CLIMATE THINKERS BLOG

http://en.cop15.dk/blogs/view+blog?blogid=708
February 16, 2009

Growing Green: Challenges and opportunities for business

by
Michael P. Totten, Chief Advisor, Climate, Water and Ecosystem Services, Conservation
International's Center for Environmental Leadership in Business (mtotten@conservation.org)

and
Dr. Joanna Durbin, Executive Director,
Climate, Community and Biodiversity Alliance

For decades the most prescient public and corporate leaders have recognized the critical need for
and immense desirability of growing the economy green. Indeed, green growth theorist and
practitioner Amory Lovins nicely summed up this importance, saying it was "spherically
sensible." Whether viewed through the lens of economics, equity, or ecologics, green growth
provides a myriad of benefits valued alike by fiscal conservatives, human rights advocates and
environmentalists.

It is not just referred to as green growth. Many leaders prefer calling it "smart" growth, while
others view it as straightforward applications of common sense. What is becoming all-to-clear is
that regardless of the nomenclature, the reality is the imperative to move beyond
compartmentalizing society's problems, particularly the handful of unprecedented challenges of
global and historical magnitude. These include the peril of climate catastrophe, more absolute
mass poverty than any time in human history, the sixth largest species extinction spasm in
recorded history, and multi-trillion dollar resource wars destroying the lives and livelihoods of
millions of citizens. As the IPCC reports emphatically caution, these problems are not isolated
but inextricably interwoven, and advise taking actions that not only avoid adverse impacts but,
instead, create mutually reinforcing positive incentives that simultaneously accrue benefits for
these diverse challenges.

There is a rich literature of how to accomplish this systems-oriented outcome, grown from
decades of empirically tested and evidence-based results at the company, community and
country level (see www.aclimateforlife.org/). Simply put, it involves shrinking, greening, and
offsetting the ecological footprints (encompassing emissions, energy, water, land and resources)
of economic activity.

Shrinking the footprint has a stellar track record, or what some now refer to as "smart energy
services." This umbrella term refers to the myriad imaginative, ingenious, inventive, innovative,
and knowledge-intensive ways to "deliver" energy or water services at increasingly lower cost,
reduced materials throughput, and less waste, pollution, and contaminant output.

Without faster efficiency gains, energy consumption in the USA, for example, would have been
75 exajoules greater in 2005. The efficiency gains avoided $700 billion per year in higher energy
bills. 75 EJ is equivalent to a freight train annually hauling nearly 18 million railcars of coal
circling the world 7 times.

Delivery of smarter energy services can play the key role in tackling the global challenges noted
above in a financially positive manner. If we also reverse emissions from deforestation (which
could add upwards of 129 ppm CO2 in the atmosphere this century if left unchecked), and
harness the most ecologically sustainable solar and wind energy options, we have a viable,
affordable strategy for achieving atmospheric stabilization at a safe level. And doing this while
sustaining robust global economic growth, ending mass poverty, collapsing the rationale for
energy wars, and protecting key ecosystem services.

A 2007 assessment by the McKinsey Global Institute concluded that energy efficiency
improvements worldwide through 2030 could provide an estimated 75% of projected new energy
service demand with a 10% or better return on investment. Effectively harnessing this level of
smart energy services is a complex challenge, but no greater than dealing with proposed gigantic
carbon capture and storage operations.

Most valuable is aligning utility financial interests with those of their customers by rewarding
utilities for delivering electric, gas and water services through efficiency gains whenever less
cost than expanding new supplies. In return for this cost diligence, utilities sustain robust
earnings while customers' utility bills decline even as rates rise to allow utilities to recoup
earnings from lost revenues. CO2 and other air emissions decline at negative cost.

California has led the world in spurring this market-based utility regulation innovation. Utilities
cost-effectively capture five to 10 times more efficiency gains than if voluntarily left to
customers to undertake such actions (all due to higher-customer vs. lower-utility discount rates).
This regulatory policy innovation is applicable worldwide, and could result in accumulated
savings of more than $100 trillion this century by displacing the need for more costly fossil-fuel
power plants.

At the same time, given the urgency of accelerating CO2 reductions, all existing fossil fuel power
plants should be required to offset their CO2 emissions. Reducing Emissions from Deforestation
(RED) offers a least-cost immediate option for offsets, which would add less than 1 cent per
kWh to the cost of coal-fired electricity – 75% less than carbon capture and storage will cost
when commercially available 15 years from now. The vast majority of the almost 20% of global

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greenhouse gas emissions that derive from deforestation occur in tropical developing countries,
where poverty is exacerbated by the depletion of natural resources and degradation of ecosystem
services. Supporting forest-based emissions reductions is a win-win-win option: generating
hundreds of billions of dollars in carbon trading revenues for impoverished developing nations;
minimizing compliance costs for developed nations; protecting irreplaceable biodiversity habitat;
improving rural livelihoods by conserving and restoring healthy ecosystems; and accruing both
climate mitigation and adaptation benefits. A comparable mandate on vehicle gas pump offsets
would add 2.5 cents per liter – which could be recouped by simply practicing better driving
habits and maintenance.

Finally, in greening the energy system, the pursuit of zero net energy and emission buildings,
factories and plug-in electric vehicles should be integrated with locally sited solar photovoltaic
(PV) power systems. PV-generated electricity is projected to reach grid parity within the decade,
can be sited in existing urban land, consumes 1/100th the water required by thermal or hydro
power plants, and is more resilient to disruption by Nature and malicious attacks.