2011 June

Who’s buying renewable energy?

Here are 10 companies that are putting real dollars behind their sustainability rhetoric:

Kohl’s, Whole Foods Market, TD Bank, Swiss Re, Nordea Bank, Adobe Systems, Vestas Wind, News Corp., CLP Holdings and Deutsche Bank.

They’re leaders in buying renewable energy, according to a new report from Vestas and Bloomberg New Energy Finance called the Corporate Renewable Energy Index (CREX) 2011. It’s available for download here.

Those companies are in the top 10, the study says, when ranked by the percentage of the electricity they use that comes from renewable energy. Kohl’s and Whole Foods, for example, buy 100% of their electricity from renewable energy sources. Most companies do this by buying renewable energy certificates (RECs). Here’s a table from the report; it’s much easier to read if you click on it to enlarge it:

The report also ranks companies by their absolute purchases of renewable energy. Here Intel is No. 1, followed by Kohl’s, CLP Holdings, Whole Foods, Koninklijke KPN, Desutsche Post, Starbucks, News Corp., Koninklikke Phillips Electronics and Deutsche Bank.

Because electricity from clean energy costs more than electricity generated by burning fossil fuels, these companies are spending more for a commodity (electricity) than they need to. This tells you more about their commitment than a glossy CSR report. (Think about some “green” companies that don’t make this list, which is drawn from a universe of global publicly-traded companies.) There’s lots more data and analysis in the full report. [PDF, download].

Food sustainability requires systemic thinking and action

SustainAbility co-founder and non-executive director John Elkington blogs this week on conclusions from SustainAbility’s new report, Appetite for Change, agreeing with the conclusion that far more systemic change is needed to address the deepening crisis of global food security.

Read the full post at the Guardian, or reprinted on our blog.

Food security needs systemic change

I don’t know about you, but the closest I ever got to a Rubik’s Cube, shortly after it was first launched in 1974, was to handle one in a toy store. For me, it seemed insoluble – and many assumed it was, until persistent cubers discovered not just one way to crack the puzzle, but many. And the cube came to mind as I thought recently about the astonishingly complex global security challenge we now face

Toyota: Streamlining nonprofits

Any company can give away money. Most don’t do it very well.

It’s harder, smarter and ultimately more valuable for companies to share their talent and expertise.

That’s what Toyota is doing with a program, announced today at the Clinton Global Initiative in Chicago, aimed at helping schools, hospitals and other nonprofits stretch their dollars further.

Toyota is famous for its lean, worker-friendly approach to manufacturing. Its Toyota Production System isn’t so much about efficiency–although that’s the end result–as it is about respecting workers, letting ideas bubble up from the shop floor and driving continuous improvement, or Kaizen. The Toyota system is “at its core a problem-solving method,” says Jim Wiseman, a group vice president and company spokesman who’s been with Toyota for 22 years.

Toyota will now share its expertise more widely. In a news release, the company says:

The company will be working with up to 20 community organizations across the United States in the first year to help improve performance, beginning with the St. Bernard Project, a New Orleans recovery organization that employs returning war veterans, AmeriCorps members and volunteers to rebuild homes devastated by Hurricane Katrina.

Techniques pioneered on Toyota assembly lines have already helped local non-profits, mostly on an ad hoc basis.

At the Community Kitchen & Food Pantry in Harlem, a Toyota team helped reduce wait times for clients and food waste.

At Allegheny General Hospital in Pittsburgh, nurses figured out with Toyota’s help how to save time when sorting and delivering pharmacy supplies so they could devote more time to patients. Here’s a short video about that.

The new initiative is being led by the Kentucky-based Toyota Production System Support Center. It  was formed in 1992, initially to help Toyota’s U.S. suppliers learn how to increase productivity, safety and quality. Since then, the center has worked with more than 160 companies and a handful of nonprofits.

This approach to corporate giving makes sense to me because the company is leveraging its unique talents. Traditional corporate philanthropy strikes me as much less useful. After all, when companies make donations to nonprofits, they are giving away their shareholders’ money. Inevitably, they are expressing preferences for charities, causes and groups. (In the worst cases, they are supporting pet projects of a CEO or a senior exec or an exec’s spouse.) Unless there’s clear payback in terms of brand, reputation or an enhanced community that will benefit the workforce, companies would do better to (1) simply match employee benefits, i.e., turn charitable giving into a workplace perk or (2) let the shareholders guide them on how to give the money away.  But that’s a blogpost for another day.

