Push-Me, Pull-You: Is the Private Sector Climate’s Dr. Do Little?

Rex Harrison– <em>Doctor Dolittle</em>About two thirds of chief executives – 67 percent – believe that business is not doing enough to address global sustainability challenges, yet there has been a precipitous drop in the proportion of business leaders who described sustainability as very important, according to a just released survey of 1,000 CEOs by the United Nations Global Compact and Accenture.

It is clearer than ever that the private sector, in particular multinationals dominating the energy, materials and utilities industries, hold the key to addressing climate through action on sustainability. Another new report, issued by CDP and written by PwC, found that 50 of the 500 biggest listed companies in the world account for emissions of 3.6 billion metric tonnes, or 73% of total greenhouse gases (GHG). These emitters primarily operate in natural resources and energy.

In the CDP Global 500 Climate Change Report 2013, Malcolm Preston, global lead, sustainability and climate change at PwC, said the findings raise “questions for some organizations about whether they are focused on sustaining growth in the long term, or just doing enough to recover growth until the next issue arises… Corporate emissions are still rising. Either business action increases, or the risk is regulation overtakes them.”

Meanwhile, the UN Global Compact-Accenture CEO Study on Sustainability 2013: Architects of a Better World found that 78 percent of surveyed CEOs see sustainability as a route to growth and innovation, and 79 percent believe that it will lead to competitive advantage in their industry. Paradoxically, however, CEOs see the economic climate and a range of competing priorities creating obstacles to embedding sustainability at scale within their companies, and the proportion describing sustainability as very important has fallen from 54 percent to 45 percent, including only 34 percent of CEOs in economically hard-hit Europe.

So we have a situation where businesses aren’t doing enough, yet the leaders of those businesses say they want to do more.

Put another way: The road to hell is paved with good intentions.

What needs to change to narrow the gap between intent and action? This is one of the fundamental questions of our time.

The answer to that question, according to the surveyed CEOs, is that we need better policies. Forty two percent of respondents listed governments among their top three stakeholders in sustainability, a rise from 32 percent in 2007. Eighty three percent thought more efforts by governments to provide the enabling environment will be integral to the private sector’s ability to advance sustainability. Specifically, 85 percent demanded clearer policy and market signals to support green growth.

Put another way: Pay no attention to that man behind the curtain. Because business lobbying dollars control politicians, CEOs are really just blaming policy makers for a problem that the CEOs – along with their investors and consumers – are creating and prolonging.

When asked which policy tools should be prioritized, 55 percent pointed to regulation and standards and 43 percent called for governments to adjust subsidies and incentives. A further 31 percent sought intervention through taxation. Softer measures, such as information and voluntary approaches, were supported by only 21 percent of CEOs.

Polite attempts were made in the authors of the UN report to pull back the curtain and place responsibility back on business.

“Business leaders should recognize that even in today’s imperfect markets, high performing companies do manage to combine commercial and sustainable success. These companies are harnessing sustainability as an opportunity for growth, innovation and differentiation, and demonstrate that sustainable business is good business,” said Sander van‘t Noordende, Group CEO, Accenture Management Consulting.

Added Peter Lacy, the study lead from 2007 to 2013, and managing director, Accenture Sustainability and Strategy Services, Asia Pacific. “To move from incremental to large scale transformation, businesses must accept that instead of  persuading consumers about sustainability they must give them sustainable products and services they want at prices they can afford. And instead of showing investors the savings made from sustainability, the will have to demonstrate the positive business value it can generate.”

At the end of the day, with policy-makers in the clutches of business, the only meaningful change will come when CEOs, their boards, and their investors all realize that action today on climate and sustainability means long-term business success and mitigation against risk from resource constraints. And then upon that realization, use their power over policy-makers to make the changes they are asking for (not the other way around). The UN report found that although 52 percent of respondents see investor interest as an incentive for them to advance sustainability practices, only 12 percent of respondents see investor pressure as a leading motivator. Nevertheless, only a small minority of CEOs (15 percent) blame the short-termism of financial markets as a barrier, and 69 percent believe that investor interest will be increasingly important in guiding their approach.

