The Business Case for Climate Capitalism - Colorado WaterWise

C L I M A T E C A P I T A L I S M© NCS 2011

What you believedetermineswhat you do

The Black SwanHighest selling book on Amazon for all of 2007Outlier event, outside the realm of expectationsNothing in the past can convincingly point to itIt carries an extreme impactAfter the fact, we explain it to make it plausibleNassim Taleb,Co-DirectorDecision ScienceLaboratoryA small number of Black Swans explain almosteverything in our world, from innovation andideas, to religions, to historical events, to ourpersonal livesBlack Swans are accelerating

Black SwansSociety's winners will be:Those who are prepared to face Black Swans,To be exposed to them,To recognize them when they show up andTo rigorously exploit them.

Business-As-Usual cannot endureBusinesses and governments will either drive change in ways thatallow companies and economies to flourish or they will be forcedrespond to unrelenting crises and hope for the best.

Global Drivers of Change• Loss of ecosystem services• Carbon constrained world• Economic instability• Volatile energy prices• Chindia• The sustainability imperative• Water• Food

Unsustainability

Climatechange is forreal

Tonimbuk, AustraliaFebruary 7, 2009Photo: AP

Photo: AP/Mark Pardew

8 January 200913,000 people evacuated – no snow – 67 degrees

Pine beetle infestation1.5 million acres of CO pines infected with beetles

Changes in climate are already causing harmMajor floods per decade, 1950-2000There’s a consistent 50-year upward trend in every region except Oceania.

Harm is already occurring (continued)Major wildfires by decade, 1950-2000The trend has been sharply upward everywhere.

Don’t ask what’s possible.Ask what’s necessary.What’s necessary?The number is 350If the US fails to act next year , then it maybecome impractical to prevent "disastrousclimate changes that spiral dynamically outof humanity’s control.”Dr Jim Hansen

Challenge:Time frameNormalpenetrationrates areway tooslow

New RuleIf we insist on ruining the planet,we have to stop claiming we’rea “superior species”.

3% of earth’s wateris fresh water2% is locked asglacier ice< 1% of all theearth’s water is freshwater we can use.

1.1 billion peoplelack proper drinkingwaterOnly 46 % of peoplein Africa have safedrinking water.

Water inflowreduced by2/3rds.Perth maybecomeAustralia’sfirst ghosttown fromwater.

Climate change in CABy the end of the century, the nation's "saladbowl" could be a dust bowl.

Global Areas of Drought (2009)

Nexus of Water, Food and Energy40 percent of theworld's food supply isgrown in places wherecrops cannot survivesolely on rainfall,requiring irrigationIrrigated-FloodedRice field in California

Food and Water ScarcityMore than 33 countries around the worldface potential social unrest due to spikesin food prices.An estimatedone-third of theworld'scropland is nowlosing topsoil ata rate thatreduces itsproductivity

COOLING water for coalfired and nuclearpoweredelectricitygenerators is the largestvolume user offreshwater in the U.S.Second is irrigation foragriculture.

Water Needs:Coal/Nuclear = 500 gal/ MWhCombined cycle Nat. Gas = 200gal/MWhCSP Parabolic Trough:(wet cooling) = 800 gal/MWh(dry cooling) = 40-80 gal/MWh

The science is uncertain

The science does not matterLet’s assume that the climate scepticsare rightDon’t go to the casino on those oddsIf all that you care about is maximizingprofit, you will do exactly what youwould do if you were scared to deathabout climate

Energy Efficiency MarketOpportunity

“Our experience has been thatfor every dollar invested you gettwo dollars back.”Diversey has achieved $31million in operational savings inlast 5 years for an ROI of 163%

The Carbon Disclosure ProjectInstitutional investors -$64 trillion assetsPushing FTSE top 500companies todisclose “investmentrelated”GHG emissions

McKinsey Curve$30 – 40 million available below the line savings per company

7M square feet DC with 500 Watt roof lightsevenly spaced every 10 feet. Half the floorspace was racks with boxes.Most of this lighting waseither unnecessary orredundant. Work areashad task lighting at theemployee level.Annual savings forshutting off the lights...$650,000.

6,300 computers and monitors in sleep or standby modewhen not in use (24/7).Leave machines on one evening a week for updates andturn them off at the end of the work day: $700,000.US companies waste $2.8 billion a year on 108 millionunused PCs. In 2009, these unused PCs will emit 20million tons of carbon dioxide emissions – the impact of4 million cars.PC power costs are the largest single factor of IT energycosts and can account for a quarter of the costs in amodern office building.

