Warming to Clean Energy Part 3: The Obstacle Course

An Oil Platform

Despite the myriad indicators painting a positive picture for the future of clean technology, there are many bumps in the road ahead. Achieving large-scale competitiveness with fossil fuels will be much more difficult if Congress does not pass carbon legislation, since people in more carbon intensive industries are working furiously to bring new electrons to market. Saudi Arabia has about 25 percent of global proven oil reserves under its sands, and could continue supplying oil at current rates for 90 years. The country maintains a level of spare capacity that could allow the Saudis to engineer a price collapse if expensive oil continues to encourage renewable technology. Even if the world moves away from Middle Eastern oil, private companies have achieved advances in the technology of oil extraction that make previously uneconomic deposits in places like the Gulf of Mexico look very attractive. Many in the industry also believe that they can increase the rate of recovery from existing wells from 30 percent to 50 or 60 percent within a decade, a jump that would augment global reserves substantially. Vijay Vaitheeswaran, a correspondent for The Economist magazine, notes in his forthcoming book “Zoom” that although BP and Shell are spending about 2 billion per year on renewable technologies, each is spending around $15 billion per year on oil, and this ratio is typical of major oil companies.

An oil sands mining operation

Perhaps the most ominous threat to the future of clean technology lies in a range of carbon-based alternative energies that will become economically viable if oil prices stay high. Notable here are the coal bed methane deposits in the American west and the tar sands in Alberta, Canada. Both of these sources are incredibly resource intensive to produce, and could effectively undo any reductions achieved by carbon legislation if burned on a large scale. Nevertheless, interest in these fields is growing: Peter Tertzakian of Canadian investment firm ARC Financial estimates that investments in the Alberta tar sands in the coming years will add up to around $60 billion.

Which energy technologies will prevail?

These examples serve to illustrate that rising oil prices do more then benefit clean technology: they drive oil exploration and investment in climatically reckless fossil-based alternatives. Whether the cleaner path will win out remains an open question; companies and countries are pumping money into fuel cell research even as they shore up petroleum reserves. Steering the energy future in a greener direction will take political leadership. The core purpose of government is to direct its resources toward development that serves the best interests of society: and nothing would serve those interests more than the advancement of clean technology.

Warming to Clean Energy

I’m pleased to announce that the Wild Green Yonder is sprouting new buds: Nelson Harvey, a fellow Gallatino and good friend, will be joining me as WGY’s second contributor. Nelson’s specialties are renewable energy and journalism, and he’s making his debut this week with a four-part series on the case for clean energy.

- Adam

For anyone with doubts that the world of energy is undergoing major change, the newspaper headlines during the last week of February 2007 should have provided pretty convincing proof. On February 25th, An Inconvenient Truth, Al Gore’s documentary film about the science of global warming, won an Academy Award. Shortly thereafter, three major electricity industry trade groups who had long opposed any federal limit on carbon emissions flip-flopped, announcing their support for such rules. Then, on February 26th, company officials from TXU Corp., the Texas mega-utility and a nemesis of environmentalists who oppose its polluting power plants, announced that a consortium of private equity firms had offered to purchase and overhaul the company. Under the deal, TXU would abandon aspirations for 8 of 11 coal-fired power plants that had been planned. It would also double its investments in wind energy, and increase energy efficiency spending.

All of this was music to the ears of the clean energy industry, which for the past few years has been on the ride of its life. In 2006, the wind industry grew by 27 percent, solar grew by well over 20 percent, and ethanol grew by 24 percent. Similar figures are projected for 2007. Rapid growth is nothing new for this industry: the Arab oil embargo of 1973 sent U.S. oil prices skyrocketing, and dollars flowed into alternative energy research. The Iranian revolution of 1979 had a similar effect, but in both cases, the declining price of oil dragged the appeal of alternatives with it, and fossil fuel re-assumed its throne as the global energy king.

This time around, things are different. Clean energy is here to stay, and what’s changing the equation is global warming. Concern about the effect of greenhouse gas emissions from fossil fuels, combined with a national fixation on the goal of “energy independence,” has sparked a desire for change, and a debate about market-based environmental tools like a greenhouse gas emissions trading system. The fact that Democrats now control both houses of the U.S. Congress makes it likely that such a system will be implemented in the near future, and when it is, renewables will be ready. Over the next three days, I will present the economic, political and technological case for clean energy, as well as the obstacles that could derail this positive shift once again.

Tax/Trade Update

A while back I wrote about two of the most widely discussed options for federal carbon legislation: a tax on individual and/or institutional emissions, and a market-based “cap and trade” system. The debate has continued to heat up in the past couple months, and I thought I’d weigh in with an update.

At yesterday’s 2010 Imperative webcast, leading climate scientist James Hansen stressed the need for immediate carbon legislation: continuing our current path for another decade, he explained, would put our emissions at 40 percent above 2000 levels, making it virtually impossible to reduce to acceptable levels without severe recession. Though he made it clear that action needs to be taken now, he refused to take a side on the tax/trade divide. What he did suggest was that CO2 restrictions be slowly phased in so as to avoid economic disruption, and that they be controlled by a nonpartisan appointee in the manner of the Federal Reserve.