The crucial role of business is one of the under-lying themes at next week’s fifth ClimateWeek NYC. I look forward to hearing from CEOs who are turning intent into action.

 

Cleantech: Bright Spot In U.S.-China Cooperation

Despite heated rhetoric from protectionist corners that China and the United States must compete over the massive dollars associated with the clean energy industry, some signs are actually emerging that we’re entering a phase of mutual benefit and collaboration.

It’s a natural fit: the U.S. is an innovation engine short of capital and customers, and China is a commercialization hotspot with lots of money and a major environmental problem. Thanks to interesting new deal structures that allow for commercialization to happen while addressing U.S. intellectual property concerns, cooperation finally appears to be a reality.

In April, Zhongding Group announced a $200 million investment to scale the production of U.S. company EcoMotor’s ultra-efficient motor technology. A new manufacturing facility will be built in China to commercialize a technology that would have otherwise taken years to come to market (if ever) in the United States. Similar deals have started to add up. Wanxiang Holdings acquired faltering U.S. battery company A123 Systems (now renamed B456 – can you say rebrand fail?) for $250 million and also invested $420 million in GreatPoint Energy, a company that turns coal into natural gas. Coal-to-butanol company IGP Energy similarly formed a joint venture with Chinese coal giant Yankuang Group for five facilities. Shanghai steel giant Baosteel also invested in waste-to-fuel company LanzaTech, funding a demonstration plant that is expected to result soon in a fully commercial facility.

All of these deals, and many others, have meant rapid acceleration of technology that may not have otherwise happened. But the benefit isn’t just flowing to U.S. cleantech companies starved for cash. China also desperately needs the technologies to address mounting environmental concerns – air pollution, severe water shortages, food safety and the list goes on and on.

According to Cleantech investor Greg Manuel, there is a 5-plus year “innovation delta” between the clean technologies being developed in the United States and those in development in China (with China lagging behind). Similarly, Manuel says, there will be a $4.5 billion shortfall in capital for U.S.-developed clean technology start-ups in the next three years. “This emerging pattern of cooperation is still in its early stages. But there is a tremendous vector of opportunity when you look at the innovation delta, capital gap and severe environmental and energy challenges facing large Chinese enterprises with large pools of cash,” said Manuel, formerly a special advisor for energy affairs to U.S. Secretary of State Condoleezza Rice and senior vice president for corporate development and strategy at Amyris.

This post originally appeared on Forbes.com

Cleantech Policy Needs Clarity, Consistency and Cojones

EarthTechling recently interviewed me and asked for my perspective on trends in cleantech, including marketing, communications and PR. Some themes that emerged:

  • Five suggestions for cleantech companies to set themselves apart in a crowded market
  • Backing “boring” businesses usually works
  • Technology innovation we have plenty off; we need marketing, financing and business innovation (plus the 3Cs from energy policymakers – clarity, consistency and cojones

See the full interview

EV to be Most Hyped News of 2011: Survey

Media covering renewable energy and cleantech overwhelmingly expect the biggest news hype of 2011 to come from electric transportation, while they identified energy efficiency as the most deserving of coverage, according to my annual survey. With more than 70 respondents from newspapers, magazines, broadcasters and blogs, the survey also revealed that more than two-thirds of media expect demand for cleantech coverage to be greater this year.

The survey strongly confirmed one trend – the migration of content online; and appeared to shoot down another – lack of adequate budget. Nearly all of the respondents – 96% – said their work will primarily appear online, while almost 70% said that they would have enough resources to do a good job of reporting on cleantech this year. At the same time, there is a willingness to use content (video, animation, graphics, etc) produced by non-media sources (73% said they frequently or sometimes used content developed by companies).

In addition, the survey revealed some social media habits with regard to obtaining information, with Twitter (82%) by far and away the top choice of social tools for tracking news.  The RSS feed is also clearly not dead, with 57% naming it as the second tool of choice.