A World Without Labels

Imagine a company which always paid its workers a fair wage, only sourced materials from sustainable sources, created minimal environmental impact and operated a system of offsets so as to be 100% carbon neutral.

How would this company convince you as an ethical shopper to buy its products?

Read more

Stewart Brand, Peter Kareiva and 21st century conservation

Peter Kareiva began by recalling the environmental “golden decade” of 1965-75, set in motion by the scientist Rachel Carson.  In quick succession Congress created the Clean Air Act, the Clean Water Act, and the Endangered Species Act—which passed the Senate unanimously.

Green influence has been dwindling ever since.  A series of polls in the US asked how many agreed with the statement, “Most environmentalists are extremists, not reasonable people.”  In 1996, 32% agreed.  In 2004, 43% agreed.  Now it’s over 50% who think environmentalists are unreasonable.

Kareiva noted that as the world is urbanizing, ever fewer people grow up in contact with nature—current college freshman have less than a tenth of the childhood experience of nature as previous generations.  And there’s a demographic shift toward multiethnicity, with whites already a minority in California and soon to be a minority in the whole country.  Asked to describe a typical environmentalist, current grade school students say it’s a girl, white, with money, preachy about recycling, nice but uptight, not sought as a friend.

In general, environmentalists have the reputation of being “misanthropic, anti-technology, anti-growth, dogmatic, purist, zealous, exclusive pastoralists.”

Kareiva gave several examples of how that reputation was earned.  In Green rhetoric, everything in nature is described as “fragile!”—rivers, forests, the whole planet.  It’s manifestly untrue.  America’s eastern forest lost two of its most dominant species—the american chestnut and the passenger pigeon—and never faltered.  Bikini Atoll was vaporized in an H-bomb test that boiled the ocean.  When National Geographic sent a research team there recently, they found 25% more coral than was ever there before.  The Deepwater Horizon oil disaster last year caused dramatically less harm to salt marshes and fisheries than expected, apparently because ocean bacteria ate most of the 5 million barrels of oil.

The problem with the fragility illusion is that it encourages a misplaced purism, leaving no room for compromise or negotiation, and it leads to “fortress conservation”—the idea that the only way to protect “fragile” ecosystems is to exclude all people.  In Uganda, when a national park was established to protect biodiversity, 5,000 families were forced out of the area.  After a change in government, those families returned in anger.  To make sure they were never forced out again, they slaughtered all the local wildlife.  In the 1980s, Kareiva was a witness in Seattle for protecting old growth forest (and spotted owls).  At the courtroom loggers carried signs reading: “You care about owls more than my children.”  That jarred him.

When genetically engineered crops (GMOs) came along, environmentalists responded with “knee-jerk anti-technology religiosity,” Kareiva said.  How to feed the world was not a consideration.  Lessening the overwhelming impact of agriculture on natural systems was not a consideration.  Instead, the usual apocalyptic fears were deployed in the usual terms: EVERYTHING’S GOING TO BE DEAD TOMORROW!  When Kareiva was working on protecting salmon, he saw the same kind of language employed in a 1999 New York Times full-page ad about dams in the Snake River: TIMELINE TO EXTINCTION!  He knew it wasn’t true.  Salmon are a weedy species, and the re-engineered dams were letting the fish through.

The Nature Conservancy—where Kareiva is chief scientist working with the organization’s 600 scientists, 4,000 staff, and one million members in 37 countries—promotes a realistic approach to conservation.  Instead of demonizing corporations, they collaborate actively with them.  They’ve decided to do the same with farmers, starting an agriculture initiative within the Conservancy.  For the growing cities they emphasize the economic value of conservation in terms of valuable clean water and air.  They started a program taking inner-city kids out to their field conservation projects not to play but to work on research and restoration.  An astonishing 30% of those kids go on to major in science.

Kareiva sees conservation in this century as a profoundly social, cooperative undertaking that has to include everyone.  New social networking tools can be in the thick of it.  For instance, people could use their smartphones to photograph (and geotag, timestamp, and broadcast) the northernmost occurrence of bird species, and the aggregate data could be graphed in real time, showing the increasing effects of global warming on the natural world.  When everyone makes science like that, everyone owns it.  They’ve invested.

Nothing to add except that we’d all be better off if more NGOs took a practical, science-based approach to environmental problems. Which isn’t to say that we don’t need rabble rousers, too. We most certainly do.

