'Don’t delay, we need you.'
Q: Some people are saying that the Goldman Sachs and other studies on the value of corporate sustainability point to a correlation, not causation. Is there a causal relationship? –Zach
Lovins: You are correct that no one study can prove causation. But our report Sustainability Pays profiles 40 such studies. At what point will you believe that there there’s a cause? Companies are coming to believe it. A recent report, Power Forward, found that over half of the Fortune and Global 100 companies, including AT&T, DuPont, General Motors, Google, HP, Sprint, and Walmart have set carbon reduction goals. More importantly, companies are finding that cutting their emissions is a route to enhanced profitability. The companies in the Carbon Disclosure Project’s Carbon Disclosure and Performance Leadership indices had nearly twice the average total return compared to Fortune’s Global 500 from 2005 – 2011. Around two-thirds of emissions reduction projects reported by companies to CDP this year exceeded a 30 percent return on investment, and 88 percent of projects exceed firm-level return on invested capital.
Q: Will we ever see the business community pushing for climate change legislation? President Obama just announced that climate change will be one of his top priorities in his second term. What are the top three things he could do, from your Presidential Climate Action Report or otherwise, to encourage sustainability in the business community? –Zach
Lovins: I am very hopeful that Mr. Obama will finally fulfill his campaign promises…and put a priority on climate. But time is very short. Dr. Fatih Birol, the Chief Economist of the International Energy Agency, has stated that unless we put in place climate protection policies by 2017, we will lose the opportunity to limit global warming to two degrees Celsius.
He should call a national summit to make such findings more public. The iMatter Campaign – young people working to raise awareness that unchecked global warming means they do not have a future – is calling for Mr. Obama to convene such a national summit on climate change in the first 100 days of his new term. I’m helping them involve business leaders who understand that cutting emissions is just better business.
There are two national policies that would be particularly helpful: restoring Property Assessed Clean Energy financing (PACE) and instituting a national Clean Local Energy Accessible Now (CLEAN) contract program.
PACE…allows local governments to put together a pool of money to loan citizens and small businesses to implement energy efficiency in their homes and offices, and to install local, renewable energy. It is one of the biggest job generators that we have.
How do I know that? Because it’s been done. In 2009, Sonoma County, California put together such a fund. In the first nine months of the program — right at the peak of the recession — construction trades in the County went up 8.4 percent. In neighboring Napa County, which did not have this financing program, jobs went down three percent, as they did for the Bay Area as a whole.
PACE was set to roll out across the country; communities everywhere were setting up such financing programs. And then those paragons of financial rectitude, Fannie Mae and Freddy Mac — both bankrupt — said they would redline any jurisdiction that implemented PACE financing. So far, nobody has slapped them down. A Congressional effort in 2012 sought to forbid Fannie and Freddie from interfering. This would be an excellent thing for the new Congress to pass. Many jurisdictions are going ahead anyway, clear that this program delivers real jobs and greater security in their neighborhoods. A number of states have passed legislation authorizing PACE financing.
The second policy, Clean Local Energy Accessible Now (CLEAN), is a variant of the legislation enabling Germany to transition from dirty energy to their goal of being 100 percent powered by renewable sources, which they should achieve before 2050. The new book Clean Break describes this amazing transformation and the policy tool driving it. Germany is rejecting coal and nuclear and investing in renewable energy. This clean energy economy is driving their prosperity, leaving them the only country in Europe in a position to bail out the southern European nations.
In 2011, cold, cloudy Germany installed 28 times as much solar as California did, despite the fact that California gets 70 percent more sunlight. The German CLEAN contract, called a feed-in tariff, mandates that utilities pay anyone who generates green electricity a fair price for what is produced for 20 years. Germans are installing renewable energy everywhere, much of it owned by the local communities, enhancing their prosperity. Wildpoldsried, Germany generates 321 percent more energy than the town uses. They sell the excess, earning $5.7 million a year for the community. An increasing number of towns in German are becoming 100 percent renewably powered by solar, wind, and biofuels.
Deutsche Bank studied the economics of the German feed-in-tariff experience. They found that in the first five years the program delivered 480,000 new jobs. It did raise electricity rates: two to three Euros a month, $50 a year for a total of 8.6 billion Euro more a year. That may sound like a lot, but Deutsche Bank found that had the Germans done nothing—just kept burning coal, they would have paid 9.4 billion Euro more. Coal costs are going up about 10 percent a year…We ought to try it here.
There will come a realization in which business and government join together to defeat this crisis. I’d like to see a federal effort to unleash the green economy, perhaps a modern-day variant of the old Atoms for Peace program in which the US and other governments pledged to deliver nuclear power to any country that pledged not to use the technology to build bombs. What if the US, Germany, China, India, maybe Brazil—the countries now leading in solar manufacturing—pledged to meet the energy needs of the rest of the world through renewable energy? The panels, wind turbines and such would be manufactured in our countries, creating jobs at home. Use the billions now being spent to make the fossil technologies look cheaper than they really are; use the World Bank’s coal expenditures. We’d meet our various development pledges to emerging nations, and by getting the volume production of these technologies up, we’d drop the prices so that the technologies would then sweep the global economy.
Oh, and we’d solve the climate crisis in a way that would lift the world’s economy into prosperity.
As President Kennedy said of poverty, we created these problems—we can solve them.
Photo courtesy of flickr user M. Christian.