Archive for June, 2008

Congressional Debate on Climate Change Begins, and Ends (for now anyway)

Saturday, June 21st, 2008

After years of anticipation, climate change legistlation finally made it to the floor of the US Senate in June, in the form of the Leiberman-Warner Climate Security Act.  The fact that the bill made it this far is a positive step.  Unfortunately the bill met an untimely demise, and was quickly pulled from debate. 

One of the common concerns raised is that climate change legistlation will cost business and consumers too much, and make US businesses less competitive in the world economy if China and India do not put a price on carbon.  Continued climate change action on the international stage will need to include these important developing nations or it will prove ineffective.

The final legistlation may or may not be based on the current Leiberman-Warner bill, but it is likely to use a cap and trade form to control emissions, putting a price on greenhouse gas emissions.  In a cap and trade system, overall greenhouse-gas emissions are limited, and members of key industries are each given allowances for emissions.  If they exceed their allotment, then they can buy credits from others who cut their emissions more through carbon markets.  One piece that is less clear still is how the initial allowances will be distributed.  The most likely choices are that they will either be handed out to polluters, or auctioned to the highest bidders.  Those representing states and industries that are heavily invested in coal or other important greenhouse gas emitters favor handing out allowances, saying that an auction would impose an unfair economic burden on them.  Those representing environmental interests favor an auction, eager for the cost of carbon to be felt, driving rapid reductions in greenhouse gas emissions.

Is the debate is over?  Hardly.  For now, the states will continue to move forward with their plans and most experts are betting the US Government will enact climate change legislation fairly soon, in the next 1-2 years.  Probably after the upcoming elections.  Candidates of both parties profess a belief in the importance of action on climate change.  When it does, carbon will become an important commodity, with hundreds of billions of dollars moving through carbon markets to favor clean and price effective solutions for climate change.  Something to look forward to.

The Greenest Business Travel is No Travel

Thursday, June 12th, 2008

Business travel costs a lot in more ways than one.  It costs businesses money, thousands of dollars a trip for business class airfare, and with many companies squeezed by the slowing economy and rising airfares, travel budgets are getting the squeeze as well.

The reduction in business travel may be another problem for the travel industry, but an opportunity for those who can provide alternatives.  In addition to costing money, business travel can also be hard on the environment, contributing to climate change.  Providing better ways to collaborate, other than flying to business meetings and conferences, provides an opportunity for businesses to save time and money and to reduce their carbon footprint at the same time.

Teleconferencing solutions are one green alternative.  Newer systems are far better than just a few years ago, and can range from simple do-it-yourself meetings via webcams, to sophisticated solutions such as the Telepresence system from Nortel:

Others are developing virtual worlds as the solution for collaboration without travel, such as the Second Life virtual world.  While virtual worlds may sound a little “out there” serious businesses are using them to improve collaboration of workers spread across the globe, allowing more routine and perhaps even better collaboration than infrequent business meetings can allow:

Conferences are another big opportunity.  The Virtual Energy Forum was held June 10-11, strictly over the internet, attracting top name participants from government and industry to discuss developments in energy.  The potential climate impact of holding such an event on-line, with thousands of people staying home, is significant.

The Ongoing Food Knowledge Gap

Thursday, June 12th, 2008

Consumers often feel a great deal of anxiety about their food, uncertain what is in it or on it, as described in 75 Green Businesses.  Continued food safety problems suggest there is indeed some reason to be concerned, including the most recent outbreak of salmonella linked to tomatoes, with more than 160 people affected as of June 12.  This is not the first time.  In looking for information, I found another incident involving serious illness from salmonella in tomatoes from 1990.  Still, the FDA remains woefully understaffed, unable to effectively screen the vast amounts of food moving through the US to market.

What is the solution?  More effective government testing of our food is one answer.  The administration has asked for more money for food safety testing by the FDA, which would help if approved.  Meanwhile, there still seems to be an ongoing opportunity for consumers to take matters into their own hands to see for themselves what is in the food they are eating.  Knowledge is power, and if food testing can be performed cheaply enough, and provide reliable protection, then providing kits for consumers to test food themselves may continue to be an opportunity with lots of room to grow.

Green Clothes Going Carbon Neutral

Thursday, June 12th, 2008

A new eco-friendly factory in Sri Lanka owned by MAS Holdings is producing lingerie with a low carbon footprint for British retailer Marks & Spencer, as reported in the Economist  (May 31 2008).  Aiming for carbon neutrality, the factory uses simple efficiency measures like providing enough windows for natural lighting and using evaporative cooling rather than air conditioning.

The move by Marks & Spencer is part of a broader move to reduce the carbon footprint of products, examining the whole supply chain as part of the process.  Although some critics still suggest that the cost of reducing carbon emissions will cripple industry, Marks & Spencer has already found that their investments in going carbon neutral will pay for themselves in the current year, much more quickly than was expected. 

Manufacturing is only one part of the supply chain though.  The carbon footprint of a company also comes from the transportation of products, packaging, and retail space.  To help companies find the best way to reduce their overall carbon footprint, IBM has introduced the Carbon Tradeoff Modeler, balancing the goal of reducing carbon with other corporate goals involved in running the business.

Green Cars - Fuel Cell Cars

Wednesday, June 11th, 2008

Fuel cell cars have been in development for a long time.  This year, in the summer of 2008, Honda is starting to lease a small number of fuel cell cars, producing 200 of the FCX Clarity to lease in Japan and Southern California (see  Does this mean the wait to produce fuel cell cars is over, and they are ready to deliver on the promise of green cars producing only water for exhaust?  One issue is still the price.  Honda is charging $600 a month for the least, but it is estimated that Honda is spending far more on these cars than they are being leased for, hundreds of thousands of dollars per car according to Honda’s president, Takeo Fukui (NY Times News Service, June 17 2008).  Fukui also says they are aiming to get this price down to under $100,000 per car in another ten years.  Still sounds fairly steep.  Another big issue is the infrastructure for hydrogen fueling.  One option is producing hydrogen at home from natural gas.  Another is the construction of fueling stations, a move supported by groups like the California Fuel Cell Partnership involving both industry and government (

I would love for fuel cell cars to be ready to go, but despite these early tests they are not there yet.  For them to make a real difference, they have be commercially competitive, and they aren’t still.

Electric vehicles seem to have something of a lead in the race to build green cars at the moment, but there are a great many committed groups still working on fuel cell cars.  Electric cars will make it first, but fuel cells are likely to provide a competitive medium to long-term green car solution.

Green Water - Water Scarcity Drives Innovation

Tuesday, June 10th, 2008

They say that necessity is the mother of invention, and this is true of water supplies as in other areas.  A drought was formally declared in California (June 5, 2008) by Governor Schwarzenegger, triggering conservation measures and assistance for those in agriculture affected by the drought, but stopping short of rationing.  For now at least.  The problem with water supplies is not just about this month or this year though, but long term trends, with declining water supplies exacerbated by continued growth in arid regions like the US Southwest.  Increasing the cost of water is inevitable, according to some.  The San Diego Union Tribune reported that rate hikes are already underway in some areas, and more are likely in the future. 

At the Cleantech Investment Briefing in San Diego (June 5 2008), Peter Hsiao of the global law firm Morrison & Foerster ( discussed the future of water as a resource and of innovation to guarantee future supplies.  As it is, water supplies in the US have been heavily subsidized and kept artificially low for decades, not reflecting water’s true cost, and the increasing scarcity of this essential resource.  With water kept so cheap, there has been little incentive for conservation or for innovation.  Continued scarcity of water though is driving the cost to consumers to better reflect its true cost, driving conservation as well as investment in new innovations.  “Scarcity [of water] is inevitable,” Hsiao commented.  With the right incentive though, so is the opportunity for entrepreneurs who help solve this essential resource issue.  We can, and will, conserve water in response to cost and regulation, but the need for water is guaranteed.

Oil and Green Cars

Friday, June 6th, 2008

Oil is a big topic these days.  With the price of oil hitting $135 a barrel, and gas near or over $4 a gallon, nobody seems to agree about anything to do with oil other than that it’s expensive.  BusinessWeek (June 9, 2008) concluded that the runup in oil’s cost involves a contribution from speculators bidding up the price knowing that the elasticity of the oil market is limited, with commodities like oil in continued high demand with economic growth in Asia, even as the US economy slows.  The Economist (June 6, 2008) concluded that the cost of oil was driven by supply and demand.  Similarly, there is no general agreement about the future price of oil.  Business Week (May 26, 2008) outlined predictions by analysts for future oil prices ranging from a fall back to $70-80, to a steady rise to $200 or even $500 a barrel. 

Who is right?  Maybe they all are.  I’m siding with those that say speculation is contributing to the current rise.  I would also side with the free market supporters though in saying that the market will right itself.  Demand is already falling in response to high prices (New York Times, May 31, 2008), and with oil at these high costs for more time consumption will fall even more dramatically.  The shift in car purchases toward small cars has been dramatic, and if continued or accelerated for a period of years the whole fleet will change much more rapidly than was thought likely or possible.  People will start carpooling, and increase their move toward mass transportation.  Increasing supply takes even longer, but Saudi Arabia is increasing its oil deliveries, and reports that no order will go unfilled.  Refineries are shifting production to match changes in consumption. 

But even if this is the case, and the price of oil stabilizes or starts to fall in the months ahead, it is only a temporary reprieve.  Even the techno-optimists are starting to see that oil production will not increase forever.  We need to be ready.  Even if the price of oil moderates in the months ahead, the long term trend is that oil will continue being more expensive than we have been accustomed to.

The current high price of oil is an economic hardship for many, but if price is the one factor that will change behavior, then lets make the most of this opportunity for green businesses and governments to start moving in the right direction today.   The economy and consumers can adjust to a lot, but lets not wait for oil to spike up to $200 before we take the actions necessary to reduce our reliance on oil for the long term and keep the economy moving strongly forward with clean and renewable alternatives.

Green Car Sales Soar With the Price of Gas

Tuesday, June 3rd, 2008

The price of gas has soared past $3.50 and even $4.00 a gallon, and the end is not yet in sight.  This has spelled big trouble for some automakers that are heavily dependent on sales of big SUVs.  As the price of gas soars, sales of larger SUVs have collapsed, falling 25% according to the NY Times (May 2, 2008), with some models like the Chevy Tahoe falling even more, dropping 35%.  The EPA-rated mileage of the Tahoe is 14 city/19 highway for the 4.8L v8 vehicle. Ford reported that in May 2008 cars outsold trucks for the first time since 1992. 

Even as sales of large cars have fallen, sales of small, fuel-efficient cars have soared.  Sales of the low-priced Toyota Yaris (29 mpg city/35 highway) are up 46%, and the Prius once again has a waiting list.  If the price of gas moderates in the mid-term, as some analysts predict, the trend may slow, but the shift in consumer behavior shows that economics matter and will drive increased efficiency in the auto fleet much faster than some may have thought possible previously with cheaper gas.   The auto makers are realizing this is not just a temporary shift, but a sea change in the market, one that some were better prepared for than others.  Perhaps the CAFE standards implemented in the 2007 Energy Bill, to achieve 35 mpg by 2020, will prove irrelevant far before this date.   Entrepreneurs who can capitalize on this shift toward smaller, greener cars should do well in the long term, one way or another. 

Green Cafes Update - Starbucks Green Efforts Revisited

Tuesday, June 3rd, 2008

One of the topics in 75 Green Businesses is the opportunity for green cafes, competing with Starbucks by moving farther toward green. 

The Starbucks Sustainability Report for 2007 came out in May, and Starbucks reports and deserves credit for many of their efforts to support social and environmental development (  Their cups contain 10% recycled content, and the use of the paper sleeve instead of a second cup avoid a great deal of waste.  They are buying 20% of their energy from renewable energy resources, exploring green building methods at several sites, increasing their recycling, and continuing to increase support for sustainable coffee production. 

Nonetheless, there is still room for improvement.  Writing at the Motley Fool (, May 29, 2008), Rick Aristotle picked Starbucks as a stock that “will never be great again”, saying “The game didn’t pass Starbuck’s by.  Everybody else just caught up.”  They have recently tried reinventing themselves by going back to their roots under the leadership of Howard Schultz once again.  Where once Starbucks was unique today they have a lot of company. 

Green Cafes remain a ripe opportunity, taking on Starbucks by focusing on the greenest possible coffee, facilities, and practices.  For all that Starbucks has done, acclaimed by some environmental groups, there is still room for improvement.  The Seattle Times reported on May 14, 2008 (, that Starbucks recycled in just 32% of their stores in the US and Canada.  They have stated their commitment to increasing energy efficiency of new stores by 25% in 2010, and certifying these stores as green using the US Green Building Council LEED rating system.  These are admirable moves, but still leave room for others to do better. 

Going carbon neutral is a harder goal, but a concrete one that entrepreneurs opening a green cafe might work to achieve.  Recycling in all stores, and moving to zero waste, is another.  Even as Starbucks goes slowly greener, entrepreneurs are bound to move more quickly to outflank them on the green side.