EV received 56% of the votes to be the most hyped sector in 2011, more than double the nearest competitor – smart grid, which received 20% of the votes. The only other technology that registered double-digit percentages was carbon capture and sequestration (16%).  On the flip side, media identified energy efficiency as the area that deserved the most media attention, with 42% choosing EE. This is ironic since I’ve often heard reporters say that they want to cover energy efficiency, but editors find it too boring (this is backed up by page views). The other technologies deserving attention mentioned by  more than 10% of respondents were: carbon management (20%); solar (13%); smart grid (13%) and water (11%). One of the most important sectors from an impact perspective, agriculture and foresty, got no votes.

As in previous years, the overwhelming majority of those surveyed (68%) said B2B coverage would take priority this year, with the remainder paying more attention to consumer technologies. Overall, the overall trend is also of continued interest in the sector – 62% expected increased demand for cleantech news among audiences

Interest in policy coverage also remains high, with nearly 80% expressing significant or moderate interest in tracking government developments.

Clean Energy: Too Many Interests, Not Enough Group

There is a lot of interest in clean energy. Here’s just a partial list of the US groups out there: American Business for Clean Energy,  Business Council for Sustainable EnergyEnvironmental EntrepreneursInvestor Network on Climate RiskBiomass Power AssociationRenewable Fuels AssociationClean Economy NetworkUS Climate Action PartnershipClean Energy WorksUS Clean Heat and Power AssociationSolar AllianceWe Can LeadAmerican Wind Energy AssociationAmerican Coalition for EthanolAdvanced Biofuels CoalitionWind CoalitionBusiness for Innovative Climate and Energy Policy,  Growth Energy,National Hydropower AssociationGeothermal Energy AssociationSolar Energy Industry AssociationSolar Electric Power AssociationCeresAmerican Council on Renewable EnergyAmerican Biogas Council,Carbon War RoomAlgal Biomass AssociationFuel Cell and Hydrogen Energy AssociationElectrification CoalitionAmerican Council for Energy Efficient EconomyGridwise AllianceDemand Response and Smart Grid CoalitionAmerican Energy Innovation CouncilBlueGreen Alliance, Water Innovations Alliance.

Remember, that is a partial list. And that doesn’t even include state and regional groups, of which there are dozens more.

Get the picture? A jumble of letters: “C” for council (five) and coalition (five); “A” for association (11) and alliance (four) and “S” for solar (three); plus at least four groups directly and indirectly touching “B” (for biofuels) and more than half a dozen groups broadly positioned around “E” for energy. What does that spell? Trouble with a “T”. At a time when the clean energy industry needs one powerful voice to drive policy and get federal and state lawmakers to actually do something visionary, what we are getting is a 100-part disharmony of sometimes clashing, sometimes overlapping agendas. With the recent shift in political winds in DC and many state houses signaling a tougher road ahead for a clean energy agenda, the need for that unified voice is even greater.

In fairness, an examination of the missions for the various groups often shows material differences in their focus, but how important are those differences in the broader picture? That is a question that we need to be asking ourselves.

The environmental NGOs – EDF, NRDC, WRI, etc – failed to influence national policy in a significant way during the first half of Obama’s current (and possibly only) term. But the truth is that, when it comes to getting more aggressive adoption of clean energy policies, the same can be said for the business interest groups listed above. A rationalization and consolidation of these groups is a reasonable expectation, and even if that fails to materialize, there is a strong need for an all-encompassing umbrella “organization of organizations” that rises above the petty jealousies and turf wars that often make the trade association, non-profit world ineffectual and scattered. Just as a consolidation of the cleantech industry itself is overdue, so too is one for the organizations that represent it.

Ironically, my involvement in the Clean Economy Network (CEN) was motivated by a desire for an industry defined by “distributed energy” to become more centralized in its approach to policy. Whether its CEN or some other group that occupies a higher, more unified plane, one thing is certain: faced with a torrent of cash-infused lobbying from big oil and coal companies, a drip campaign from dozens of groups representing a fractured clean energy industry won’t have the desired impact – rapid and decisive action from policymakers.

I plan on being in Washington, D.C. on January 24-25, 2011 to attend the first CEN business leaders summit, with the hope that at least part of the proceedings will be a serious dialogue on organizational strategy for the clean energy industry. It would be great if the representatives of all the groups owning patches of the industry can be there too to create a more cohesive quilt.

