A New Energy Economy

The New Agenda: A New Energy Economy and 5 Million Green Jobs

US Green Building Council

With more than 500 energy and climate advisors, President-Elect Barack Obama campaigned on an aggressive and detailed plan to strengthen the economy, spur green job creation, and protect the environment.

Harnessing the amazing momentum and progress of the green building community, USGBC is now working to promote sound policies in the next administration that will stimulate a green economy, create millions of green jobs, reduce greenhouse gas emissions, advance greener, more energy-efficient buildings, and spur green infrastructure. The following policy proposals, advanced by the President-Elect during the campaign, offer particular promise for advancing green building:

• Green Building: President-Elect Obama has proposed the expansion of federal grants to assist states and localities in building more efficient public buildings through the use of LEED. In addition, under President-Elect Obama's plan, all new federal buildings would have to be carbon-neutral by 2025. This plan also would commit all new federal buildings to a 40% improvement in efficiency within five years and would seek a 25% improvement in the efficiency of existing federal buildings within the same period.


• Building Efficiency Goals and Incentives: President-Elect Obama has proposed a goal of carbon-neutrality for all new buildings by 2030. This will be achieved by establishing a goal of 50% greater building efficiency for new buildings and 25% greater efficiency for existing buildings over the next decade. Under the plan, the federal government would award grant funds to states and localities that implement new, energy efficient building codes, and would provide matching grants to states that promote building retrofitting through public benefits funds.


• Green Jobs and Job Training: President-Elect Obama has proposed an investment of $150 billion over 10 years to spur the development of renewable and other technologies, promote energy efficiency, and advance new fuel and smart electricity infrastructure. This plan would direct funding to the manufacturing sector for job training and transition programs, and would create an estimated 5 million new green jobs. Additional training programs, including a Green Jobs Corps for disadvantaged youth and a Clean Energy Corps, have been proposed to stimulate the development of a highly skilled workforce.


• Transportation and Infrastructure: President-Elect Obama has proposed the consideration of smart growth principles in the transportation funding process, as well as renewed support for public mass transit projects. The President-Elect's proposed plan also includes the creation of a National Infrastructure Reinvestment Bank to direct $60 billion over 10 years to infrastructure projects that could create some 2 million new jobs and $35 billion annually in economic activity.

With strong federal support, the green building community will be able to accelerate its spectacular wave of growth and innovation, and help ignite a rebuilt, revived green economy. USGBC looks forward to working with the new administration to support these and other initiatives that create jobs, save money and energy, and promote the creation of sustainable buildings and communities.

A Green Revolution: Creating Green Jobs and Economic Recovery through Green Building

USGBC estimates that 2.5 million new green jobs could directly result from a 100% commitment to energy efficiency in our homes, schools, and offices. Indeed, McKinsey & Company reports that 85% of future incremental electricity needs in 2030 could be met through energy efficiency in buildings, appliances, and industry. For more than a decade, the U.S. Green Building Council's members have been at the forefront of the green building movement. Building by building, neighborhood by neighborhood, we are already witnessing the positive impact of green buildings on the planet, and we are making equally impressive progress in support of the other two "p's" that guide our work -- people and prosperity. Through the deployment of new, green projects, products and technologies, the green building movement is harnessing the entrepreneurial spirit of our country, creating green jobs for the future, and providing opportunities for individuals from all walks of life to enjoy healthier, more environmentally responsible, and prosperous buildings and communities. Informed by our collective experience with more than 2,000 LEED certified facilities and nearly 16,000 LEED registered projects, we must now dedicate ourselves to restoring not only our environment, but also our economy.

New technical expertise and skills will be required to transition from our carbon-intensive economy to the green economy of the future. Large-scale investment in building efficiency and renewable energy, among other areas, can spur the creation of millions of new, green jobs -- reviving domestic industries and communities while advancing our environmental goals.

Building a Green Economy

Building a Green Economy:
Meeting the Needs and Sharing the Opportunities

by Fabian Núñez

California’s emerging green economy continues to grow with astounding momentum and potential. With millions of dollars being invested in that green economy, we need to identify and address its workforce needs.

In 2006, through an unusual partnership between Democratic legislators and a Republican governor, we passed AB 32, otherwise known as The California Global Warming Solutions Act. AB 32 establishes regulations that will phase in a 25 percent cut in carbon dioxide emissions from the state’s largest emitters by 2020.

The California Air Resources Board’s recently-released AB 32 draft scoping plan noted that not only will this effort reduce green house gasses, it will add a much-needed boost to the economy. That backs up information we received during the passage of AB 32, when the Climate Action Team – a group of state agencies coordinated by the California Environmental Protection Agency – found that meeting the 2020 limit on pollution will increase the income of Californians by $4 billion and create 83,000 jobs. Another study by UC Berkeley’s Energy and Resources Group and the Goldman School of Public Policy found that investments in green technologies produce jobs at a higher rate than investments in comparable conventional technologies.

Government is also investing in this green future. To achieve the state’s carbon reduction goals it is estimated we need to replace 20 percent of our gasoline consumption with lower-carbon fuels and increase the state's number of alternative-fuel or hybrid vehicles by more than 7 million. To help push this forward, I wrote AB 118 last year to fund incentives for more alternative fuels and to help make clean-car technologies affordable for more Californians. With these incentives, California drivers will have more opportunities to retire their old gas-burning, carbon dioxide-emitting cars, and companies will step up production of clean technologies and fuels.

With all this investment potential, what are we doing to train the workforce we will need? As the author of AB 32, I know first hand how important the promise of green technologies, investment in green industries and a new energy economy are. For me, elected from inner-city Los Angeles, environmental justice and economic opportunity are powerful motivators. I want the economy for our children to be a clean economy. I want the neighborhoods they live in to be clean neighborhoods. A green economy can be an effective path out of poverty.

I want Californians to have opportunities along the entire green spectrum — from high tech work in the lab, to installing one of our million solar roofs, to weatherizing homes and businesses. The dot-com boom of the mid-1990s almost completely circumvented employment of our most vulnerable and underserved populations. This time, I want to make sure that we have the necessary infrastructure in place to ensure no one is overlooked. The green tech and clean tech movement cannot be merely another bubble; it must be a solid and sustainable cornerstone of our economy.

To that end, two years after AB 32, I have also authored AB 3018. AB 3018 adds a green collar jobs special committee to the state’s Workforce Investment Board. The council will be tasked to develop a comprehensive set of strategies including training programs, partnership opportunities, statewide and regional data and funding sources to build the needed workforce.

Under AB 3018, if signed by the governor, The California Workforce Investment Board (WIB) has until April 2009, to establish a Green Jobs Council. The CWIB may utilize its existing members and also call on other state agencies, higher education representatives, industry representatives as well as philanthropic, nongovernmental, and environmental groups to serve as consultants in the development of this strategic initiative.

Among the concrete steps the Green Jobs Council will take are:

• assist in identifying and linking green collar job opportunities with workforce development training opportunities throughout the state, and encourage regional collaboration in local workforce investment areas (LWIAs) to meet regional economic demands;

• create and develop public, private, philanthropic, and nongovernmental partnerships to build and expand the state’s workforce development programs, network, and infrastructure;

• provide policy guidance for job training programs in the clean and green technology sectors to assist and prepare specific populations, such as at-risk youth, displaced workers, veterans, formerly incarcerated individuals, and others facing barriers to employment;

• develop, collect, interpret and distribute statewide and regional labor market data on California’s new and emerging green industries workforce needs, trends, and job growth;

• identify funding resources and make recommendations on how to expand and leverage these funds;foster regional collaboratives in the green economic sector.

I’m excited about the potential of the Green California Community College Summit. A recent news story referred to California’s community colleges as “the modest workhorses” of California’s higher education system. Now, modesty is a fine trait, but the community college system has nothing to be modest about in the role it plays in changing lives and expanding opportunities for thousands of California students.

I am thrilled that our community colleges will be playing a key role in helping provide a trained and educated workforce to meet the needs of our emerging green economy. The needs and the opportunities are so great it will take each of us doing all we can individually and together. And this time we get to start from a new beginning, where we can build social equity and economic opportunities across the board for workers, professionals and entrepreneurs.

I like to say gold built the California economy – but green will sustain it.

Fabian Núñez is California Assembly Speaker Emeritus

A Plan for Creating Two Million Green Jobs in Two Years

WASHINGTON, D.C. -- The U.S. holds the potential to generate two million jobs in two years with a $100 billion investment in cleantech, according to new report.

"Green Recovery: A Program to Create Good Jobs and Start Building a Low-Carbon Economy" describes a green recovery program that could lay the foundation for sustainable economic growth while boosting the country's energy security. The program calls for $100 billion worth of tax credits, government spending and federal loan guarantees to cut unemployment and spur growth in six cleantech and efficiency areas.

"We can be certain that the green recovery program will serve as a strong counter-force against pressures that are currently pushing unemployment up as well as more broadly increasing economic disparities," the report said. "The green infrastructure investments proposed here will also generate significant long-term advances toward creating the clean energy economy we need."

The program targets building retrofits, expansion of mass transit and freight rail, wind and solar power, biofuels and constructing a smart electrical grid.

The package would break down into three investment streams: $50 billion in tax credits to give private businesses and property owners access to building retrofits and renewable energy systems; $46 billion in direct government spending on mass transit expansion, smart electrical grid and public building retrofits; and $4 billion in federal loan guarantees to help finance renewable energy and building retrofits.

Spending the money in these areas would create four times as many jobs as investing an equal amount in the oil industry, and triple the number of jobs paying more than $16 an hour, the report found. It also would lower the unemployment rate from 5.7 percent to 4.4 percent and offset the 800,000 jobs lost in the construction sector.

Some jobs would be found in specialized areas, such as installing solar panels, but most would include existing jobs already being performed throughout the U.S. For instance, investment in wind power generation could create jobs for environmental engineers, iron and steel workers, truck drivers and machinists. Growth in second-generation biofuels may drive demand for chemists, agricultural supervisors and blending machine operators.

The report suggests raising the money by auctioning carbon permits in a national greenhouse gas cap-and-trade program.

Researchers from the Political Economy Research Institute at the University of Massachusetts at Amherst prepared the report on behalf of the Center for American Progress.

Tidal Power in France

Coming on the heels of the inauguration of the world’s first commercial scale tidal power turbine, Electricite de France (EDF) has announced that it plans to build a pilot tidal turbine system. The plan calls for 3 to 6 turbines to be built with capacities between 4 and 6 MW by 2011.

The location of the site (off Paimpol in Brittany) was chosen due to the extremely strong currents in the area.

While the recently installed SeaGen tidal power system in Ireland was certainly revolutionary, the French plan is as well. France alone has 80% of the potential in Europe for generating electricity from tidal currents—enough to theoretically create 10 million MWh per year.

This is not France’s first tidal power endeavor; The Rance tidal power plant in Brittany was the world’s first electrical generating system powered by tidal energy. The plant, constructed in 1966, outputs about 68 MW of power per year. However, the Rance plant has had severe environmental consequences due to its placement in a fragile estuary.

Fortunately, the new plan will not have such issues—unlike the polluting barrage system used in older tidal plants, the EDF turbines are free-floating.

And the EDF plan has big implications—if all goes well with the pilot project, France hopes to make tidal power an integral industry in the country.

Electric Car Innovation in Palestine

By Nick Chambers

Published on July 11th, 2008

Posted in Electric Cars (EVs), International issues

The Christian Science Monitor (CSM) has reported on two business partners in Gaza who have converted a 1994 Peugeot 205 into an electric car capable of going 110 miles on a single charge using 34 standard lead-acid car batteries.

After more than a year of being blockaded by the Isreali government, Gazans find themselves facing out-of-sight prices for fuel.

Instead of letting that get the better of them, civil engineers Waseem Khazendar and Fayaz Anan claim to have developed an electric motor that is different than other electric motors and allows for improved efficiency.

The converted Peugeot has 15 horsepower and can travel at a top speed of 60 mph. To most Americans this may seem underpowered, but on the 25 mile long and 7 mile wide Gaza strip this amount of power and speed is more than satisfactory — and in reality, it’s probably more than satisfactory for most Americans too.

The business pair say that they already have a few thousand orders to convert gas cars into electric cars, but due to the blockade they only have enough supplies to convert 30-40 more vehicles.

The conversion purportedly costs a mere $2,500 dollars to accomplish. As reported by the CSM, US experts are baffled as to how the conversion could be done for so little money and that using even the cheapest parts available in the US it would cost 3 times as much to do the conversion here.

Kahzendar and Anan are in the process of trying to patent their invention and hope to work together with Israelis to create a multimillion dollar business.

A quote in the CSM from an Israeli businessman after considering the possibility of working with the Gazans sums it up nicely: “I believe that business creates peace, and any peace project is good for everybody.”

Global Warming: Does it Matter?

By Moe Fakih

If you have lived in Tucson Arizona since the 1960s, you have been witnessing that record low temperatures happen much less than they were from 1910 to 1960. The City of Tucson's population is also growing and with an increasing number of people comes a proliferation of concrete and steal. As more buildings and roads are built a heat island develops. Asphalt and concrete absorb heat at different rates depending on how dark the item. Typically the darker the concrete the more heat it absorbs. Lighter surfaces will reflect heat or absorb less heat than darker objects. So as Cities expand, so does their heat absorbing, paved areas; therefor since most major cities are growing, it is believed that heat islands will also increase. Perhaps this contributes to Earth's average mean temperature increases.

The snow is melting on Mt. Kilimanjaro, Kenya. This is a fact. Another fact is that the rain forest at the base of the mountain is being shredded, thus less moisture is whispped up the mountain, less moist air becomes cooled, and less snow is replenishing white caps. Could the fact that the destruction of the local ecosystem have contributed to glaciers dissapearing on Kilimanjaro and not Al Gore's Inconvenient Truth?

Are we witnessing Global Warming or are there other explanations where areas of the Earth is getting hotter or cooler like in Punta Arenas (at the tip of South America), where they have a GISTEMP station record posted on the wall which shows a long-term cooling trend? The middle of Antarctica is also cooling and large glacier sections are getting thicker.

Those are some arguments against Global Warming.

Is global warming a real threat or are there other factors that may explain why the mean surface temperature of the Earth is getting hotter?

Honestly, who cares?

As we watch pundits, politicians, and arm chair politicos debate over whether global warming is a fear tactic to change behavior or a legitimate scientific concern, we should rise above the muck and consider the other reasons why we should design cities so they do not place added strain on resources and the environment, for example. We should consider what products we procure especially when they could come from a rain forest slaughter mill or which region we need to patrol to protect our petrol-chemical intrests. As my friend comments below, humans need to rethink how their behavior affects the environment.

It's not only about Global Warming. It's about how we perceive ourselves in relation to the Country and to the World. Is our job to take care of the bordered fencing on our plot of land? Is our only concern that Conner, Sally, and Alex make it to soccer and cheer practice on time while mom looks for a second job to pay down last year's Holiday expenses? Or should our concerns expand beyond the mind numbing noise, endless chatter and bleeding mass media headlines that help keep us captivated and distracted?

I'm picturing an Ostrich with its head in the sand right now where its wallet, its way of life, its values and its substance is being compromised. It has been sold that having a head in the sand is American, it's good for the economy, and will help fight terror.

It's so much more than Global Warming.

Rethink U.S. goals
by Omar Masry

It seems like every day, I can open up the Register to a healthy debate over the ramifications of global warming and whether global warming even exists or if it's even the fault of humans. As a city planner, I sometimes wonder if it even matters anymore. The climate is changing in ways we can't simply reverse, no matter our intention, and whether it's due to humans doesn't undo the present. What matters more to me, especially as a veteran of the Iraq war, is how dependent we are on unstable areas for the energy that powers so much of our economy.

It's time to ask: Where is our space race? Where is our generation's challenge? Where is our paradigm shift to rethink American?" Heck, even crotchety oilmen like T. Boone Pickens are saying it's time for change. Surely, that change has to be something more than the next iPhone.

Omar's comment is published in the Orange County Register:
http://www.ocregister.com/articles/doctrine-oil-congress-2091254-fairness-newspapers

Renewable Energy Jobs Growing Worldwide: Study

By Jonathan Bardelline

Renewable energy accounts for the employment, directly or indirectly, of 2.3 million people worldwide, with the largest gains made where governments support renewables, according to a Worldwatch Institute study.

"It depends very, very strongly on government policy and investment private companies take," said Michael Renner, Worldwatch researcher and author of the "Jobs in Renewable Energy Expanding" report. "Even in the years up to now, we have clearly seen countries that give consistent, strong support, for example in Europe, in Germany and Spain."

Using available data, the study estimates there are 1 million biomass and biofuel jobs, 624,000 solar thermal jobs, 300,000 wind jobs and 170,000 solar photovoltaic jobs. Figures include jobs directly in the renewables sector and jobs indirectly related, such as suppliers that provide equipment components.

The data is incomplete due to the fact that one can't look at traditional economic statistics to see the number of renewables jobs, Renner said.

Using what's available, the Worldwatch study shows Germany has 259,000 renewables jobs (a figures estimated to grow to 500,000 by 2020), Spain has 89,000 direct and 99,000 indirect jobs, and the United States, due mostly to support from individual states, had 200,000 direct and 246,000 indirect jobs in 2006.

Renner notes that as renewables jobs have expanded, employment in the coal, oil and natural gas industries have shrunk. In the past 20 years, output of coal has grown by one-third while the number of coal jobs was slashed in half.

Long-term outlooks put the number of wind energy jobs by 2030 at 2.1 million and solar jobs by that same year at 6.3 million. More people will be employed not only in manufacturing wind turbines and solar panels, the study says, but in installing, operating and maintaining the equipment, all jobs that will contribute to local employment growth. Kenya, for example, has 10 large solar photovoltaic companies and 1,000-2,000 solar technicians.

Even though governments have supported the growth of renewables, Renner pointed out that at least in one case, government does not need to increase or maintain high subsidies.

"In Germany for example, the level at which alternative energy, solar, wind and so on are being subsidized deceases each year," he said. "The key is it provide the overall framework that allows investors to say, 'This is something that is not going to lose money forever, this really is a good prospect...this can stand on its own feet.'"

Other factors that have helped renewables grow are guaranteeing renewable energy will be available from the grid and setting guaranteed rates for buying renewable energy.

http://www.greenbiz.com/news/2008/07/11/renewable-energy-jobs-growing

Blankness: Failure in American Leadership

By Moe Fakih

On an overcast southern California afternoon, I rolled my Honda Accord V6 to the fuel pump at a local Chevron station. I quickly remembered those emails blasts calling for a boycott of Chevron and Exxon/Mobile stations to force fuel prices down. That worked well. A few yards away the employees at the car wash were diligently drying off newly washed vehicles. Out of the nine vehicles being wiped down, six were of the sport utility variety.

While stepping out of my car, I scanned the faces of the customers who were waiting to climb into their rejuvenated vehicles. Who are the ones driving the SUVs, I thought? It was difficult to tell because cheerful expressions upon their faces were missing like George Bush from news headlines. A couple of frowns, one gentleman was sitting with his arms and legs crossed, another was staring off into the distance. One lady was looking down blankly at her cell phone.

I swiped my credit card, verified my zip code and proceeded to fuel up on 89 Octane in the automatic fashion I’m accustomed to. Then I realized that I was filling up at $4.01 per gallon. I pulled out my camera phone to record this historic occasion. For the first time it cost me over $50 to fill up my gas tank. Shaking off sticker shock, I chuckled and shook my head, thinking, I’m glad I’m not rolling in an Escalade.

So how did we get here? A revolution took place after Ronald Regan took office in 1980. At that point Americans had lost confidence in their government. John F Kennedy was assassinated in 1963, the Vietnam War was largely seen as unnecessary and costly in both lives and capital, in 1972 OPEC launched an oil embargo that brought the US economy to its knees, Richard Nixon was impeached for his involvement in the Watergate scandal, and the fall out of the OPEC embargo resulted in double digit interest rates under President Jimmy Carter’s tenure.

A malaise swept across America that enabled Ronald Regan to sweep into the white house on a platform that government was the enemy and change must come from the American people vise-a-vi the private sector. By encouraging business development in the private sector, by propping up large companies, a trickle down effect would take place putting money in people’s pockets. Change was indeed on the way.

One of the first things Mr. Reagan did after entering office was to remove the solar cells installed on the White House roof and gut Carter’s solar program that was seeking to achieve 20% of America’s energy through sun power by the year 2000. Carter’s notion of “conserving” was seen as running counter to Reagan’s “consumer” approach to help stimulate the economy.

"In June or July of 1981, on the bleakest day of my professional life, they descended on the Solar Energy Research Institute, fired about half of our staff and all of our contractors, including two people who went on to win Nobel prizes in other fields, and reduced our $130 million budget by $100 million," recalls Denis Hayes, the founder of Earth Day, who had been hired by Carter to spearhead the solar initiative.[1]

Reagan and Congress stopped pushing new auto efficiency standards, acceding to Detroit's desire to leave them at Carter-era levels. They let the solar tax benefit expire, and the young solar industry went belly-up.

It was time to let the markets work their magic and stop all this government tinkering, Reagan and conservatives said.

But what’s interesting is that as Carter was touting solar energy, he was also deregulating price controls on the oil and gas industry. Regan took the credit for untying the hands of the oil industry to charge “market” prices. However, Carter also pushed a "Windfall Profits Tax" on the belief that decontrol would bring higher prices and, thus, higher profits to oil companies that "really don't deserve them.”[2] Later congress quietly repealed the Windfall Profits Tax.

Now the oil companies are able to dictate price unabated. Congress reduces fuel efficiency requirements for automobiles, and in 2002 small business operators, whether they are farmers, contractors or Realtors received a $25,000 tax deduction if the car they buy weighs over 6,000 pounds or more – a light truck or SUV.

Below is a graph showing fuel efficiency standards since 2002 and into the future. The United States is in last place with regards to fuel efficiency for automobiles.

Figure 1: Actual and Projected Fuel Economy for New Passenger Vehicles by Country, 2002-2018.

American leadership should be placed on the side of a milk carton. Or perhaps a billboard should read, “Have you seen this country?” only to display a map of the United States.

Simply put, the US government since Carter, since the assassination of John F. Kennedy, has been working more so in the best interest of the petrochemical industry and its cousin, the military industrial complex than for the best interest of the American people.

What we are witnessing at the pump today is a culmination of successive administration's (both Republican and Democratic) intention to successfully keep Americans hooked on obsolete technology while espousing free markets, jobs and patriotism.

Jobs surely have been created: in India and China as a matter of fact.

The US market truly is as free as the American Bald Eagle - $4 gas and climbing, an endless war in the Middle East, crumbling housing market, low consumer confidence, mounting household debt, blue states, red states and a deregulated media that is focused more on ratings than on the facts.

How did we get here? Perhaps the blank stares of those people at the car wash may explain it.

---

[1] Koff Stephen, Was Jimmy Carter right?. Energy Bulletin. 1 October 2005. http://www.energybulletin.net/9657.html

[2] Anderson William, Rethinking Carter. Ludwig von Mises Institute. 25 October, 2000. http://mises.org/story/535

Home Brew for the Car, Not the Beer Cup

New York Times
By MICHAEL FITZGERALD

WHAT if you could make fuel for your car in your backyard for less than you pay at the pump? Would you?

The first question has driven Floyd S. Butterfield for more than two decades. Mr. Butterfield, 52, is something of a legend for people who make their own ethanol. In 1982, he won a California Department of Food and Agriculture contest for best design of an ethanol still, albeit one that he could not market profitably at the time.

Now he thinks that he can, thanks to his partnership with the Silicon Valley entrepreneur Thomas J. Quinn. The two have started the E-Fuel Corporation, which soon will announce its home ethanol system, the E-Fuel 100 MicroFueler. It will be about as large as a stackable washer-dryer, sell for $9,995 and ship before year-end.

The net cost to consumers could drop by half after government incentives for alternate fuels, like tax credits, are applied.

The MicroFueler will use sugar as its main fuel source, or feedstock, along with a specially packaged time-release yeast the company has developed. Depending on the cost of sugar, plus water and electricity, the company says it could cost as little as a dollar a gallon to make ethanol. In fact, Mr. Quinn sometimes collects left-over alcohol from bars and restaurants in Los Gatos, Calif., where he lives, and turns it into ethanol; the only cost is for the electricity used in processing.

In general, he says, burning a gallon of ethanol made by his system will produce one-eighth the carbon of the same amount of gasoline.

“It’s going to cause havoc in the market and cause great financial stress in the oil industry,” Mr. Quinn boasts.

He may well turn out to be right. But brewing ethanol in the backyard isn’t as easy as barbecuing hamburgers. Distilling large quantities of ethanol typically has required a lot of equipment, says Daniel M. Kammen, director of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley. In addition, he says that quality control and efficiency of home brew usually pale compared with those of commercial refineries. “There’s a lot of hurdles you have to overcome. It’s entirely possible that they’ve done it, but skepticism is a virtue,” Mr. Kammen says.

To be sure, Mr. Quinn, 53, has been involved with successful innovations before. For instance, he patented the motion sensor technology used in Nintendo’s wildly popular Wii gaming system.

More to the point, he was the product marketing manager for Alan F. Shugart’s pioneering hard disk drive when the personal computer was shifting from a hobbyists’ niche to a major industry. “I remember people laughing at us and saying what a stupid idea it was to do that disk drive,” Mr. Quinn says.

Mr. Butterfield thinks that the MicroFueler is as much a game changer as the personal computer. He says that working with Mr. Quinn’s microelectronics experts — E-Fuel now employs 15 people — has led to breakthroughs that have cut the energy requirements of making ethanol in half. One such advance is a membrane distiller, which, Mr. Quinn says, uses extremely fine filters to separate water from alcohol at lower heat and in fewer steps than in conventional ethanol refining. Using sugar as a feedstock means that there is virtually no smell, and its water byproduct will be drinkable.

E-Fuel has bold plans: It intends to operate internationally from the start, with production of the MicroFueler in China and Britain as well as the United States. And Mr. Butterfield is already at work on a version for commercial use, as well as systems that will use feedstocks other than sugar.

Ethanol has long had home brewers, and permits are available through the Alcohol and Tobacco Tax and Trade Bureau. (You must be a property owner and agree to make your ethanol outdoors.) But there are plenty of reasons to question whether personal fueling systems will become the fuel industry’s version of the personal computer.

For starters, sugar-based ethanol doesn’t look much cheaper than gas. It takes 10 to 14 pounds of sugar to make a gallon of ethanol, and raw sugar sells in the United States for about 20 cents a pound, says Michael E. Salassi, a professor in the department of agricultural economics at Louisiana State University. But Mr. Quinn says that as of January this year, under the North American Free Trade Agreement, he can buy inedible sugar from Mexico for as little as 2.5 cents a pound, which puts the math in his favor. While this type of sugar has not been sold to consumers, E-Fuel says it is developing a distribution network for it.

In addition, it’s illegal in the United States to operate a car on 100 percent ethanol, with exceptions for off-road vehicles like Indy cars and farm equipment. Mr. Quinn has a federal permit to make his own fuel, and believes that if MicroFuelers start popping up like swimming pools, regulators will adapt by certifying pure ethanol for cars.

Despite all the hurdles, Mr. Quinn and Mr. Butterfield may be on to something. There are plenty of consumers who want to reduce their carbon footprint and are willing to make an upfront investment to do it — consider the success of the Prius.

And if oil prices continue to rise, the economics of buying a MicroFueler will become only better and better.

Gobi Desert Devouring China

Each year, the Gobi Desert devours 2,460 square miles of Chinese soil, an area roughly the size of Delaware,” writes Free Market Investor Chris Hancock. “Violent sandstorms threaten to conquer Beijing. Dunes now tower just 43 miles from the ancient capital…firmly marching south, like Sherman through the soft Georgia pines, at a brisk 12-15 mile per year clip:

Why is Asia’s largest desert growing so quickly? It is because of a process scientists call desertification. Basically, China’s rapid economic growth comes at a great price, as the fast-approaching desert threatens to blanket Beijing before the Summer Olympics in 2008.

The solution? The ‘Green Wall.’ Beijing officials set aside $8 billion to construct a natural wall of trees spanning more than 2,000 miles.

But they’re no match. Trees need water. And air pollution inhibits precipitation. Researchers from Israel’s Hebrew University of Jerusalem and the Chinese Academy of Meteorological Sciences found that on hazy days, precipitation from the top of Mount Hua in China’s northwestern Shaanxi province is cut by up to 50%.

Consequently, one-quarter of China currently finds itself buried beneath sand… two out of every three major Chinese cities have less water than they need. Cities in northeast China have roughly five-seven years left before they completely run dry.

Story taken from
http://www.agorafinancial.com/5min/category/todays-5-minutes/

Masdar Plans World's First Green City

Dubai, Abu Dhabi, United Arab Emirates, sultans and shieks - these are foreign terms to us Westerners, but ones we no doubt will become familiar with. If you saw the television program 60 Minutes recently, you may have been awe-struck by the development occurring in Dubai, one of seven states (called Emerates) that comprise the United Arab Emirates (UAE).

http://www.masdaruae.com/

Dubai is building as fast as it can & sans environmental regulations. Dubbed the richest city in the world, it has $300 billion in development projects underway, including a skyscraper twice the height of NYCs Empire State Building. Next door, another UAE state called Abu Dhabi is following in its footsteps, but is taking a more sustainable approach. Its fascinating Madscar initiative is an attempt to create the worlds first sustainable city - Arab-style.

In April 2006, Abu Dhabi decided to create Masdar - which means - the Source - in Arabic, a walled city covering 640 hectares. Promoters say it "will be living testimony to the possibility of sustainable cities." The Abu Dhabi Future Energy Company, the company executing the Masdar initiative, calls it the "creation of a historic global shift to new energy sources and sustainable resource utilization."

In contrast to neighboring Dubai, which is building an energy-consumptive city of glass, steel and concrete towers, Masdar is being designed to run entirely on renewable energy. World renown architect Lord Foster is designing Masdar so that its 50,000 residents will live on streets modeled on traditional souks and medinas - but draped with shades of fabric that convert sunlight into electricity. Canals will run alongside the streets, some of which will be only 10 feet wide to protect pedestrians from the heat, which averages over 40C in the shade during the summer. There will be fields of solar concentrating mirrors in the desert and wind turbines will catch breezes from the Gulf.

Palm and mangrove plantations will create a green belt around the city to provide raw material for bio-fuels, a new industry that, say developers, may one day supplement oil and gas revenues. The tiny emirate is the fifth largest exporter of oil in the world, but it is envisaged that Masdar City will not need a drop. "We want to position ourselves as thinkers and progressives," says Sultan Al Jaber, the chief executive of Masdar. "Years ago in the Middle East we lived in a very sustainable environment. We are bringing that back by creating a compact city where people don't need to use a car."

Adjacent to Abu Dhabi International Airport, the goal is to create a city based on sustainable employment, eventually facilitating a population of 100,000. The first stage of development will set the tone for the entire project; the construction of a state-of-the-art photovoltaic power plant that will deliver the energy required to build the entire city!

The compact, high-density city will be completely free of cars and their emissions; a world model of energy conservation with zero carbon emissions and zero waste. Compared to average urban levels, fossil fuel consumption will be reduced by 75%, water demand by 300% and waste production by 400%. Cycling and walking will be the most common means of travel.

Accoring to the city's master plan, no one will be more than 200 meters from essential facilities, including shops selling locally grown produce. A fully automated, electric Personal Rapid Transit System will provide a flexible and comfortable alternative to private cars. A Light Railway Transport system will link the Masdar development to adjacent developments, the airport and in the future with the center of Abu Dhabi.

Futuristically, developers plan to integrate real time monitoring of energy use and carbon emissions in public spaces. Digital management and intelligent systems with sensors and data mining will provide information to support the decisions of individuals and service providers.

Through a micro-chip-like network of connections, developers plan to coalesce the expertise and resources to enable global technological breakthroughs in advanced energy technologies. There will be a university education and research center - the Masdar Institute of Science and Technology (in partnership with MIT) - which will offer Masters and PhD programs in science and engineering disciplines focused on advanced energy and sustainability. Its research and educational institutions and partnerships will search for solutions to mankind's most pressing problems: energy security, climate change and truly sustainable human development.

Special economic zones will attract business and commercial partners focused on the advanced energy systems and technologies from around the world, from start-ups to major corporations.

The city is being designed based on local climate and cultural traditions, particularly its solar movements and prevailing winds. Its orientation captures cooling sea breezes from the North, while its perimeter protects against the warmer desert winds. The Eastern wall facing the airport will be raised to provide a buffer, reducing aircraft noise in the city. Shaded by PV collecting canopies, courtyards and wind towers will draw cooling breezes into the narrow streets and filter harsh sunlight, conjuring images of ancient bazaars and market places.

Construction materials with a high thermal mass will considerably reduce energy requirements. The relationship of one building to the next will provide shading and generate year round useable spaces between them. Solar collectors will be on roofs throughout the city; wind turbines will be placed at its outskirts. The perimeter wall will form an intelligent outer shell, housing the energy, environmental and recycling services.

A solar powered desalination plant will provide a potable drinking water supply. Wastewater will be purified and recycled back to the city. In the process, it will be used to grow tree plantations, contributing to its biofuels strategy.

Carbon Sequestration is Key

The United Arab Emirates (UAE) has embarked on an initiative to develop a national CO2 capture and storage (CCS) network. Leaders believe the country can reduce its CO2 emissions by 40%, while increasing oil production by up to 10% and liberatinq large quantities of natural gas by separating CO2 from industrial and energy related sources and delivering them to oil reservoirs for enhanced oil recovery.

In February, the Abu Dhabi Future Energy Company released an international request for proposals to conduct a feasibility study for carbon sequestration. The study initially targets Abu Dhabi and is expected to later expand to cover the rest of the UAE. The multi-billion dollar CCS program is the largest of its kind in the world and the first to be undertaken at a national level. Canadian firm SNC-Lavalin has been selected to conduct the study, which will be completed by the end of the year.

The firm will evaluate and rank options for onshore and offshore CO2 capture from industrial facilities in Abu Dhabi, and will identify the first project to be implemented as part of the network, provide a roadmap to develop the network and potentially link it with similar schemes across the region.

Sultan Ahmed Al Jaber, CEO of Abu Dhabi Future Energy Company, says, "CCS is the most promising technology for the reduction of energy-based CO2 emissions and a viable substitute for the vast amount of natural gas currently re-injected into oil reservoirs for pressure maintenance. It's a win-win, reducing CO2 emissions in the country, while increasing oil production and maximizing natural gas availability."

Future Solar Leader

Besides powering the city using solar, Masdar has visions of becoming the premium developer and installer of renewable energy systems in the Middle East and North Africa region. It has entered into a partnership with one of the world's leading renewable energy developers, Conergy AG of Germany.

The partnership will start with solar PV and then span out to fully integrated renewable energy systems including solar cooling, wind and biomass technologies. The partnership with Conergy will support Abu Dhabi's objectives to build local capacity and capability by transferring knowledge to UAE based resources in manufacturing, engineering, project management and finance of large scale renewable energy projects. Conergy will also assist Masdar in identifying and analyzing global trends in alternative energy technologies and translate them into international business opportunities.

The Masdar Clean Tech Fund, L.P. is a $250 million fund that will build a portfolio of cleantech funds, committing about $75 million to 3-5 fund managers. The remaining capital will be invested in co-investments alongside fund managers, direct investments in companies sourced by the Fund and strategic joint-venture investments. The Fund will seek to invest in companies with technologies that are suitable for commercialization in the United Arab Emirates.

Abu Dhabi is competing with Dongtan, China, which is trying to create the world's first zero carbon city on an island at the mouth of the Yangtse. The emirate believes it will win the race. "We are seeing a transition from the industrial age of human civilisation to the ecological age," says Peter Head, a director of Arup, the British engineering firm that is building Dongtan.

Study: Oil Decline Brings Risk of War

Steep decline in oil production brings risk of war and unrest, says new study

· Output peaked in 2006 and will fall 7% a year
· Decline in gas, coal and uranium also predicted

Ashley Seager
Monday October 22, 2007
The Guardian


Oil platform in the Gulf of Mexico at sunset. Photo: Larry Lee/Corbis


World oil production has already peaked and will fall by half as soon as 2030, according to a report which also warns that extreme shortages of fossil fuels will lead to wars and social breakdown.

The German-based Energy Watch Group will release its study in London today saying that global oil production peaked in 2006 - much earlier than most experts had expected. The report, which predicts that production will now fall by 7% a year, comes after oil prices set new records almost every day last week, on Friday hitting more than $90 (£44) a barrel.

"The world soon will not be able to produce all the oil it needs as demand is rising while supply is falling. This is a huge problem for the world economy," said Hans-Josef Fell, EWG's founder and the German MP behind the country's successful support system for renewable energy.

The report's author, Joerg Schindler, said its most alarming finding was the steep decline in oil production after its peak, which he says is now behind us.

The results are in contrast to projections from the International Energy Agency, which says there is little reason to worry about oil supplies at the moment.

However, the EWG study relies more on actual oil production data which, it says, are more reliable than estimates of reserves still in the ground. The group says official industry estimates put global reserves at about 1.255 gigabarrels - equivalent to 42 years' supply at current consumption rates. But it thinks the figure is only about two thirds of that.

Global oil production is currently about 81m barrels a day - EWG expects that to fall to 39m by 2030. It also predicts significant falls in gas, coal and uranium production as those energy sources are used up.

Britain's oil production peaked in 1999 and has already dropped by half to about 1.6 million barrels a day.

The report presents a bleak view of the future unless a radically different approach is adopted. It quotes the British energy economist David Fleming as saying: "Anticipated supply shortages could lead easily to disturbing scenes of mass unrest as witnessed in Burma this month. For government, industry and the wider public, just muddling through is not an option any more as this situation could spin out of control and turn into a complete meltdown of society."

Mr Schindler comes to a similar conclusion. "The world is at the beginning of a structural change of its economic system. This change will be triggered by declining fossil fuel supplies and will influence almost all aspects of our daily life."

Jeremy Leggett, one of Britain's leading environmentalists and the author of Half Gone, a book about "peak oil" - defined as the moment when maximum production is reached, said that both the UK government and the energy industry were in "institutionalised denial" and that action should have been taken sooner.

"When I was an adviser to government, I proposed that we set up a taskforce to look at how fast the UK could mobilise alternative energy technologies in extremis, come the peak," he said. "Other industry advisers supported that. But the government prefers to sleep on without even doing a contingency study. For those of us who know that premature peak oil is a clear and present danger, it is impossible to understand such complacency."

Mr Fell said that the world had to move quickly towards the massive deployment of renewable energy and to a dramatic increase in energy efficiency, both as a way to combat climate change and to ensure that the lights stayed on. "If we did all this we may not have an energy crisis."

He accused the British government of hypocrisy. "Tony Blair and Gordon Brown have talked a lot about climate change but have not brought in proper policies to drive up the use of renewables," he said. "This is why they are left talking about nuclear and carbon capture and storage. "

Yesterday, a spokesman for the Department of Business and Enterprise said: "Over the next few years global oil production and refining capacity is expected to increase faster than demand. The world's oil resources are sufficient to sustain economic growth for the foreseeable future. The challenge will be to bring these resources to market in a way that ensures sustainable, timely, reliable and affordable supplies of energy."

The German policy, which guarantees above-market payments to producers of renewable power, is being adopted in many countries - but not Britain, where renewables generate about 4% of the country's electricity and 2% of its overall energy needs.

State of the Paper Industry Sees 'Green Wave' Changes Coming Quickly

State of the Paper Industry Sees 'Green Wave' Changes Coming Quickly
Source: GreenBiz.com

ASHEVILLE, N.C., Oct. 3, 2007 -- The new report, released by the Environmental Paper Network, examines how the paper is made today in the face of growing environmental awareness in the U.S., and calls for major changes across the industry to reduce impact and increase sustainability.

The Environmental Paper Network (EPN) is a coalition of environmental organizations seeking socially and environmentally sustainable transformations within the pulp and paper industry. The group's "State of the Paper Industry" report has been billed as the first to comprehensively address how the industry sources its materials, addresses supply chain issues, deals with end-of-life for its products, and its impacts on communities and the climate.

The need for this assessment, the group says, is that a "green wave" is sweeping North America, with ever-increasing numbers of consumers and companies seeking to address and minimize their impact on the environment. In recent months, companies across many niches of the industry have adopted green paper policies, including Victoria's Secret, Williams Sonoma, Staples, FedEx-Kinkos and Random House.

"The good news is that a shift within the paper industry has begun, and corporate leaders are emerging across every sector to embrace new tools for responsible choices, responsible production and major climate, health and forest benefits," said Joshua Martin, Environmental Paper Network Coordinator.

Martin said the report offers a vision and a challenge to the paper industry and hopes to set a baseline of environmental data that companies can use to make significant progress in coming years.

The report's findings detail a list of negative environmental impacts, including:

• The paper industry is the fourth largest contributor to greenhouse gas emissions among United States manufacturing industries.
• Paper accounts for 25 percent of landfill waste, the largest of any single component.
• Paper production accounts for over 40 percent of the world's industrial wood harvest
• Paper production is one of the world's largest consumers and polluters of fresh water
• Paper production continues to come into conflict with indigenous and other communities around the world over land rights, culture, human health, and livelihoods

But at the same time, the green wave cited by the report's authors include significant opportunities for companies to embrace:

• Growing market demand for environmentally responsible paper products
• Growing acreage of Forest Stewardship Council certified sustainable forestry
• Cleaner production and alternatives to chlorine bleaching
• Increasing recovery of waste paper
• The emergence of innovative, corporate leaders.

Among the improvements the EPN would like to see from the industry are responsible, certified forestry practices, paper recyling and recovery, a move to reduce paper consumption by its customers, and a shift toward clean production that reduces bleach and toxin emissions.

Global Marshall Plan

The trick will be to get leaders to buy in and to show that such a plan will help leaders get re-elected. If the process can move forward without what's viewed as "economic pain", then momentum will carry the globe towards a green revolution. I'm pretty sure the benefits outweigh the costs associated with initiating a global plan to clean up industry. A lean and mean business operation is proven to be more profitable, and the innovations in the green sector will create hundreds of thousands of jobs - new technology = new jobs.

Gore calls for ‘global Marshall plan’

By Daniel Pimlott in New York

Published: September 26 2007 19:37 | