by Hunter Lovins and Boyd Cohen
Do you believe in global warming (or as it is perhaps more accurately described, global weirding)?
Polls say that many otherwise literate people now question the science that human caused emissions of carbon dioxide and other greenhouse gases are changing the climate in unappealing ways. The millions of dollars spent by fossil-fueled funders of climate denial are working: a growing number of skeptics have been seduced to believe that climate change is a hoax.
Frankly, the earth doesn’t care what you think, but rather than waste time arguing the science, let’s try another approach: assume the deniers are right. Don’t go to Vegas on the odds of this being true, but in a way it doesn’t matter: if all that you are is a profit-maximizing capitalist, you’ll do exactly what you’d do it you were scared to death about the climate crisis. This is the message of Climate Capitalism, a new book that I wrote with professor and carbon entrepreneur Dr. Boyd Cohen. The book shows how businesses and communities are reinventing themselves for the twenty-first century, unleashing a new energy economy, creating millions of new, local jobs, and reclaiming leadership in technological innovation.
Which all but makes the science irrelevant. If we know how to solve this problem at a profit, let’s do it. If it turns out that global warming is a hoax, we’ll have made a lot of money. If it turns out that it’s real, we’ll have made a lot of money. Oh, and we’ll be on our way to solving what essentially all reputable scientists now recognize is one of the most serious threats to life as we know it on earth. Either way, let’s go.
Want to increase earnings, maximize productivity, drive job creation, strengthen our economy and enhance security? You’ll do just what activists who like to spoil dinner parties linking Russian fires and Pakistani floods to 2010 being the hottest year on record (tied actually) are calling for. Only better, because you’ll invest real money.
Don’t believe me. That’s the conclusion of those wild-eyed environmentalists at Goldman Sachs, and more than 20 management consulting houses who have shown that the companies who are cutting energy waste and implementing more sustainable practices have, take your pick, 25% higher stock value, the fastest growing stock value, are well protected from value erosion even in a down economy, and have market capitalization averaging $650 million more than their less sustainable competitors. The business case for a corporate commitment to protect the climate is powerful and proven, and smart companies are making money on it.
Climate Capitalism, sequel to the game changing Natural Capitalism of a decade before offers nine chapters celebrating investors, entrepreneurs, corporations large and small, and communities who are making money by capturing energy efficiency savings, implementing renewable energy, investing in green buildings, transforming the vehicle and fuel industries, shifting to more sustainable agriculture, creating carbon markets, and bringing adaptation products to market. “Forget about climate change,” says Ben Verwaayan, CEO of Alcatel Lucent in the recent Wall Street Journal article, “The financial impact of doing nothing is much too high. Going green,” he says, “Is a financial decision.” (Chapter 10 tackles transforming the economy, but that’s another topic.)
A decade ago, DuPont found that every ton of carbon it no longer emitted its shareholders received $6. By 2007, DuPont’s waste-cutting had reduced its greenhouse gas footprint by almost 80%, and in the process saved the company $2.2 billion a year. That turned out to be the same as DuPont’s profitability. Similarly, Diversey, a manufacturer of industrial cleaning products found that every dollar it invested in climate protection measures returned $2 in savings. In 2008, Walmart, one of only two companies in the Dow Jones Industrial Average whose stock price rose almost 20% during the recession, saved $11 billion globally by cutting packaging by just 5%. This kept waste from landfill what would have produced methane, an even more potent greenhouse gas than carbon dioxide.
Yet enormous savings remain to be captured. Most of the world’s largest companies than and thousands of smaller ones report their carbon footprint to the Carbon Disclosure Project (in part because the Walmart Sustainability Scorecard asks them to.) CDP recently calculated that an average mid-sized company has $30 to 40 million of uncaptured energy efficiency opportunities with paybacks of under two years. Looking for money to jumpstart the economy? Gary Hirshberg, CEO of Stonyfield Farms states it succinctly: “Energy efficiency is my source of venture capital.”
One company with whom Natural Capitalism Solutions worked found that simply turning off computers when no one was sitting in front of them would save the company $700,000 the first year. Ford Motor Company did this, saving $1 million in 2010. Similarly the NCS team helped a company whose 7 million square foot warehouse had 500 watt light bulbs shining on the tops of its floor to ceiling stacks of boxes find a switch – and save $650,000. Across America, companies waste $5 to $10 billion a year leaving unnecessary lights on, even though eliminating such waste is free money. Systemic failure by US companies to adopt low cost efficiency measures are why American businesses use twice as much energy to produce a unit of Gross National Product (GNP) as our competitors in Europe and Asia, who abide by the Kyoto (Climate) Protocol.