Getting Data From the Ground To the Cloud

Last week, the Google Earth Outreach and Google.org teams, in collaboration with the Global Canopy Programme, hosted partners from non-governmental organizations (NGOs) for the first gathering of the Community Forest Monitoring Working Group. The goals of the working group are to provide a platform for groups engaged in community forest monitoring activities - across continents - to share knowledge and experience. Equally important is for these groups to provide recommendations for the development of tools, methodologies, and common protocols. For example, the Surui tribe in the Brazilian Amazon is using modern technology to implement their community’s Surui Carbon Project.

This effort isn't isolated, as many NGOs and stakeholders support community-based approaches to forest monitoring for their efficiency, cultural relevance, and reliability. Community Forest Monitoring will play a role in the United Nations’ Reducing Emissions from Deforestation and Forest Degradation (REDD+) effort which aims to incentivize developing countries to adopt a low-emission path to development. In thinking about best methods for data collection, this working group is tackling a host of data collection issues including usability, security, accountability, cultural relevance, and scalability.

Google: Energy innovation will pay off but..

The folks at Google, not surprisingly, have enormous faith in the power of technology. So a group of them set out to see what technology breakthroughs in clean energy will mean to the economy, the environment and the typical American household.

They found good and bad news.

The good: Energy innovation could pay off big, benefiting GDP, jobs, energy security and reducing carbon emissions. It’ll even save homeowners money, over time.

Specifically, as Bill Weihl and Charles Baron write on the Google blog, here are the benefits of energy breakthroughs, when compared with a business as usual scenario. In their parentheses is even better news; those numbers reflect what clean energy technology can do when combined with stronger U.S. policy to promote clean energy and discourage the burning of fossil fuels:

• Grow GDP by over $155 billion/year ($244 billion in our Clean Policy scenario)
• Create over 1.1 million new full-time jobs/year (1.9 million with Clean Policy)
• Reduce household energy costs by over $942/year ($995 with Clean Policy)
• Reduce U.S. oil consumption by over 1.1 billion barrels/year
• Reduce U.S. total carbon emissions by 13% in 2030 (21% with Clean Policy)

The not-so-good news is the last bullet: Reducing U.S. carbon emission by 13% by 2030, or even 21% under the more favorable clean policy scenario, won’t do much to reduce the threat of catastrophic climate change. The report also found that by  2050, innovation in the modeled technologies alone reduced CO2 emissions by 55% and by 63% when combined with policy. Those are under best-case assumptions.

But, while there’s lots of disagreement about all this, many reputable scientists, using respected climate models, say the world needs to reduce CO2 emissions by 70 to  80% by 2050, and that the U.S. share should be close to 80%. Here’s the argument, as articulated by the Union of Concerned Scientists.

So, yes, by all means, let’s invest in clean energy technology because it will be good for the economy in the long-term but let’s also be clear-headed about how terribly difficult it is going to be to head off something that looks like a climate catastrophe.  As White House science advisor John Holdren has said, there are fundamentally three ways to deal with the climate threat–mitigate, adapt and suffer–and this report suggests that we (more likely, our children or grandchildren) need to prepare for all three.

The report “highlights how hard the problem is,” Google’s clean energy czar Bill Weihl told me by phone last week. “Coal plants last a long time.”

Yes, they do, and they will even if the costs of clean energy drop sharply. Here’s a chart showing the U.S. power generation mix in 2030 under a variety of scenarios modeled by Google, using McKinsey’s Low Carbon Economics Tool (LCET). Notice that even under the most optimistic scenario, a substantial portion of electricity generation will come from fossil fuels coal (the gray) and natural gas (the dark blue). You can click on the chart o enlarge it:

I asked Weihl what else he learned from the report.

“We were surprised,” he said, “to see the extent to which aggressive innovation combined with modest policy gives you a kind of triple word score benefit—economic gains, job gains and very significant emission reductions.”

He wasn’t trying to say that this is a “free lunch” solution. In the short run, he said, both government and the private sector will need to invest in research and development, and the scaling of newer, cleaner technologies. The government policies embodied in the models either put a price on carbon for the utility industry, which would raise the costs of coal-powered electricity, or they would mandate renewable energy generation for electricity, which would also mean that homeowners and businesses would initially pay more.

“In the short term, there are costs to these policies but they are relatively modest,” Weihl said. “In the longer term, there are significant benefits.”

Washington policymakers are one of the target audiences for the Google study. The company wants to see investment in research.

“If there is one bottom-line recommendation in the short term, for the current budget discussion, it would be, ‘don’t cut R&D,’ ” Weihl told me.

There’s lots more in the report, and Google has made the raw data available on a website that will occupy energy-policy geeks for hours.

Several other findings struck me.

First, reaching tipping points in electric-car battery technology “could be transformative.” Rapid decreases in battery costs and increases in energy density could lead to electric cars and hybrids achieving 90% of new vehicle sales by 90%. This is great news for those who want to reduce America’s depending on oil imported from repressive regimes.

Second, cheap grid-storage creates both significant opportunities and unintended consequences. Grid-scale storage makes it easier to bring large numbers of intermittent, renewable energy sources like solar and wind onto the grid. But, in the short run, if the costs of wind and solar power do not come down, low-cost utility scale storage could actually drive an increase in coal consumption because coal is so cheap.

Third, and this is obvious but worth saying, cheap natural gas could reduce GHG emissions in the short term by replacing coal but it is also likely to slow the deployment of clean energy sources in the long term.

Put simple–and you knew this–getting the change we need, when it comes to energy and climate, isn’t going to be easy.

Empowering Farmers to Achieve Food Security

Appetite for Change discusses one of the most critical challenges of our time – Food Security. In other words, how do we feed a growing and prospering population without going beyond ecological limits and ensuring that farming communities thrive? This multi-faceted challenge is further complicated by the vagaries of nature, market speculation and agriculture’s interconnected to other inputs like energy.

The solutions currently being developed tend to focus on the market and consumers. This can be seen by the thousands of different standards and certification being developed – all with good intention but now in an unhealthy competition and creating confusion for consumers

Webinar: Nuclear power, after Fukushima

I hate to paraphrase a terrible sexist joke but when it comes to nuclear power, I sometimes feel like we can’t live with it and we can’t live without it.

There are lots of reasons to worry about nuclear power. No. 1 may be cost. As I noted last week,  a recent report from the Union of Concerned Scientists tallied up the costs of government support for nuclear power from uranium mining to waste disposal, and it concluded that “subsidies to the nuclear fuel cycle have often exceeded the value of the power produced. This means that buying power on the open market and giving it away for free would have been less costly than subsidizing the construction and opera­tion of nuclear power plants.” Those costs, if anything, will only get higher because of the added scrutiny that the nuclear accident in Japan has brought to the industry.

And yet…without preserving and expanding nuclear power as an energy source, it’s extremely hard for me to see any path towards the low-carbon future that we need. As Robert Bryce, the author of Power Hungry: The Myths of ‘Green’ Energy and the Real Ruels of the Future, once put it, “If you are anti-carbon dioxide and anti-nuclear, you are pro-blackout.”

These issues, and more, will be the topic of a live webcast on Wednesday June 29, 3 PM ET / 12 PM PT, presented by The Energy Collective, a website about energy and climate. I’ll be moderating. Registration is free and available here.

We’ll be talking about the following issues:

• How has the Fukushima crisis impacted public opinion and policy debates about nuclear energy?
• What do countries like Japan and Germany stand to gain or lose by giving up nuclear power generation?
• What is the carbon cost of giving up nuclear plants?
• How will countries that move away from nuclear make up that power elsewhere?
• Has the demise of the nuclear industry been exaggerated? While some countries are taking aggressive steps away from nuclear, some accounts suggest that overall, the number of nuclear plants continues to grow.

We’ll hear from these top experts. Matt and Jesse are  friends and colleagues; trust me when I say they know what they are talking about:

Matthew Wald is a Reporter for the Washington Bureau at The New York Times, covering environmental and energy issues, as well as transportation, aviation and highway safety. Having joined The Times in October 1976 as a news clerk in the newspaper’s Washington bureau, Wald held positions at the New York metropolitan desk, the State Capitol in Hartford, and as a national correspondent, covering a variety of areas including housing and nuclear power, before joining the Washington bureau in September 1996. Wald has covered the Fukushima crisis extensively in the New York Times.

 

Edward Kee is a VP at NERA Economic Consulting and a specialist in the electricity industry with experience in nuclear power, electricity markets, restructuring, regulation, private power, and related issues. For more than 20 years, he has provided testimony as an expert witness on a range of electricity industry issues in state and federal courts, before the Federal Energy Regulatory Commission, and before other legal and regulatory bodies in the US and around the world. Mr. Kee also provides strategic advice to companies and governments on issues related to the nuclear and electricity industries. Mr. Kee holds an MBA from Harvard University and a BS in Systems Engineering from the US Naval Academy.

