Entrepreneurial Solutions to Insoluble Problems - Tides Canada

Growing OpportunityDeeper Dive: Energy‘It was difficult for usto negotiate with largecorporations to begin with.They have more lawyers anda different style. I would likeaccess to training to “speaktheir language” and accessto board-level contacts.’Energy Sector110http://shop.easybeinggreen.com.au/categories.asp?cID=71&fromhome=true111www.chicagoclimatex.com112www.climatechangecapital.com113www.freeplayenergy.com114www.hm-treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/sternreview_index.cfm115www.ceres.orgAnother venture that aims to makesustainable energy choices more accessibleto ordinary people is Easy Being Green,founded in Australia by Nic Frances andPaul Gilding, but with plans to gointernational. 110 In 2004, they set a goalfor 70% of Australian homes to be 30%more energy and water efficient within10 years. Since then they have implementedprograms that have provided almost halfa million homes with ‘Climate Saver Packs’;reduced 620,000 tonnes of CO 2 pollutionper year, equivalent to taking 150,000cars off the road; saved 5.8 gigaliters ofwater, equivalent to 2,500 Olympic-sizedswimming pools; and saved householdsA$32.3 million on their energy bills.5 Business models:take climate into accountDisclosing greenhouse emissions is onething, putting a price — and a value —on them is quite another. Two organizationshave been working in this area: RichardSandor’s Chicago Climate Exchange(CCX) 111 is the world’s first, and NorthAmerica’s only voluntary, legally bindingrules-based greenhouse gas emissionreduction and trading system; and JamesCameron’s Climate Change Capital (CCC) 112is a leading investment banking group thatspecializes in the commercial opportunitiescreated by a low carbon economy. CCCadvises and invests in companies thatrecognize combating global warming isboth a necessity and an economicopportunity. Its activities include investmentmanagement and financing emissionreductions, and its aim is to make theworld's environment cleaner whiledelivering attractive financial returns.Longer term, it will be interesting to seewhat happens to such players when theChinese get serious about greenhouseemission trading.Then there are the ‘Robin Hood’ models.Whether or not such a figure ever stolefrom the rich to give to the poor, differentpeople certainly place a different value —and are prepared to pay very differentprices — for anything from their health toclean fuels. In the energy sector, the mostoutstanding example of this is probablyFreeplay Energy, 113 which started outoffering wind-up radios and expanded toa wide range of other human-poweredproducts.43Whether from the basic needs angleor because of systemic challenges likeclimate change, energy is central to thesustainable development agenda. The UKStern Review, which described climatechange as effectively the biggest marketfailure of all time, calculated that thedangers of unabated climate changewould be equivalent to at least 5% ofGDP each year. 114 Overall, it estimated thatthe dangers could be equivalent to 20% ofGDP or more. In contrast, it argued that thecosts of action to reduce greenhouse gasemissions to avoid the worst impacts ofclimate change could be limited to around1% of global GDP each year. People wouldpay a little more for carbon-intensivegoods, but our economies would continueto grow strongly. According to one measure,the benefits over time of actions to shiftthe world onto a low-carbon path couldbe in the order of $2.5 trillion each year.Markets for low-carbon technologies willbe worth at least $500 billion, and perhapsmuch more, by 2050 if the world acts onthe scale required.The potential impact of social andenvironmental entrepreneurs in this areawas dramatically illustrated by the successof Ceres, 115 led by its President MindyLubber, in helping stall plans by TXU tobuild 11 coal-fired power stations in theUSA. Even though 150 coal-fired powerplants are currently proposed in thecountry, TXU’s $10 billion coal expansionplan drew intense criticism in terms of thelikely climate impacts. When the plans wereannounced, Ceres convened some of TXU’slargest shareholders, including CalPERS,CalSTRS, and the New York CityComptroller’s Office, to bring pressure tobear. Some time later, it was announcedthat two private equity firms — KohlbergKravis Roberts & Co and the Texas Pacific— would buy TXU for $45 billion, and woulddrop eight of the proposed power stations.Strikingly, the private equity firms consultedCeres and other critics ahead of the dealbeing signed. We expect a lot more of thissort of power politics.