climate change solutions to boost company profits. That's why the major corporations that provide Washington's economic backbone and their executive leadership need to bring their vitally important participation to the table: It's of great economic interest to all of us.

Washington state arguably has several characteristics that will help us as we strive for a piece of the green economy. Our assets include: unrivaled branding as a center of "green" ideas; a consumer base that is highly sophisticated and demands truly sustainable products and services; and strong trade and economic ties with China and the Far East, which is fast emerging as a leading consumer of cleantech products and services. We applaud Sen. Maria Cantwell's efforts to make Seattle the center for the dialogue with

China about these issues.We also have a vibrant green building-and-design industry, which is one of the key pillars of the green economy. And we have the potential to become a power in providing integrated design solutions that will be needed to reduce energy usage worldwide, including "green software" and smart-grid applications.

Along with these strengths, we need to find sustainable and verifiable ways to leverage our vast forestry and agricultural resources as sources of renewable fuels and carbon sinks as regional and international markets take root.

But key pieces are missing. Specifically, for Washington to compete and lead in the cleantech economy, the business community must demand and achieve three things:

  • Legislation next year that commits Olympia to put a price on carbon through a regional cap-and-trade system, along with complementary policies that promote clean energy, sustainable development, transportation and land use, energy efficiency and training for the green-collar workforce;

  • Pressure on the federal government for strong climate policy that achieves reductions in global warming pollution that is science-based and beneficial to the economy;

 • And we need a business community that is focused on and organized around the vision of making the region an international leader in the coming cleantech transformation.

 We have a chance to truly be Evergreen. Now let's seize it.

Last year, I said that a time would come when the term "green" would fall into disuse. I'm now wondering if that time is nearer than I originally thought. I'm already sensing some fatigue from friends in the media. At the consumer level it's also more pronounced (depending on the day, search for "green fatigue" on a leading search engine bring back 500,000 to over 1 million results). Ironically, at the recently concluded Fortune Brainstorm: Green event, Andrew Shapiro of Green Order said that it felt as if 2008 would be the "apex of green". Which of course begs the question: How steep is the downward slope in 2009? Ted Nordhaus (who coincidentally was my childhood neighbor growing up in the southeast quadrant of Washington, DC, back when we both had hair) and his cohort Michael Shellenberger, in 2004 shook up the establishment with their paper called "Death of Environmentalism". They succeeded in pounding the final nail in that coffin. Now green's utility is in question and it is even being challenged by another color - "blue". Sustainability advocate Adam Werbach is now selling blue as the next step beyond green, arguing that blue is more accessible because it, in effect, means having your cake and eating it too (I've tried that, by the way, and I keep biting my hand by mistake). But really, green or blue, aren't we just creating another arbitrary label that will also fade away with time? Aren't we just setting ourselves up for "blue fatigue", when the next Adam Werbach comes along and pronounces the blue movement dead, and argues that its time for chartreuse to have a turn? Not to mention the fact that people in the developing world (I spent 16 consecutive years in China from 1987-2003 so I have some credibility) have just started the Long March to consumerism and couldn't really give a damn about green or blue, unless its related to the color of their new car or the tile in their newly renovated, air-conditioned kitchen.  

I moved into technology because public capital markets (and human activity more generally) are driven by short-term interest and unsustainable growth. Facing a powerful system backed by powerful inertia, it was my conclusion that fundamental change to our behavior around consumption/growth is highly unlikely to happen (to the degree or within the timeframe needed) to address the ecological problems we face. That POV was largely informed by my time in China, where I watched stock markets open, bans on advertising lifted, private cars allowed back on the roads and consumerism return with a vengeance. I witnessed China's boom and how it raised a lot of people out of poverty. The problem is that we can't raise the remaining 1 billion Chinese out of poverty without totally screwing ourselves and the ecology. And China is just the start - Brazil, India and the rest of the developing world are going through the same transformation. Far be it for me to deny others the chance to live lives of comfort. But it is highly naïve to assume that individual Chinese or Indians or Brazilians will have the foresight to look beyond their drive to material comfort and make decisions on how they live based on a moral responsibility for the health of the planet. The West didn't. It just won't happen (no offense Bill McKibben, whose conclusion for our generation - that more is not better - ignores the fact that its mainly people who know wealth who have room to think about less). Only when people are so afraid of the ramifications of climate change or toxic sludge seeping out of their water taps will they be motivated to change behavior (as recent events in Juneau underscored). But of course, by then it will be too late.  