Gristmill has been seeing a raging debate on the issue recently. In a guest editorial last week, Bill Chameides, Environmental Defense’s chief scientist, came out in favor of a market, calling taxes politically unfeasable and less likely to promote technological innovation. In a series of comments to my original post, fellow Green Archer Daniel Dempsey agreed, citing the precedents of NO2 and SO2 markets in the US as successful examples of market-based pollution reduction.

But Gar Lipow’s well-researched response to Chameides’ piece counters these very examples. Lipow provides evidence that domestic pollution markets were slower and resulted in smaller reductions than tax-based programs in Germany and Western Europe. Furthermore, these markets were nowhere near as complicated as a carbon trading system would have to be, and were therefore easier to implement and less subject to manipulation. In other words, if set up correctly, markets can indeed work – just not as well as taxes.

Still, one of Daniel’s criticisms still holds: to institute an effective carbon tax would be tantamount to “political suicide” in our current taxophobic political climate. Although endorsed by economists and corporations alike, to my knowledge not a single elected official has proposed introducing one, probably because it would raise the price of nearly everything we buy.

It seems clear to me that the tax vs. trade debate is essentially one of feasibility versus necessity. Emissions trading would be cheaper to implement and is far more business-friendly, which is why politicans are so fond of it. But it’s also complicated to set up, and likely to be less effective overall. To reduce our carbon quickly enough to prevent catastrophic climate change, it seems as if taxing is a safer bet. Sure, at the moment it seems as if a carbon tax is unrealistic – but then again, this very discussion would have seemed politically preposterous only a couple years ago.

The Green (Un)market

A recently released survey by the market research firm Mintel seems to agree with what every newspaper columnist and progressive politician has been saying: being green has hit the mainstream. The survey’s summary reports that the market for environmentally-friendly prodcuts was $200 billion last year and is growing rapidly, with 35 million Americans categorized as ‘True Greens’ who regularly buy green products.

But Worldchanging writer Joel Makower points out on his own blog, Two Steps Forward, that things aren’t quite as verdant as the survey makes it seem. Market research on this stuff has been happening for 20 years, and the numbers were just as encouraging then: he mentions a 1989 survey where nearly 90% of consumers reported that they were concerned about the impacts of their choices on the environment. And while $200 billion might seem like a lot, it’s a small fraction of our annual spending power. If green products were truly mainstream, they’d be comprising the majority of the things we buy – and we’re far from that point. Makower succintly sums it up with this statement: “two-thirds of Americans say they are buying green, but are spending barely more than a nickel per dollar doing so… how come we’re not shopping our talk?”

I can think of a few simple reasons off the top of my head. There’s the oft-bemoaned price barrier. There’s the un-green choices we all make as a matter of convenience. And there’s the simple lack of legitimately green products out there – why can’t I buy recycled plastic DVD cases? To a certain extent, these responses are all valid. As economies of scale kick in, and awareness continues to rise about the impacts of our consumption, we’ll see the market for green products continue to rise.

But these aren’t getting at the heart of the issue. The real answer to Makower’s question isn’t one that either he or Mintel is going to want to hear: as any environmentally-conscious citizen knows, the greenest thing to do is not to consume at all. What Mintel calls the “true greens” are turning their backs on the market altogether, finding ways of satisfying their needs without having to buy a shiny new whatever. Why won’t “green marketing” ever hit the mainstream? Because it’s a contradiction in terms.

Creative, resourceful, and thrifty, environmentally conscious consumers often aren’t consumers at all, but creators. When we’re not saving money and the environment by getting our stuff used, we’re excercising our imaginations and our power to network by making it ourselves.

I’m not naive enough to think that the rest of America will start using craigslist over Sam’s Club, or that any of us can get everything we need without having to buy new. Most people would rather just buy a bookshelf than download open-source instructions for making one. And we can’t have any semblance of a contemporary lifestyle without relying mass production. Lots of products are better left to be made in factories by experts – who’ll be keeping themselves busy for the next few decades figuring out how to do it all cradle-to-cradle. But as for the “green marketing rennaissance” that Makower’s holding out for? I’m hoping it’ll never happen.

The Zero-Energy Chinese Cancer Factory

Looks like Ed Mazria has one more case study for Architecture 2030 (see post below):
Sustainable Design Update reports that uber-architects Skidmore, Owings and Merril have designed a skyscraper in the booming Chinese city of Guangdong that produces all of its electricity on-site. The building uses site orientation, hi-tech window glazing, air circulation strategies, and heat-absorbing materials to reduce energy consumption by 60% over a conventional building of the same size, and the reduced energy needs are met by PV panels and large- and small-scale wind turbines. Sounds pretty sustainable, right?