Jesse Jenkins is Director of Energy and Climate Policy at the Breakthrough Institute, and is one of the country’s leading energy and climate policy analysts and advocates. He is the co-author with Devon Swezey of the “Rising Tigers, Sleeping Giant” report on global clean energy competitiveness strategies, and is currently working on an update to the report. Jesse has written for publications including the San Francisco Chronicle, Baltimore Sun, Yale Environment 360, Grist.org, and HuffingtonPost.com, and his published works on energy policy have been cited by many more. He is founder and chief editor of WattHead – Energy News and Commentary and a featured writer at the Energy Collective.

I invite you to join us by signing up here.

Biochar: Too good to be true?

Would you like to curb or even reverse global warming? Help feed the world? Generate renewable energy?

Biochar is the answer, say its most fervent advocates.

If only life were so simple.

Biochar, alas, isn’t ready yet to be a meaningful solution to the climate crisis, or a way to enhance agricultural productivity at scale. But it’s an intriguing substance that has been around for thousands of years, and the production of biochar may prove to be one of the  technologies that governments and business deploy to deal with the threat of climate change. As, potentially, a carbon negative technology, it’s worth a look.

Biochar, for those of you who haven’t heard of it, is a charcoal-like substance that is created today by pyrolysis of biomass. In layman’s terms, biochar is made by taking organic material, like agricultural waste, heating it to very high temperatures, and allowing it to decompose in the absence of oxygen.

To learn about biochar, I met recently in Boulder, Colorado, with Jonah Levine, who is a co-owner of his own small biochar business and, until recently, was an executive with a startup called Biochar Engineering.   Jonah, who is 30 and lives near Boulder, got involved with biochar when a friend asked him to organize a conference on the technology in 2009 at the University of Colorado. A passionate environmentalist, he had previously worked as a wildlife biologist and as an engineer advising utilities on how to incorporate renewable energy into the grid.

Now he’s bullish on biochar.

“I feel like like I’m watching the beginning of an industry,” Jonah says. “Within a  decade, I feel this will be a functional business space.”

He told me that the history of biochar can be traced back to Brazil, where dark soils in the Amazon region are known as “Terra Preta.” No one can be certain about their origin, but some scientists believe they were created as long as 4,500 years ago, and that they helped support a complex, farm-based civilization in the Amazon, despite the region’s poor soil.

Johannes Lehmann, a leading biochar researcher at Cornell University, writes:

Terra preta research inspired the development of a revolutionary technology that can have tremendous impact on rural livelihoods as well as carbon sequestration. It builds on the application of stable organic matter in the form of bio-char (biomass-derived black carbon or charcoal) in conjunction with nutrient additions. This bio-char is very stable, provides and retains nutrients for millenia, as seen in Terra Preta.

As Jonah explained it to me, organic matter—crop waste, wood chips or even sewage—can be turned into biochar by heating the materials to between 300 and 900 degrees C. This generates a synthetic gas that can be converted into liquid fuels, used for  heating or generating electricity, as well as the biochar, which is then worked into soil to improve farm productivity. (The yield of products from pyrolysis varies with the temperature; lower temperatures produce more char, higher temperatures make more syngas.) Proponents claim that the biochar then sequesters carbon in the soil for hundreds to thousands of years—carbon that would otherwise be released into the air if the organic matter were burned or allowed to decompose.

Consider, for example, the vast swaths of pine trees being killed by mountain pine beetles in the Rocky Mountains. Some, I’m told, are being shipped to Europe to be burned as fuel in coal plants. Others are allowed to decompose, emitting CO2. If, instead, the dead trees were turned into biochar through pyrolysis, and the char was then used in agriculture, substantial amounts of CO2 emissions could be avoided even as renewable energy was created.

The business model for biochar is simple: Buy cheap organic waste, process it and then sell energy and biochar to create two streams of revenue. “If you have $150,000 and 90 days, I can sell you a piece of equipment that will make 50 to 100 pounds of char an hour,” Jonah told me. He says the process will also release about 2 million BTU per hour of producer gas.  “We need all the revenue streams we can get, including soil product value, energy value, carbon value, waste mitigation value and more,” he adds. The process, he assures me, requires far less energy than it generates, but the technology for making char isn’t well-developed yet.