High Noon for US Clean Energy Leadership: March 21, 2011

A wise man once said that contemporary politics is fueled by two things: raising money, and a fear of angry mobs. OK, I actually said that. Nevertheless, it makes sense that the ultimate nightmare for DC lawmakers would be an angry mob with money. At the Renewable Energy Finance Forum-West this week in San Francisco, a gathering of top financiers, project developers, executives, etc, it was clear that there are a lot of angry and frustrated American businesspeople with money who are sick and tired of Washington’s refusal to treat renewable energy and cleantech as THE pillar of our future economic growth (not to mention a solution to our increasingly resource-constrained world). Not surprisingly during REFF, Beijing’s aggressive moves to become the cleantech power were repeatedly contrasted against DC’s cowardice and failure to act. Yet, so far the efforts to change the situation in DC by the broader clean energy business community have added up to only a sliver of the lobbying dollars spent by Big Oil and Coal, plus the occasional pilgrimage to DC by a few handfuls of business leaders to implore action (and increasingly that requested action is just short-term fixes, not long-term solutions). So with Solar Power International just around the corner; with WindPower coming up in May 2011; I have a question for Rhone Resch and for Denise Bode. Why are you gathering your mobs with money in Los Angeles?

Perhaps what’s not needed is the current drip campaign, nor “constructive engagement” with the representatives in DC, but blunt force trauma. Congress, and especially the Senate, needs to be convinced that the clean economy interest group is just as powerful as the fossil fuel lobby, with the money to back up its talk. Congress also needs to viscerally feel that the clean economy is a money-making, tax-generating, vote-swaying reality. So I have two specific calls to action for the renewable energy industry.

  1. For the next 3 years, EVERY major trade show for every sector of clean energy – solar, wind, geothermal, power storage, smart grid (thanks Gridwise Alliance Forum for being in DC already), should take place in Washington, D.C. Seeing is believing. If Solar Power’s 50,000 delegates, Windpower’s 25,000 delegates and other similar numbers descended on DC every year and disrupted Congressional limos, lawmakers might pay more attention.
  2. That 1,000,000 business people – employers and employees (present and future) – from the clean energy industry descend on the Capitol Building on March 21, 2011, and show the power and confidence of the new “industrial evolution”. Not NGOs, not lobbyists, but the real deal – CEOs, CFOs, installers, retrofitters, you name it. If we need a sea change in US energy policy, let’s put a sea of angry people with money at the doorstep of those failing to act.

Jeff Immelt of GE: you called Congress “stupid” because of it’s failed energy and climate policy. Will you sign on?

Jim Rogers of Duke Energy: you’ve argued that the most energy efficient economy will be the leader of the 21st century. Will you sign on?

Bill Gates: you want billions of dollars more investment in clean energy R&D. Sign up.

Tom Friedman of the New York Times: you clearly have a bee in your bonnet on this topic. Will you show up?

Being an optimist, I have already created an event page on Facebook, called the Million Business Voices for a Clean Energy Economy and another on LinkedIn. If there are at least 10,000 people signed up before October 10, this thing might have a chance. So spread the word.

marketing monday: resilience – the new sustainability

I’ve already made my argument that ”sustainability” and “green” are obsolete terms, and over the last year there appears to be growing mainstream momentum (it originated out of the systems design community) around the term “resilience” as a possible successor. One voice on the subject is Dennis L. Meadows, author of The Limits of Growth. In a recent interview with Pictures of the Future, Meadows made the following argument:

In my opinion [sustainable development] is an oxymoron, a term with nonsense meaning. To many people,”development” seems to imply that we can simply keep going as we have for the last 100 years, depleting resources on a large scale and polluting heavily. And adding some kind of “sustainability” makes the detrimental effects of our model of development go away. I am more interested in the term “resilience”. This concept is about how to structure a company or a city or a country so that it can continue to function quite well even in the face of major shocks. Implementing policies that give you resilience tends to make the system more sustainable.

Meadows went on to equate the coming environmental crisis with the current financial crisis, saying that he expects to see similar systemic problems. He said behavioral change is the most important factor in preventing these problems, combined with the tools of technology to realize those changes.