Main Street benefits from efficiency, too. In Florida, a RE/MAX real estate office implemented a weatherization program, caulking windows and weather-stripping doors, saving $7,900 the first year. Add this up throughout a community: every megawatt of saved energy creates over $2 million in increased economic output, over half a million dollars in increased wages and ten times the number of jobs you would get by investing in a big coal plant to generate that much energy.
Climate Capitalism is about generating power as well, and in the process creating jobs and prosperity. In 2007, the US renewable energy and energy efficiency industries generated over $1 trillion in sales, substantially more than the 2007 sales of the three largest US corporations combined — Walmart, ExxonMobil and General Motors ($905 billion), and created over 9 million jobs. But America is losing the innovation competitiveness race to Germany, where the renewable energy industry now adds more new jobs than all other German industries combined. Why is it that cold, cloudy Germany, with the skies of Northern Alaska, has more than 20 times the installed solar capacity of California, which has 70% more solar radiation? Because the Germans implemented what is called a feed-in-tariff that gives capitalists a predictable investment horizon. In its first four years, this program gave Germany over 300,000 new, high quality jobs and cut the cost of solar panels to the point that they will soon compete with coal-fired electricity without subsidies. Such programs will enable Germany to be 100% renewably powered by 2050. Critics charged that it raised the costs of electricity. True. Germans now pay €8.6 billion more than they used to. However, a recent study by Deutsche Bank pointed out that without the renewables program, Germans would have paid €9.4 billion in higher costs to buy and burn coal.
Globally renewables are big business. A 2010 report by HSBC bank, “Sizing the Climate Economy,” predicted that annual capital investment in the green economy will grow from an annualized $460 billion in 2010 to at least $1.5 trillion. The bank observed that mounting pressure on land, water and energy as a result of growth in emerging economies and world population will add momentum towards a more efficient “climate economy,” and expected that the green economy would more likely triple to $2.2 trillion, implying global annual market growth of 7-11 percent from 2009-2020.
China is committed to be the world’s green superpower. In 2009 it surpassed the US as the world’s largest wind-power generator. In 2010 China invested another $14.6 billion to expand wind power generation. The world’s biggest emitter of greenhouse gasses, China committed to invest an additional $220 billion in renewable energy by 2012, increasing its wind power capacity to 100 GW by 2020, eight times the current level. Investing heavily in solar as well, China reportedly committed to spend over a half trillion dollars to promote clean-energy industries by 2020.
Clean Edge reports that the Chinese, with over 150 million people still living in extreme poverty are planning to achieve at least 11 percent of their energy from non-fossil fuels by 2015, bringing on 70 GW of new wind capacity, 5 GW of new solar capacity, and investing $76.7 billion in transmission lines to move renewable energy to the populations needing it.
The UN’s Intergovernmental Panel on Climate Change stated in its May 2011 report that the world could power 80% of its energy needs with renewable energy by 2050 if we implement sensible policies like eliminating the $550 billion spent each year to make the fossil forms of energy look cheaper than they really are. It is also the best and fastest way to lift the over 2 billion people struggling in poverty to prosperity. Doing this, the report concluded, would cost less than one percent of world GDP, far less that the perhaps 20% it will cost to deal with an unmitigated climate crisis.
There are other crises as well. How high must oil prices go before we innovate the future of transportation? Chapters five and six of Climate Capitalism make clear that there are better ways of moving us and our stuff around than driving inefficient, single-occupancy, oil-addicted cars.
Or would we rather respond to crises. The last time that oil prices exceeded $100 a barrel the economy went off a cliff six months later. Global oil prices already hit $120 with the Libyan crisis, though fell back to around $100 as the Saudi peddlers realized that another protracted price spike would drive the sorts of infrastructural changes that might endanger their market forever. But even the Saudis may not be able to keep America under their thumb forever. The International Energy Agency now admits that the world hit peak oil in 2006. Classified diplomatic cables released by Wiki Leaks demonstrated that the Saudis have been cooking their books, claiming to have 40% more oil reserves than they likely have.
These two words define our age: climate and capitalism. The meltdown of both imperils our prosperity, but the fight about them is stalling solutions to both. So let’s combine them: Climate Capitalism is the way to make a lot of money, and a difference unimaginable by yesterday’s activists.
For all the references and hundreds more examples get the book, Climate Capitalism, now on the http://www.Amazon.com top 10 policy books list.
Article by L. Hunter Lovins, President of Natural Capitalism Solutions, and co-author of Climate Capitalism. A professor of sustainable business at Bainbridge Graduate Institute, she was named by Newsweek as “the green business icon.” You can reach her athttp://www.natcapsolutions.org