Except for one thing. The building is the new headquaters for the Guangdong Tobacco Company – an arm of China National Tobacco Company, the largest cigarette manufacturer in the world. In a country where smoking is a part of the national culture, the government-owned CNTC provides Beijing with billions of dollars in taxes every year, while feeding the addictions of more Chinese than the entire US Population.

The Guangdong Tobacco building provides a fine example of the inscrutable ethical knots found at the intersection of capitalism, globalization and sustainablility. To be sure, we should be doing all we can to reduce our global carbon footprint, especially in emerging superpowers like China. But is it ethical to build a green skyscraper, even a zero-energy one, if the building’s client is cutting short the lives of hundreds of millions of people? And what if the profits from that client are helping finance education, infrastructure improvements, and renewable energy? Tricky times, indeed.

The Carbon Economy

Last week I outlined a couple options for starting to regulate our carbon emissions on a national scale. Implementing either a national carbon tax or a cap and trade system would be a huge step towards what you might call a “carbon economy”: a world where the CO2 we emit is tracked and regulated as carefully as the dollars we spend or the calories we consume.

The first saplings of the carbon economy have already sprouted. Elementary carbon footprint calculators let the curious and concerned estimate how much carbon their activities are responsible for (my footprint was about 10 tons of CO2 per year when I calculated it in November). Taking it a step further, offset programs such as Terrapass and CarbonFund have become a popular way to “cancel out” a person’s carbon footprint, with the proceeds going towards activities such as tree planting and investments in renewable energy.

But these steps are probably somewhat premature. For starters, the benefits of offset programs are hard to verify without any standards or regulatory bodies. Moreover, offsets are hardly a long-term solution: we can’t solve the climate crisis by doing the same thing as always and paying somebody else to fix it. Instead, we need to start figuring out how we can cut the carbon out of our lives for good. This means keeping careful track of the emissions we’re responsible for, down to each and every purchase we make.

The emerging field of life cycle analysis – whereby environmental impacts are identified across all stages of the production process – is making this kind of product-by-product awareness possible. Last month, for example, Jamais Cascio released a fascinating look into the carbon footprint of a cheeseburger, and concluded that every one pound burger was responsible for the emission of around 6 pounds of CO2 along its path to the consumer.

2007 has already seen the carbon economy gaining momentum. Last week, Sam’s Club announced it would be selling the first “Carbon balanced” product, a pressure washer made by Karcher. For every washer purchased, Terrapass will offset 285 pounds of carbon (the estimated emissions from two years of use). Also this month, the UK supermarket chain Tesco became the first megacorporation to formally enter the carbon economy: each one of its tens of thousands of products will soon be labeled with the amount of CO2 emitted during their production and distribution.

The rapid trajectory of the nascent carbon economy – from internet calculators for envirogeeks to a major commitment from the world’s fourth largest retailer – is nothing short of astonishing. In the coming months and years, we’ll see it continue to become a powerful influence in our lives, as the reduction of our collective carbon footprint becomes an ever more urgent priority. Imagine Tesco’s carbon labeling policy expanded to a federally-regulated system for all consumer goods. Imagine RFID tags that keep a running tally of a product’s emissons from the mine to the landfill. Imagine a carbon credit card that taxes your cumulative CO2 load. Sound scary? Just imagine the alternative.

Product Green

Last semester I met a Gallatin marketing student named Annie who had an intriguing idea: applying the co-branding strategy of Product Red to environmentally sensitive products. In the past year, Product Red has successfully leveraged Bono’s star power and the cultural influence of brands like Apple, Converse and the Gap to raise tens of millions of dollars for AIDS. What would happen, Annie wondered, if a similar cross-company brand was created for goods with greater environmental sensitivity?

At first glance, it seems like Annie was onto something. But for it to actually have a positive environmental impact, there’s a number of issues that would have to be thought through. First off, standards would have to be developed to assure that the co-branded products were truly green; if they weren’t stringent enough, the result would merely be greenwashing on a massive and coordinated scale. Maybe there could be a LEED-style checklist of attributes, with separate symbols on the (minimal) packaging certifying that the product contained non-toxic materials, recycled content, fair trade, or a low carbon footprint.

The second issue with environmental co-branding is the danger of the token green product. Suppose H&M decided to offer a fair-trade recycled hemp shirt – what about the hundreds of unsustainable products on their shelves? Running a special promotion like a co-branding campaign creates the mindset that sustainability is a bonus, when it should be an imperative. Finally, even the most environmentally responsible co-branding campaign wouldn’t get across the message that we most need to hear: that we’re addicted to consumption, and the environmental crisis is bound to worsen until we recognize and break that addiction.

Still, even as a Lime Green idea – that is, one that benefits the economy more than the environment – “Product Green” is worth a closer look. It has the potential to raise awarness of environmental issues to millions who currently could care less. And even if H&M doesn’t switch their entire line to recycled hemp right away, they’d at least have something environmentally responsible for sale. And that’s a lot more than you can say about them at the moment.