The Renewable Energy Standard Versus The Clean Energy Standard

The renewable energy standard (RES) is one of the reasons why Senate Majority Leader Harry Reid’s (D-NV)energy bill never saw the light of day.

RES is a requirement that the country will increase the percentage of its power generated from renewable energy sources within a certain time frame. RES would go a long way towards spurring private sector investment in renewables. The idea is popular as illustrated by a Pew/National Journal poll that indicated 78 percent of all respondents and 70 percent of Republicans favored a RES.

President Obama has talked about a clean energy standard (CES) that in addition to renewables, includes nuclear, efficient natural gas and coal with carbon capture. In the 2011 State of the Union address, President Obama urged lawmakers to establish a CES with a goal of generating 80 percent of the nation’s energy from “clean” sources by 2035. Calling the clean energy push “our generation’s Sputnik moment,” the President’s speech framed a clean energy standard in the larger context of improving the United States’ competitiveness in the global economy.

Under a national CES, electricity supply companies would have to produce a certain percentage of their electricity from clean energy sources, or purchase credits in the amount of the shortfall. Certified clean energy generators would earn credits for every unit of electricity they produce and could sell these along with their electricity to supply companies. The electricity supply companies would then submit the credits to a regulatory body to demonstrate compliance.

Although CES is not as safe or as clean as RES, it is the most viable in the current political climate. Republican inroads in the 2010 midterm elections killed any hope of a RES, however, CES may prove to be a politically acceptable alternative.

© 2011, Richard Matthews. All rights reserved.

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High Oil Prices Stimulate Renewable Energy

Higher oil prices stimulate renewable energy. Renewable energy enables the world economies to grow sustainably, where our current reliance on fossil fuels is entirely unsustainable.

To stimulate renewable energy we must see what is known as supply shock. A supply shock is an event that suddenly changes the price of a commodity or service. In the case of oil this will be caused by a sudden decrease in the supply relative to demand. This sudden change affects the equilibrium price.

When oil approaches $200 per barrel we should get the shock and a stimulus effect on renewable energy. This will occur when the oil supply out paces demand by something like 10 percent.

Instability in the Middle East may very well be the catalyst that causes oil prices to go sharply higher, which in turn will create the shock that will stimulate renewable energy.

There are a great many unknowns, but renewable energy will be driven by how market demand reacts to higher oil prices.

© 2011, Richard Matthews. All rights reserved.

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Businesses Will Lead the Transition from Oil to Renewable Energy

In this video, Jonathan Koomey discusses the important role that business will play transitioning away from oil to renewable energy sources. While he sees a role for governments, he sees business and civil society as being crucial to this transition. He discusses the options available and concudes that there is a lot we can do. There will have to be big investments in new energy and new technologies. He concludes by saying, "if we are going to make this happen the transition will have to be led by business."

Koomey is co-author of "Winning the Oil Endgame" and author of many energy efficiency related books and articles. He led a group at Lawrence Berkeley National Laboratory (LBNL) that developed energy efficiency recommendations for EPA & DOE.

His cutting-edge research for the International Project for Sustainable Energy Paths, Rocky Mountain Institute, and LBNL helped establish the feasibility and desirability of using renewable energy to reduce carbon emissions, decrease dependence on oil, and boost jobs in the US & Europe.

© 2011, Richard Matthews. All rights reserved.

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Sustainable Growth Excludes Fossil Fuels

Sustainable economic growth is utterly impossible as long as oil, coal and natural gas provide nearly 88 percent of the world's energy needs. According to EIA (the US Energy Information Administration), total world consumption of marketed energy will increase by 49 percent between 2007 to 2035. The International Energy Agency predicted that Chinese energy demand would soar 75 percent by 2035, accounting for more than a third of the growth in global consumption.

The most egregious source of energy is coal, in India, more than 50% of commercial energy demand is met with coal and according to 2008 statistics, coal accounts for 71 percent of China's energy mix. The US is not much better with 23 percent of its total energy demand being met with coal.

We simply cannot afford economic growth that is so reliant on dirty energy like coal. Although growth is a serious environmental threat, it could also be a valuable opportunity to radically expand the clean energy economy. New innovative applications of sustainable technologies can significantly reduce emissions and old inefficient technologies can be replaced with cleaner greener technologies.

Renewable energy is the great hope for the planet because it is sustainable energy, but renewable energy is not cost competitive cheap and abundant coal. Therefore, cost considerations alone will not drive the move away from coal.