So my bet for overcoming the challenges is technology, broadly defined. The way I see it, technology is the layer buffering natural resources from consumer and corporate behavior. It allows consumers to continue to behave much as they do and it allows natural resources to get a reprieve from that behavior. The more scaleable the technology, the bigger the reprieve and the better our chances. What Lawrence Berkeley National Lab has done with appliance standards in China is a perfect example of this. "Technology buffering" is not a panacea, but at least there is an opportunity to insert new clean technologies into existing products and systems and have a significant and accelerated impact. That's what gets me moving in the morning. (Several new books, The Cleantech Revolution, The Plot to Save the Planet and Apollo's Fire address this movement). 

What interests me from the Fortune event and others that I've attended over the past two years is a shift in the conversation. Many of the people I talk to say green/blue doesn't really matter. I agree. What matters is that "industrial restructuring" takes place. Whether the CEO of Stonyfield Farm ("we don't even use green to describe our customers, but 'quality' or 'educated'"), the chairman of SC Johnson ("we need to move the conversation from going green to transforming industry"), Vinod Khosla ("people's view of green is obsolete, its about mainstream business"), or builder Steve Glenn ("within 15 years green building goes away as a category"), the focus is more and more on creating a technological buffer to reshape the way we supply and demand.  

So let's focus on the technology that is going to get rid of the only color that deserves our attention - the black of oil and coal.

Hundreds of leaders from business, policy and NGOs in the same room for two days, naturally some interesting things will emerge. Below is a quick sketch of trends and comments from the just wrapped Fortune Brainstorm Green that I thought of particular note:

• The media "needs to get off cars and on to buildings" - Autodesk executive chairman Carol Bartz on the fact that the issue of buildings sucking energy, material and water is still not getting the attention it deserves. The numbers back her up. Conversely, it was noted by others in the green building space like Hycrete and Serious Materials that after a two decade hiatus, venture funding has found its way back to building in the past 2 years.
• A new version of LEED is set for unveil at Greenbuild in Boston and will be a "quantum leap" - head of USGBC Rick Fedrizzi
• Seems to be growing unease, and even skepticism, that cap and trade is going to be as easy at many thought. 2011 was heard repeatedly as a possible timeframe for legislation. Will a nascent business consensus fray into a mess? Are the economics fully understood to push forward aggressively? Is the Hill ready? Anecdotally at least, the answer is still clearly in the balance. One interesting alternative presented was Cap and Dividend.
• Like building, energy efficiency is still struggling to get more than a lot of lip service. Is recession the catalyst for cracking that nut? It was mentioned as a possibility.
• Hybrids and small cars are the fastest growing segment of US automotive market, according to Beth Lowery of GM. "The price of fuel is driving behavior," she said.
• "Living building" that taps into biomimicry is going mainstream. HOK - the giant architecture and design firm is starting to position itself as "bio-inspired", according to Janine Benyus, the founder of the Biomimicry Guild. Benyus' group is also looking to launch Asknature.org - a cool idea that allows anyone to query a database with questions about how nature addresses specific issues.
• Coke's environmental guru Jeff Seabright said look for something soon about consumer-facing information about "water used" in the company's products. It may not be on-package information, but something is coming. This would be welcome, since embedded water in consumer products is still very opaque to the consumer (for example, according to Dow Chemicals' Scott Noesen, it takes 2,000 liters of water to make a McDonald's hamburger if you do the whole-cost analysis.) There is nutritional information, now carbon labeling information has appeared, and water is the logical next step. Let's hope it happens.
• Vinod Khosla was the most provocative in my opinion during a 1:1 with Fortune's Adam Lashinsky. Highlights include:
  • Next generation batteries are not on a rapidly declining cost curve and require a quantum jump with a high probability of failure
  • The "Prius is more greenwash than green"
  • Technology for clean energy will only succeed if it passes the Chindia price test. If it's affordable in China and India then it has a shot.
  • Carbon emissions from all-electric cars are 3x more than that of cars powered by cellulosic ethanol.
• The highest correlation in the movement of solar stocks is the price of oil (not the price of natural gas as would be expected) - David Edwards, analyst at Morgan Stanley
• Both Monsanto CEO Hugh Grant and Khosla cited the same statistics placing biofuel as the fourth leading cause for the spike in global grain prices. The top three - rise in oil prices, drought in Australia and change in eating habits in developing countries like China (to more meat). I found one paper on Khosla's site about Fuel vs. Food, but it didn't appear to include the above list. Anyone know where it comes from?
• When Fortune's Marc Gunther asked a panel of Xerox, GM, SC Johnson and Dupont executives what grade corporate America should get in addressing environmental challenges (10 being the best grade), all of them said "1″, with the exception of GM's Lowery, who gave a "2″ because of innovation happening around new technologies. If you want to actually score a company, you can thanks to the CEO of Stonyfield Farm Gary Hirshberg, who has created an online corporate scorecard at Climatecounts.org

It's an unenviable position to have to prioritize the world's problems and solutions. First, there are too many. Second, there is an inter-relatedness to all of the problems that makes it difficult to pinpoint a chief culprit. Increasingly, however, it is clear that one issue trumps them all: energy. Plenty of other smart people have explained this, so I will just quote one - Nobel laureate Richard Smalley, who said "It is impossible to imagine bringing the lower half of the economic ladder of human civilization - about three billion people - up to a modern lifestyle without abundant, lowcost, clean energy". He made a strong case that energy touches everything - disease, water, poverty, terrorism, malnutrition, etc. As you might guess, I'm no Bjorn Lomborn booster. From where I sit he's advocating buying a dinghy to save those stranded on a desert isle when we need to marshal resources for an Armada to save the island's inhabitants... and everyone else. 

 

At any rate, it is encouraging to see a shift in public, business and government urgency that recognizes the energy calculus, some for energy security reasons, others for economic prosperity reasons and still others for climate change reasons. Support, happily, is getting stronger every day. Unhappily, as the Intergovernmental Panel on Climate Change notes, even with drastic action, we are still in big trouble.

 

Yet curiously, from a non-descript building on Lake Union here in Seattle, the Bill and Melinda Gates Foundation - the Fort

Knox of the NGO world with funds north of $30 billion and Warren Buffett's still to come – is so far nearly quiet on the issue of energy. And dare I say that Mr. Gates, a technology revolutionary himself, seems nonplussed that he is missing a revolution that badly needs him.

 

It almost goes without saying that the Foundation is doing incredible work to alleviate suffering of the world's poor. That work must continue and is testament to the size of Bill Gates’ heart and his commitment to activism and witness. But there are two sides to the coin. He is addressing the symptomatic and saving millions of lives, but oddly there is still nothing on the systemic issues surrounding energy that threaten billions. Even odder since technology - Mr. Gates' playground - has a key role to play in reducing poverty through the production of clean, distributed energy. 

 

Gates has clearly thought about energy. He has made two public pronouncements that I could find. One a 2006 interview with Newsweek, in which he stated that he was “already reading some books on energy and the environment… But I will read a lot more two years from now and think whether there's something the foundation should do in those areas,” he said. “The angle I'll have when I'll look at most things is, What about the 4 billion poorest people? What about energy and environmental issues for them?”

 

In November 2007, he added for Rolling Stone: "Between now and 2100, how many people in Africa are going to die of malaria? Just do the numbers. Helping them avoid an eleven-inch rise in the water in 2100, we could do it and we should do it, we will do it. But in terms of relative priorities, if you want to help the poor, this is not the issue to be focused on."  For a genius who started one of the most successful companies in human history, Gates appears to be unwilling to fully accept that energy affects the global commons, not discriminating based on income. While he's reading up on the issues, China put 90,000 megawatts of coal-fired power online in 2006 alone (about the equivalent of two Californias in capacity). All dirty coal, some of which finds its way to our lungs here in the Pacific Northwest. In Beijing last week for the Cleantech Forum, the Chinese government's cleantech guy, Shi Dinghuan, said that even by 2050, coal would still account for 50% of China's power generation (it's 70% now).  

So far, the Foundation appears to be hedging on energy/climate change. In August, it made its first investment, with a 100 million Euro commitment to Peony Capital Ltd., a Beijing-based company that is using investment in technology to lower GHG emissions through the UN CDM process. But we are all fooling ourselves if we think the market will take care of introducing the technologies to deal with GHG quickly enough to make a dent. Nor is the slow churn of policy going to get us there fast enough. Where Mr. Gates could make a difference, for example, is using his financial leverage to advocate for the creation of a public/private fund that works to provide financing for clean technologies that are already out there but not being implemented because of cost. Coal plants in China are a great example. They don't spend the money on cleaner technology, but if a powerful enough fund was created to drive the cost of the gasification/sequestration technology down and provide favorable financing (or even give it away), things could be greatly accelerated.  

 

It is certainly just a coincidence that the Gates Foundation is moving its offices from the lakeside to higher ground over the next two years. But maybe not. Maybe they are preparing to add their important voices to the campaign against dirty energy - from dry ground as the world's waters continue their eleven foot rise. One only hopes.