Like the financial crisis, climate change or energy scarcity are not going to proceed in a nice orderly, uniform way. Sometime in the foreseeable future there will be discontinuities, which will put us in a mode of crisis… to prepare ourselves the most important thing is to increase our time horizon.

The leading proponent of the resilience concept has been Jamais Cascio, an “ethical futurist” based in the San Francisco area, who points out the two reasons why resilience is gaining traction: 1. the future is inherently uncertain and 2. failures happen, so the OS of humanity needs to be flexible and self-aware enough to identify failures early and adapt accordingly. He adds that resilience implies two characteristics needed to do that: strength and flexibility.

One reason why the idea of resilience resonates with those of us 
engaged in foresight work is that, as troubling as it may be to 
contemplate, the current massive economic downturn is likely to be 
neither the only nor the biggest crisis we face over the next few 
decades. The need to shift quickly away from fossil fuels (for both 
environmental and supply reasons) may be as big a shock as today’s 
”econalypse,” and could easily be compounded by accelerating problems caused by global warming.

A number of organizations exist to explore the possibilities for resilience as a new social meme, including the Center for Resilience at Ohio State University. Others have emerged in South America and Europe

GHG: regulation vs. legislation?

I asked my friend Graham Noyes, attorney at renewable energy law firm Stoel Rives focused on bioenergy projects, federal energy incentives and carbon monetization, for his thoughts on the Kerry Lieberman bill.

Q: What was your main takeaway from the bill?
A: Some context first. There’s a massive potential hammer out there on GHG emitters in terms of the risk of regulation under the Clean Air Act (CAA) by the EPA, which has already issued an endangerment finding that found GHGs to be a danger to public health and welfare, thereby making the EPA obligated to regulate GHG’s under the CAA. So the wheels are turning forward at the EPA to regulate GHG. That’s what the EPA will do if nothing else happens. So it’s really surprising that Kerry Lieberman imposes what I think to be much stricter limitations on the EPA than the status quo.

In that sense the bill is very favorable to those industries that have the most to lose from GHG regulation, because it essentially weakens the regulatory landscape for GHG intensive industry when compared to what the EPA is likely to do. That’s why we have the strong industry support lined up for the bill. What’s odd is that we have universal Republication opposition (from a party known for its pro-business stance), and near universal Democratic support (from a party known to support more environmental protections). That is a fundamental disconnect.

The 800 lb gorilla in the room is the EPA’s ability to utilize the CAA if the Kerry-Lieberman bill stalls. That’s a really interesting regulatory and political landscape for this thing to play out.

Q: Can you be more specific on how Kerry Lieberman is easier on emitters?
A: We don’t know what the EPA will do precisely in order to get its targets in the endangerment finding. Emissions levels, cost implications for regulated industries – we don’t know. But it’s easy to imagine a scenario in which the EPA ratchets down harder and harder on these emissions to get the problem under control, specifically the PPM concentration of CO2 in the atmosphere. By contrast, Kerry Lieberman has a slow front-end phase-in (with only some industries included in the first years), price collars and very substantial offset programs to lower the economic impact, none of which the EPA would necessarily do. Most people expect the EPA would be more onerous than Kerry Lieberman.

Q: Is legislation or regulation better at the end of the day?
A: The Clean Air Act was not designed for GHGs, but for what we usually think of as pollutants – emissions that are directly unhealthy. CO2 is not something people worry about breathing, it’s the indirect risk of global warming caused by the escalating CO2 levels that triggered the finding. CO2 is also more ubiquitous than other pollutants hence the tailoring rule actually reduces scope of CAA enforcement.

The EPA would regulate by mandate, not by consensus. If we can’t get legislation passed and the EPA begins enforcement, there will be a lot of criticism about over-reaching and strangling industry. EPA would take a lot of heat for this.

Q: Some argue that EPA will take much longer to regulate than legislation.
A: I don’t necessarily think so. This legislation requires extensive rule-making that will take a long time to happen, consider the RFS2 delay. And the EPA won’t build in phase-in limits like Kerry Lieberman. If EPA moves ahead on its present course, I think it would have a faster impact on emissions than the bill. Ultimately, I think this landscape will spur a deal with a surprising alliance.