The increasing price of oil and the uncertainty of the fossil fuel markets is something that business are increasingly considering and it is only a matter of time before we remove oil subsidies. However, until we see climate change energy legislation and regulation, business have an opportunity to show leadership by voluntarily replacing coal with renewable energy.

Economic growth that includes fossil fuels precludes the possibility of a living planet.

© 2011, Richard Matthews. All rights reserved.

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Is Capitalism Sustainable?

Business has created the environmental crisis and now the same capitalist system that was behind the industrial revolution, is beginning to play a vital role in solving the problems it created.

Despite the link between environmental practices and profitable, long-term business sustainability, many believe that capitalism itself is unsustainable. The Earth has finite resources, so their argument goes, but capitalism depends on ever expanding consumption. The truth is that dating back to the origins of our species, we have seen our use of resources evolve, from stone, to bronze and then iron. More recently we entered the information age which may prove to be the gateway to a more sustainable use of resources.

Although we should do everything we can to preserve finite resources, human ingenuity is infinite. In this way we are slowly moving away from finite fossil fuels to infinitely renewable fuels such as wind, wave and solar.

Market driven solutions can be incredibly powerful as they have the power to extend, promote and invest in sustainable innovation. Although new market based mechanisms like regulation, incentives and tradable permits are still a few years off, it is inevitable that the true cost of carbon will be made absolutely clear. As a tenant of the free market business should pay for the costs they incur.

Sustainability will continue because it is an unstoppable mega-trend that is destined to keep growing at even faster rates. With the rise of the green consumer, businesses want to cash-in on the steady and growing demand for green goods and services. Various partnerships are emerging to help in the development of sustainable best practices. One such arrangement involves the new partnerships between corporations and environmental organizations.

There are also other factors that make sustainability entirely consistent with capitalism. Renewable energy solutions are seen as a potent symbol of a new modernity. Numerous studies have shown that environment issues have a significant effect on workforce morale. A workforce seeing a forward-looking and responsible company is more likely to feel good about working for such a company and a happier workforce is a more productive workforce.

Increases to employee productivity and benefits to the brand are just two ways in which integrating sustainable practices serve a company's best interest. Avoiding public pressure and attracting customer loyalty are additional factors that add to the capitalist appeal of sustainability.

Factoring environmental considerations into economic equations makes sense and the profit motive is a powerful incentive. The marketplace is always looking for cleaner, cheaper, faster, more efficient and more effective solutions, and the market is better at identifying opportunities than most government planning. Although short sighted greed makes long term planning difficult, with the right long-term incentives it can be made to work.

The green market is now estimated to be worth $5.27 trillion (£3.2 trillion) worldwide and in the next couple of decades the clean energy market alone is expected to be worth more than$13 trillion. With that much at stake, businesses cannot afford to ignore the green market.

In the business environment of tomorrow, sustainable practices are a strategic priority. The Survey of America's Greenest Brands show that even companies with very poor environmental reputations can redeem themselves and go from environmental pariah to eco-superstar by incorporating sustainable practices.

If we are to make the changes within the time frames we have left we will have to make use of the mechanisms that are available to us today. We do not have time to reinvent our world. As Paul Hawkin once said, "business is the only mechanism on the planet today powerful enough to produce the chances necessary to reverse global environmental and social degradation."

With the appropriate incentives and disincentives we can integrate environmental and social issues into the economic equation. An economy based on fossil fuels can be replaced by a low carbon economy. Capitalism is our last best hope to manage the environmental crisis we are facing.

© 2011, Richard Matthews. All rights reserved.

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The Dow Jones Sustainability Indexes

The Dow Jones industrial average is the world's best known index and as of 1999 it has been home to the world's first sustainability indexes.

Dow Jones is the leading full-service index provider that develops, maintains and licenses indexes for use as benchmarks and as the basis of investment products. Dow Jones Indexes offers more than 130,000 equity indexes as well as fixed-income and alternative indexes.

In 1999, Dow Jones launched its Sustainability Indexes (DJSI). They are the first global indexes tracking the financial performance of the leading sustainability-driven companies worldwide. Based on the cooperation of Dow Jones Indexes and SAM (Sustainability Asset Management) they provide asset managers with reliable and objective benchmarks to manage sustainability portfolios.

Currently more than 70 DJSI licenses are held by asset managers in 19 countries to manage a variety of financial products including active and passive funds, certificates and segregated accounts. In total, these licensees presently manage over 8 billion USD based on the DJSI.

The DJSI measures companies’ sustainability initiatives. This family of indexes evaluates the performance of the world’s sustainability leaders. The DJSI focuses on how a company recognizes the risks and opportunities arising from sustainability issues in its business strategy. The DJSI Indexes are the longest-running global sustainability benchmarks worldwide and have become the key reference point in Sustainability Investing for investors and companies alike.

To be incorporated in the DJSI, companies are assessed and selected based on their long term economic, social and environmental asset management plans. Selection criteria evolve each year and companies must continue to make improvements to their long term SAM plans in order to remain on the Index.

Indexes are updated yearly and companies are monitored throughout the year. DJSI conducts a yearly review of the DJSI family and is based on an analysis of corporate economic, environmental and social performance, assessing issues such as corporate governance, risk management, branding, climate change mitigation, supply chain standards and labor practices. It accounts for general as well as industry specific sustainability criteria for each of the 57 sectors defined according to the Industry Classification Benchmark.

Here is a partial list of some of the companies included in the DJSI:

Dow Jones Sustainability World Index
Adidas- United States
Hewlett Packard Co. – United States
BMW AG- Germany
Coca-Cola Co – United States
Christian Dior S.A.- France
Halliburton Co. – United States
Hyundai Engineering & construction Co. Ltd. – South Korea
Intel Corp. – United States
Mitsubishi Corp. – Japan
Nokia Corp. - Finland
Panasonic Corp. – Japan
Rolls- Royce Group PLC – United Kingdom
Samsung Electronics Co. Ltd – South Korea
Siemens AG- Germany
Starbucks Corp. – United States
Toshiba Corp. – Japan
Unilever- United Kingdom
Volvo AB Series B- Sweden

Dow Jones Sustainability North American Index
3M Co. – United States
Allstate Corp. – United States
Bank of Montreal – Canada
Campbell Soup Co. – United States
Dell Inc. – United States
Ford Motor Co. – United States
Gap Inc. – United States
H & R Block Inc. – United States
Kinross Gold Corp. – Canada
Macy’s Inc. – United States
Microsoft Corp. – United States
National Bank of Canada – Canada
Proctor & Gamble Co. – United States

© 2011, Richard Matthews. All rights reserved.

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The Anti-Environment Crusades of ExxonMobil and Koch Industries

Despite an increase in the number of companies that are adopting sustainable practices, major multinationals like ExxonMobil and Koch Industries are waging war on the environment. These two companies are aggresively resisting the trend towards a low carbon economy. In addition to being major producers of greenhouse gasses, ExxonMobil and Koch use their influence to lobby governments and create resistance to global-warming-related regulation, such as the Kyoto Protocol and the UN sponsored Conference of the Parties (COP). Some of their most destructive actions pertain to their funding of misinformation campaigns that fuel climate change denial.

According to a 2004 study commissioned by Friends of the Earth, ExxonMobil and its predecessors caused 4.7 to 5.3 percent of the world's man-made carbon dioxide emissions between 1882 and 2002. The group suggested that such studies could form the basis for eventual legal action.

ExxonMobil has been a leading figure in the business world's position on climate change, providing substantial funding to a range of climate change denial groups. According to Mother Jones ExxonMobil-funded a total of 40 organizations that "either have sought to undermine mainstream scientific findings on global climate change or have maintained affiliations with a small group of "skeptic" scientists who continue to do so."Between 2000 and 2003 these organizations received more than $8m in funding.

Koch Industries is the major source of funding for climate denial. From 2005 to 2008, Koch donated $5.7 million on political campaigns and $37 million on direct lobbying to support fossil fuel industries. According to the non-partisan research group the Center for Responsive Politics, between 1997 and 2008, Koch Industries donated a total of nearly $48 million to climate opposition groups. Koch Industries and its subsidiaries spent more than $20 million on lobbying in 2008 and $12.3 million in 2009.

For ExxonMobil and Koch it may be too late, however, for all but the most egregious, there is hope for redemption. The Survey of America's Greenest Brands show that even companies with very poor environmental reputations can redeem themselves and go from environmental pariah to eco-superstar by incorporating sustainable practices.

© 2011, Richard Matthews. All rights reserved.

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