In the same way the Northwest has imagined and innovated its way to success with endeavors now synonymous with the region – be it coffee, software, outdoor gear, aerospace or microchips – our region can help write the operating instructions for what might be the most important opportunity for the next two generations – cleantech.   The time is now, not to walk but to fly. The land grab has started as different regions – inside the US and out – move to stake their claim as the leaders of the cleantech revolution. The companies and people of the Northwest are uniquely positioned to be among the leaders. The intellectual capital is here. The political will is here. The consumer culture and public sentiment needed to support a cleantech economy are also here.  Tech heavyweights like the San Francisco Bay Area are already way ahead, investing heavily in starting clean technology companies and churning out patents from their universities.   Yet here in the Northwest, local venture-capital money is still trickling into cleantech - Chrysalix and Yaletown in BC are the notable exceptions. Entrepreneurial enthusiasm has been relatively muted. Where is the Bill Gates, the Jeff Bezos, the Paul Allen, the Howard Schultz of cleantech? Cleantech is ripe for great, local visionaries. It is also ripe for another key component of success: a clearly identifiable brand. What does the Northwest stand for? Where does it have a competitive advantage in cleantech that is sustainable over the long haul? What can we get excited about as a community and rally around? The jury is still out, but here is an attempt to crystallize the focus of our region and my candidates for where the Northwest has a real chance to stake a claim, not as “the” world leader, but as “a” legitimate leader with the proof to back it up: The Frontrunners

• Biofuels – Imperium Renewables gets the attention, but there is much more happening. Boeing working on aviation biofuel. Weyerhaeuser exploring cellulosic ethanol. A host of start-ups looking at algae, mold and enzymes. The Northwest Biofuels Association, Pacific Regional Biomass Energy Partnership. A solid base of expertise has formed in the Northwest, including at universities and national labs. And we also excel in the ability to design and build large bio-refineries.  
• The Other Hydro – Wave and tidal could be the “next wind” and we are blessed with the right coastline and ripping tides. Just ask Oregon Iron Works, as they churn out prototypes of several different wave energy prototypes. When I recently saw the eight-story AquaBuOY (almost all of which is underwater) designed by my client Finavera Renewables, it finally struck me that this is no joke.
• Software – Whether PC power management, carbon emissions tracking, vehicle to grid, or remote electricity consumption monitoring, its already happening in the Northwest and the potential for growth here is great given that software is in our DNA. Microsoft even appears to be prepping for a big push in greening its products.
• Cleantech as a Service – The service sector has always been a strength in the Northwest, whether its building, engineering or environmental consulting. Is there an Accenture of cleantech out there waiting to happen? Not yet, but its possible.   

The Maybes

• Consumer Cleantech – We have some of the best consumer brands in the world, and there is no reason to believe that we cannot create more in cleantech, whether it’s a consumer-facing biofuels brand (SeQuential or Propel), a family-friendly home energy saving software or a venture capital firm like Maveron that takes its consumer knowledge and puts it to work in the cleantech space. But top talent is being drawn to the Bay, so we need to incubate locally and aggressively.  
• Smart Grid – The Northwest appeared to have an edge here several years ago, with relatively progressive utilities and Itron dominating the metering market, but does it anymore? Not so sure. Other regions have caught up and probably passed us.  
• Renewable Energy Gateway to China – Senator Maria Cantwell certainly would like to see that happen, and efforts are underway to organize a bilateral forum in Seattle of top business leaders to advise the US-China inter-government Strategic Economic Dialogue. The Northwest also exports a lot of engineering knowledge, environmental consulting, green building and design to
  China.
• Power Storage – Between fuel cells in British Columbia and a national lab in Idaho that knows power storage, there is some critical mass here, but can we recover from the disappointment of Ballard?

This past spring Tristan Fischer, then chief executive officer of Camco International Ltd., a global firm that helps companies identify and develop projects that reduce greenhouse gas (GHG) emissions, scoured China's countryside for a new breed of opportunity. Rather than looking for cheap shoes to stock the shelves of big-box retailers, he was searching for carbon-belching smokestacks in need of clean technology to offset carbon emissions and make them available for market trading. Though China has benefited from more than 25 years of rapid economic growth, that progress has also created an environmental nightmare of global proportions, with worse to come in the next 20 years. The country, which gets nearly 70 percent of its energy from burning dirty coal, is on track to surpass the United States as the world's top GHG emitter as early as the end of this year—more than a decade earlier than previously predicted—according to  International Energy Agency Chief Economist Fatih Birol. In addition to GHG emissions, China has many other environmental problems, including water shortages and poor air quality that threaten public health and industrial output. With finite supplies of carbon-based energy and growing global demand, China will have to find other—and cleaner—sources of energy.