James Lovelock, the British scientist who created the Gaia hypothesis, and prominent climate scientist James Hansen are biochar advocates. More than 500 academic papers have been written about biochar, Jonah told me, many of them focusing on its impact on agricultural yields. Research is going on all over the world, including at the USDA’s Agricultural Research Service and at an experimental farm in North Carolina. Here’s a global discussion list with lots of information on biochar research; another good source of information is the International Biochar Initiative, a Washington, D.C.-based nonprofit.

Various companies in Europe, Australia and the U.S. either sell biochar or biochar production units; all are small scale. One of the most intriguing is a startup based in Camarillo, California, called Cool Planet Biofuels that is developing “negative carbon fuels” with biochar as a byproduct. The company website says:

Imagine driving high performance cars and large family safe SUV’s while actually reversing global warming, and without using any foreign oil….the more Negative Carbon “N100″ fuel you use, the more carbon you permanently remove from the atmosphere.

It sounds too good to be true, but investors in Cool Planet Biofuels include Google Ventures, General Electric, NRG Energy and ConocoPhillips.

If they think biochar is worth their attention, it’s probably time for those of us concerned about the climate crisis to take it seriously, too.

[Biochar photo credit: Jonah Levine]

Trust Marks 2.0

I write this on the plane back to London from a wonderful (if logistically bumpy – thank you State Department and friends for getting me home!) trip to the States, where we kicked off our Signed, Sealed… Delivered? research by running sessions at Sustainable Brands 2011 in Monterey, California (hosted by KoAnn Skyrzniarz and team at Sustainable Life Media), Starbucks (hosted by Ben Packard and Colleen Chapman of the Starbucks global responsibility team) and Method (hosted by director of sustainability Drummond Lawson – see my colleague Mark Lee’s blog for a recap).

With the wonderfully diverse set of B2B and B2C (food & beverage, retail, paper, household & personal care, biotech, industrial materials and carpet) and functional perspectives represented (from procurement to brand & marketing), our goal was to explore the following questions

Do we need energy subsidies?

What would happen if the government eliminated all subsidies for the energy industry?

It’s a radical notion, but an overwhelming vote by the Senate last week to eliminate billions of dollars in support for the U.S. ethanol industry sent a strong message that the era of big taxpayer support for biofuels is ending,. Reuters reported.

Given that about $1.3 trillion of this year’s $3.5 billion federal budget is being borrowed–and must ultimately be paid by future taxpayers–Congress may take a hard look at the vast array of tax breaks, tax credits, loan guarantees and liability protections that flow to virtually every segment of the energy industry.

As well it should.

Energy industry leaders howl every time anyone wants to take any of their subsidies away. But as Adam Smith once wrote (and I love this quote)…

The proposal of any new law or regulation which comes from [businessmen], ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.

Figuring just how much energy subsidies are costing taxpayers, and who’s getting them, isn’t easy. Some subsidies are obvious. Buyers of electric cars–even a $100,000 Tesla—get a $7,500 tax credit.

Others are less visible. In a recent report, the Union of Concerned Scientists tallied up the costs of government support for nuclear power from uranium mining to waste disposal concluded that

subsidies to the nuclear fuel cycle have often exceeded the value of the power produced. This means that buying power on the open market and giving it away for free would have been less costly than subsidizing the construction and opera­tion of nuclear power plants.

Shocking, if true.

Along with nuclear power, well-established energy sources like coal and natural gas enjoy subsidies, as this table shows. I came across it in a report from the Hamilton Project, called A Strategy for America’s Energy Future: Illuminating Energy’s Full Costs.

Do some simple long division, and you see that refined coal – which apparently means coal-based synthetic fuels – wind, solar and nuclear power get very generous subsidies per unit of energy generation. For every per billion KWH of generation, coal gets $30 million in subsidies, wind gets $23 million, solar gets $14 million and nuclear gets $1.5 million.

It would be interesting to see another column on the chart showing tons of CO2 displaced by the fuel–assuming that’s a key goal of the subsidy–to see what, exactly, we are getting for our tax expenditures.

If the goal is to reduce CO2, should we be spending on  wind or solar or nuclear? Which holds the greatest future promise? What about geothermal? Or wave power? Will electric cars decarbonize transportation for effectively than advanced biofuels? Of course no one knows the answer to those questions, which is why industry-specific subsidies are potentially so wasteful. We’re surely betting on some of the wrong horses.