“Ford Saves One Million Dollars...By Shutting Off Computers”Fast Company, 23 March 2010Turning off one computer every night for a year saves $34If 20 computers are left on in the evening and over the weekend,the savings grow to $526 a year

Solutions @ the Speed of BusinessLightingDaylighting, Lighting Controls & Lighting EquipmentHeating & CoolingInsulation, HVACOffice EquipmentPower Management, PurchasingWaterWater Use & Water HeatingWasteReduce, Reuse, Compost & RecycleTransit & TravelTransit Alternatives & Business Travel

Business Sustainability StoriesUsing daylighting, CFLs, turning off computers and using powerstrips, Ripe cut electric bills from $220 to $90 a month$1 MMcompany

Lighting RetrofitReplaced 200 overheadlights with efficient fixturesCost = $14,000Savings = $32,000 per yearWith waste eliminationMi Rancho will save $450,000

!For each gallon ofwater that is bottled,an additional twogallons of water areused in processingOn average bottledwater costs about$9.85 a gallon, whiletap water costs about$0.01 per gallon

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EPA WaterSenseWaterSense bringstogether local waterutilities andgovernments, productmanufacturers,retailers, consumers,and otherstakeholders topromote waterefficiency.

EPA WaterSense

EPA WaterSense

EPA WaterSense&! $'( %)**#+', -%#. /$(,0%12 23 ( ,45. !% $3 '!67)512

It should come as no surprise that Americanbusinesses require twice as much energy toproduce a unit of GNP as do our Europeanand Asian competitors

Built Environment• 39% of total energy use• 70% of electricity consumption• 30 - 60% of green house gas emissions• 30% of waste output• 40% of raw materials use• 30% of waste output• 12% of potable water consumptionIndoor air quality can be two to five times worsethan outdoor air

Oberlin CollegeAdam Lewis Center for Environmental ScienceRecycled materials and FSC certified wood.Roof drains divert to cisternsPassive solar heat/ ventilation / daylightinggeothermal HVACEdible landscapingStudents integrally involved in designPV roofproduces45 KWgridintegratedpower

Living Building Challenge4500 sq ft greenhouse, Eco-machine - has togenerate its own energy, use no outside water, andbe produced using local materials.

Four TimesSquare, NYC(Condé-Nast Building)•150.000 m2; 47 storeys•non-toxic, low-energy materials•50% energy savings/m2 despitedoubled ventilation rates•Fuel cells•Integral PV in spandrels onS & W elevations•Ultrareliable power helped recruitpremium tenants at premium rents•Market average construction cost

A RE/MAX office in Fort Lauderdale,Florida, was being remodeled.The facility's manager made sure that allexterior windows and doors were sealedand caulked.All the buildings ductwork was replacedwith tighter sealed ductsThe measures are saving $7,900 annually

'!Water-efficiencymeasures can reducewater and sewer costsby up to 30 percent.

'!8 .!40%35%30%25%20%15%10%5%0%Landscaping Restroom Cooling Other Kitchen Laundry[1]Pacific Institute, Commercial Water Use and Potential Savings: Appendix E, www.pacinst.org/reports/urban_usage/appendix_e.pdf, Accessed on March15, 2010.

One leaky toilet can waste as much as22,000 gallons in one year.

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Indoor Water Use:ShowerheadsHigh efficiencyshowerheads willreduce water use by40%, presentingsavings of up to $100per showerhead, andgiving a 111% ROI.

Indoor Water Use: ReplaceToiletsA dual flush toiletcan reduce waterusage by up to 77%when compared tostandard modelsthat use 2.9 gallonseach flush

$Newer dishwashersconsume about 800gallons less water annuallythan older models.Lower electricity costs by25 percent compared toolder dishwashers.

Opportunities: Heating & CoolingBuilding Envelope

Green buildings improve laborproductivity and worker healthGreen buildings that deliver improve indoor airquality could save U.S. businesses:• $200 billion earned in increased worker performance• $58 billion in avoided sick time each year,

Comparative Costsin Large Office Buildings

Harvard Business Review“Building the Green Way”“In fact the owners of standard buildingface massive obsolescence. They mustact now to protect their investments“Building owners are starting to doreviews of their portfolios to see howgreen their buildings are and what theyneed to do to meet growing marketdemand.”