China's large and growing appetite for clean technology will create one of the biggest market opportunities in the next few decades, providing the potential for enormous wealth creation by cleaning up the ecological mess that has come from its miraculous, but dirty growth. Many climate change experts are betting that the solution to the world's environmental problems resides in the technological innovation coming out of Silicon Valley and other high-tech clusters in the United States and Europe. But to fully benefit from such technology, China will have to change its policies and consumer attitudes quickly to speed its adoption of the technology—or face significant economic, social, and public health ramifications. "China says it will obtain 15 percent of its [primary] energy from renewables by 2020," says Mike Eckhart, president of the American Council of Renewable Energy, referring to the goal China first announced in November 2005. "But China has got it backward. If it's not at 85 percent renewable, we're in big trouble." Though China is unlikely to change its renewable energy targets so radically, the central government is highly motivated to address China's chronic energy shortage and severe environmental pollution. Across the board, Beijing is enacting policies that will require huge investments in renewable energy, energy efficiency, smart building, clean water, and cleaner coal. These initiatives include:

Read more at the China Business Review

I spent last week in Beijing for the kick-off meeting of Cleantech China's founding members. The air pollution was so bad that my eyes were stinging for two of the days; visibility was less than 500 meters according to the local news, but it seemed more like 200 meters. Understandably, a lot of the conversation was around coal, since it accounts for 70+ percent of China's power generation and is the main source of pollution and CO2. Todd Glass, who heads the energy practice group at Heller Erhman, was particularly informative on the topic (when he wasn't being subjected to my harangues that "clean" coal was a mythic moniker, and should be replaced by "cleaner" coal.). Several interesting companies came up in our discussion. Ergo Exergy Technologies already has two projects demonstrating its in situ sequestration/gasification technology, while cash rich GreatPoint Energy and publicly traded Synthesis Energy were two other companies mentioned as leaders in gasification. Interestingly, however, when we toured Tsinghua University's energy research facilities, we heard from Dr. Cai Ningsheng that the best option for China today is not gasification, but ultra-supercritical pulverized coal (USC-PC) and also coal-fired boiler (CFB) technology. They are working on gasification, pre-combustion and sequestration options too, of course, but Dr. Cai's opinion is that USC is the near- to mid-term solution for China. USC-PC is at least half the cost of IGCC in China and has a lower technology risk as well. Nor is all coal suitable for IGCC. Technology advances, Cai said, are possible with USC-PC and CFB that allow CO2 capture, post-combustion capture and oxy-fuel combustion. In my earlier conversations with pre-burn technology companies in the US such as CoalTek and Evergreen Energy, their concerns were more around IP protection when going to China, not necessarily market demand. It will be worth watching the outcome of the strategic economic dialogue between the US and China on easing restrictions on coal technology transfer and how the different technologies on the table play out in the market.

(This is an article I wrote for Yes! magazine a couple of years ago. I am currently updating it for the China Business Review). 

After an initial rush of excitement over writing a piece about China for YES!, a slow creep of dread and unease replaced the thrill. With global oil prices spiking because of China's rapacious growth in oil consumption and the country poised to replace the United States in the dubious role of world leader in carbon dioxide emissions, could I honestly write an article portraying as positive what is happening with China and fossil fuels?

My doubts were not erased, but amplified, after some initial phone calls to environmental leaders in China were met with long pauses when I asked for suggestions on positive stories.

But I was not deterred. China is important to me. I take what is happening there to heart. In many ways it is my home, and I am protective of it. I have spent nearly half of my life there, as a foreign correspondent and businessman from 1986 to 2002. During that time, I experienced what I consider to be one of the most dramatic periods of transformation in world history from the brief ecstasy of free expression in the late 1980s and the might of totalitarianism in snuffing it out, to a shift toward capital markets and the massive spiritual, economic, and social changes that came with that shift, including the beginnings of civil society. (When the United States industrialized, it had fewer than 80 million people, and it took around 40 years to do it. China has nearly 20 times that number of people, and it is industrializing at hyper-drive speed, manufacturing not only for itself but for the rest of the world.)

I believe it is essential that all of us not only understand what is going on in China, but that we become active agents for making it better. Unless we do something urgent, my two-year-old son will enter adulthood in a world neither he nor I want to contemplate.

When I first arrived in China, Beijing was one big bicycle lane, as was the rest of China. There were no private cars no one had the money and even if they had, private car ownership was prohibited by the government. The few cabs on the road catered to the few foreigners who paid in the equivalent of U.S. dollars.

Read more at Yes! magazine