By the way, some people think the EIA’s numbers are low. According to this article in the Christian Science Monitor, Doug Koplow of the energy-consulting firm Earth Track in Cambridge, Mass., estimates that the the US spent between $49 billion and $100 billion on energy subsidies in 2007, with oil and gas getting the biggest share, followed by nuclear and coal.

Let me be clear about something:  I’m not arguing here that we should deregulate energy markets. That’s because the prices we now pay energy are distorted not only by subsidies, but even more by the environmental and health costs of energy production and use.

Put simply, the price of gas at the pump or coal-generated electricity on our utility bills does not capture the full cost of that energy. Nor does the price of nuclear, solar or wind.

Here’s how the Hamilton Project report, by Michael Greenstone and Adam Looney, puts it:

Almost all energy sources have significant social costs that are not reflected in their prices but nonetheless have a real impact on well-being—not just in the United States, but globally. These costs include the economic and geopolitical consequences of reliance on oil, the pollution and changes in climate patterns that result from burning high-carbon fuels, the health effects of pollutants, and the risk of major accidents.

Pricing energy sources—carbon and oil in particular—to more fully reflect their social costs would give firms and consumers a strong incentive to change their energy consumption patterns and make better-informed decisions. Pricing also would give firms an incentive to research and invest in low-carbon technology and alternative fuels, helping to pave the way for a low-carbon future.

Of course, this is easier said than done. The very modest effort to price the cost of carbon emissions into energy embodied by the Waxman-Markey climate legislation failed in Congress.  A revenue-neutral carbon tax would be a simpler approach; a revenue-raising carbon tax might even emerge as Congress tries to deal with the debt.

Indeed, if Congress eliminated all subsidies and taxed carbon emissions instead, it would put the country on a sounder fiscal footing and on a path to reducing CO2 emissions.

One thing is clear: the complex and opaque industry-specific subsidies we now have are inefficient and wasteful.

They are more likely to be about the political clout of the oil, coal, nuclear, wind, solar or ethanol industries than about the actual benefits–if any–that they deliver.

[Photo credit: Dana Robinson on flickr]

Sharpening the sustainability lexicon in FT Special Report on Sustainable Business

A piece in the FT today – part of its Special Report on Sustainable Business – delves into how the language of sustainability, long a sticking point for corporations just getting started in this space, is now growing more sophisticated across a variety of industries. SustainAbility Executive Director Mark Lee is quoted on precisely why that is, namely that many companies have now been at it long enough to have developed a vocabulary more specific to their business and its key impacts.

From the article:

For some industries, the language is becoming far more specific. In the food sector, for example, companies have moved from talking about “CSR” to notions such as “traceability”, “ethical sourcing” and “food security”.

Mining companies, which have been tackling social and environmental risks for longer than many, tend to talk less of broad concepts such as “sustainability” or “corporate re­sponsibility” than of addressing social risks such as local protests, ethical obstacles such as bribery and corruption, or environmental threats such as toxic waste and resource degradation.

“That’s a product of long practice and a reflection of the level of sophistication inside these organisations that they know what each of those things mean,” says Mark Lee, executive director of SustainAbility, a consultancy.

Mr Lee also cites the example of Starbucks, the US coffee chain, which focuses on areas such as ethical sourcing, food ingredients and nutrition for consumers. “They now feel they’ve defined what being responsible means for them,” he says. “And they’ve been at it for longer. They’re two decades of finding their way into it and they now have a language that works for them.”

Read the full article here, and read more of SustainAbility’s thinking on this topic on our blog – in particular, see Michael Sadowski’s recent posts on the ongoing debate over sustainability versus CSV.

Appetite for Change, evolution of green marketing and more in latest SustainAbility newsletter

Our latest newsletter covers the launch of our new report, Appetite for Change, as well as updates from Engaging Stakeholders, survey results on the future of energy, the evolution of green marketing, and more on the debate over sustainability versus CSV. Click here to view.

Also see other past updates here:

• May 2011: Five early trends for 2011, keys to leadership and more
• April 2011: Keys to transformation, Engaging Stakeholders and more
• March 2011: Eco-labels, views on economic recovery & more
• February 2011: Uncovering ratings best practices
• January 2011: 2011 a year of absolutes?
• December 2010: Changing Minds, COP 16 and more
• October 2010: Road to Credibility 2010, Biodiversity and more
• SustainAbility launches Rate the Raters, Phase Two
• September 2010: Latest news from SustainAbility

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Appetite for Change

In just the last few weeks, one of the worst E. coli outbreaks in history has killed 37 people and made more than 2,600 ill, academics concluded that climate change will have more negative consequences for agriculture than expected, and the UN’s Rome-based Food and Agriculture Organization released a guide warning “world farming needs a ‘major shift’ to more sustainable practices as intensive crop production since the 1960s has degraded soils, depleted ground water and caused pest outbreaks.”

Industry and food system experts interviewed for SustainAbility’s latest report, Appetite for Change, read trends such as these and conclude that the food industry is failing

Appetite for Change Maps Path to a Sustainable Food System

June 23, 2011, London, NYC – A new report from SustainAbility reveals that experts from leading food, technology and finance companies agree that the food sector is failing. Published today, Appetite for Change goes on to set out a vision for what needs to happen next.

“We have to realize that the basic thinking of economies of scale has to go; [we have] to develop solutions that will impact not only one company but also consumers and society as a whole,” says Jose Lopez, Executive VP of Operations at Nestlé.

Signs of failure in the current food system are increasingly difficult to ignore:

• Recent E. coli outbreaks in Germany highlight safety and security lapses in the supply chain;
• 925 million people are malnourished while another billion are chronically obese; and
• Over half of the world’s farmers suffer chronic hunger.

“We still have a long way to go,” says Patrick Medley from IBM’s Smarter Planet, Smarter Food program. “The food industry currently is operating at a 6 out of 10. The challenge is how we move upwards from a 6 … I don’t think there’s enough going on that’s fast enough.”

Appetite for Change uncovers a disturbing disconnect in the way corporate and non-corporate actors are tackling food security issues. The biggest source of innovation is occurring outside the corporate sector, with multilateral institutions like the UN calling for a radically new ecological approach to agriculture. Conversely the energy of the food companies is focused on squeezing more out of current approaches, which are inherently unsustainable.

Industry leaders now acknowledge that it is incumbent upon them to find ways to be part of a holistic solution – both for market advantage and to meet societal goals – but say that the path forward is not clear. By way of response, Appetite for Change sets out a new agenda to help the food sector and its partners chart a collaborative course toward a sustainable food system.

For further insight and examples of organisations that are pursuing creative approaches to making the food system more sustainable, download the full report at sustainability.com().

Appetite for Change

The global food system is under scrutiny for environmental impacts including habitat degradation, greenhouse gas emissions and freshwater use. Half the world’s farmers go hungry, while around a billion people are clinically obese. Demand for food is growing and yields are falling. Radical and rapid systemic change is required.

Appetite for Change was conceived to identify what change is needed, and the role the corporate sector must play in making it happen.

We interviewed a wide range of corporate leaders for this research, and many acknowledged that it is incumbent upon them to find ways to be part of a holistic solution. But they told us that the path forward is not clear. In response, Appetite for Change seeks to energize the debate by proposing a new agenda, to help food companies and non-corporate actors chart a collaborative course toward a sustainable food system.

Watch the summary video or download the full report now. Please join the debate by commenting here on what you believe needs to happen next.

 
To learn more about SustainAbility’s food and agriculture insight, or to engage us to consider how your company might lead and/or respond to food sector transformation, contact biringer@sustainability.com.

Navigating and Reporting ESG Data

Compliance Week reports on growing investor interest and challenges companies face in responding to ESG ratings, and on how SustainAbility’s Rate the Raters research project is attempting to create more clarity and quality in this fast-evolving field. SustainAbility Vice President and Rate the Raters research director Michael Sadowski is quoted on what Rate the Raters has uncovered so far, and on strategies for companies to recognize and perform well in the best ratings.

From the article:

SustainAbility has been collaborating with companies and raters to discuss what useful, high-quality ratings would look like. The group is also exploring “big sticky questions,” Sadowski said, such as whether raters can also be consultants (a possible conflict of interest), and how raters can be more transparent without giving away commercially important information.

Read the full article at Compliance Week (subscription required), and learn more by downloading Rate the Raters phases one, two and three.

Clean As a Whistle

San Francisco is a trend-setting kind of place. Politically, technologically, environmentally, gastronomically, oenologically and otherwise, it’s a city that’s had a few moments.

A relatively recent addition to the Bay Area avant-garde is Method, a line of home care products launched in 2000. The products are colorful, effective and non-toxic, so you don’t need to worry about having them under your sink, while Method’s package design comes as close as possible to making soaps sexy – you actually want them on display