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 (

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 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


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.


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