Q: What are the top three ramifications on business from this bill?
A: The bill would establish a long-term value to CO2e reductions. This will benefit all renewable energy projects andsupport US offset projects in methane capture, agriculture and forestry that make good GHG sense.

Roundup: Cleantech Predictions for 2010

Based on the rash of predictions for cleantech in 2010 from investors, consultants and media (see the full list at the end of this post), I’ve pulled together a “trend of trends” list below that attempts to synthesis the broader, over-arching themes. As always, I’m amazed that water isn’t on the top of every list, every year, although there are some positive signs on that front. So here are the 12 things that filtered to the top:

  • Energy efficiency will have a big year, with buildings and information and communications technology (ICT) front and center (nice to see the “wow” factor over technologies like solar being tempered by the realization that there are a lot of cheaper ways to meet immediate goals for reducing emissions)
  • Private investment will revive (with one prediction for a record-breaking year), but fears persist that the pending end of stimulus dollars will cast a long shadow over the market
  • Differentiation – i.e. marketing – will increase in importance as we move from a technology-heavy phase to a commercialization-focused phase (something I’ve called attention to in the past).
  • Consolidation and industry shake-out will accelerate, as will increased involvement of major corporates. Many VC-backed firms need an exit (especially in smart grid, solar and biofuels), so expect a few IPOs, but mostly M&A or failure as scale becomes more important and winners and losers emerge. And as the market grows and the issues being addressed become more complex, big multinationals with vested interests will try to play a larger role
  • Smarter transportation – especially electrified – continues to gain traction, while next generation liquid fuels (cellulosic in particular) takes baby steps
  • It’s more than energy, stupid. Land, water, rare earth metals, etc take more mind share as understanding grows  that the issues we face go beyond energy and carbon
  • Importance of carbon measurement and management will increase, but folks seems pretty skeptical that even if climate legislation/treaties get enacted that they will be aggressive enough (some expect sector specific carbon regulation – i.e. aviation and shipping – instead of economy-wide measure
  • Distributed solutions continue to erode the power of centralized systems (in energy generation, building, transportation, etc)
  • Some technologies expected to garner attention: Waste to energy, waste biomass, power storage, geothermal, aquaculture, ultracapacitors, desalinization, building materials, large-scale solar
  • There is a lot of expectation around advancements and interest in upgrading the electric grid; although there was a warning to expect at least one major failure of a smart grid rollout (not to mention that people have been predicting an intelligent grid for many years)
  • Standards gain a higher profile – whether building codes, water or carbon labeling, unified standards for the smart grid, etc, creating a clear marked playing field grows in importance, including communicating the rules to consumers as needed
  • International competition to be the cleantech leader intensifies (again this is something I’ve written about in the past, so not really news in my opinion)

If you want to read for yourself, the various predictions I’ve pulled from are here: Energy stocks to watch from Seeking Alpha; Overall industry outlook from the Cleantech Group; Clean energy predictions from Deloitte; Two different VC perspectives, one from Lightspeed Venture Partners  and the other from Rob Day at Black Coral;  5 biggest hurdles from Earth2Tech; IT and corporate green from Greenmonk’s Tom Raftery; Green building trends from Earth2Tech;  Top 10 promises from cleantech companies from Cleantech Group; Smart grid from Earth2Tech.

ACORE offers dour view on bioenergy

The American Council on Renewable Energy (ACORE) had this to say about the current state of affairs on bioenergy. Nice to see some realism out there:

“The prospects for a successful green energy revolution  appear problematic with the diffused applications of the American Recovery and Reinvestment Act (ARRA) of 2009, the seemingly faltering relevance of carbon regulation, the lack of policy coordination  on environmental/ renewable energy issues in the Federal Government between departments and agencies with broad natural resource jurisdiction, and the controversy surrounding green  energy uses  of bioenergy sources  such as co-firing by electric utilities and other companies. The significance of these issues will be escalated if the scheduled reduction in Federal grant, tax and loan assistance programs to renewables occur in 2011.”

If you want to learn more ACORE on this subject take a look at Sustaining National Stimulus: The Bioenergy Case