Green Building MarketOpportunity

1 MW/ week = 15.6 GWIn 2010SCE: 250 MW plant on roofs around So California$875 million to complete (comparable coal plant ~$800 million)

Property Value of SolarHomes with solarphotovoltaic (PV)systems sell for apremium over homeswithout systems.The premium equalsthe investment ownersmade to install PV.

Economic Realities:Saving energy strengthens the entire economy

Wind is the 2nd fastestgrowing energy supplytechnology in the world:37 GW in 2009, 32 GW 2010Less than coal in good sitesAnd checkout China

Not a left or a rightissueR. James Woolsey’s solarpowered plug-in-hybridhas a bumper stickerreading:“Osama bin Ladin hatesmy car.”

Unsustainability Drove the FinancialCollapseUnsustainable business practices contributed tothe economic collapse, which will not be resolvableuntil these more fundamental issues areaddressed“People seem blind to the fact that the causes of theeconomic collapse are exactly the same as thosebehind today's ecological crisis – and behindaccelerating climate change in particular.”Jonathan Figure Porritt, 1. Economic Forum performance for Asia. the 1 Futurequoting Sir John Beddington

Vital RoleforGovernments

Challenge:Time frameNormalpenetrationrates areway tooslow

Global Biodiversity Outlook Three -GBO-3"We continue to lose biodiversity at a ratenever before seen in history - extinctionrates may be up to 1,000 times higher thanthe historical background rate.”Earth’s ecosystems may soon reach"tipping points" where they rapidly becomeless useful to humanity.

Ray AndersonWhat is the businesscase for ending lifeon earth?

Implementing the technologies that cansolve all of the problems facing humanityis the route to prosperityWe can feed the world’s peopleWe can power a modern industrial societyentirely from energy efficiency andrenewable energy......and doing that will unleash a vibrantnew economy – as Germany is doing

Sustainability paysCompanies in the Dow Jones sustainability Indexoutperform the general marketGoldman Sachs report July 2007: Companiesthat are leaders in environmental, social andgovernance (ESG) policies are outperformingcompetitors in stock performance—by anaverage of 25%. 72% of the companies on thelist outperformed industry peersRegions that protect their environment outperformthose that do not

“Companies with the highest share price growth overthe past three years paid more attention tosustainability issues… those with the worstperformance tended to do less….The link appears clear: companies that rated theirefforts most highly over this time period saw annualprofit increases of 16% and share price growth of45%,Those that ranked themselves worst reported growth of7% and 12% respectively. High-performingcompanies put a much greater emphasis on socialand environmental considerations at board level,while the poorly performing firms are far more likelyto have nobody in charge of sustainability issues.”

Green Winners, an AT Kearney analysis, tracked stockprice performance for 6 months of 99 firms on DJ SIand the Goldman Sachs list of green companies.In 16 of 18 industries, businesses deemed"sustainability focused" outperformed industry peersover three- and six-month periods and were "wellprotected from value erosion.”September throughNovember performance differential across the 99firms tracked was 10 percent; over six months, it was15 percent."This performance differential translates to an average

Carbon Emitters Are Valued LowerStudy from Notre Dame and Georgetown found acompanies’ (S&P 500) value declines by $202,000for every additional 1000 mt of carbon they emit.“Results suggest thatthe market attaches animplicit cost to carbonemissions, even thoughthere is currently noexplicit cost,”-Studies Authors

Carbon Innovators LeadCompanies that lead in climate-related innovation givehigher financial performance (five-year return on equity)Three indexes identified the most resilient, mostinnovative and best positioned companies to gaincompetitive advantage in the new low-carbon economyRanking the top 350 US companies, with a combinedmarket cap of $350 trillion, on their climate innovationand carbon management programmes, shows a positivecorrelation between the financial performance ofcompanies and their ability to successfully implementdisruptive market innovations related to climate change.

two entrepreneurs harnessing human nature:Instead of guilt, fear, rations orrestrictions…Trust ‘invisible hands’ of innate selfinterest-- esp. greed & envyEnable metered accounts to earn &own equal EcoShares of waterEstablish online ‘click’ markets within‘brick’ natural water monopolyReward local trades who sell savedwater credits… race to conserve

I am a professor of a disciplinethat did not exist when I went tocollege

Buckminster FullerThe best way to predict thefuture is to invent it

Natural Capitalism SolutionsL O N G M O N T, C O L O R A D OEmail: solutions@natcapsolutions.orgVisit: www.natcapsolutions.org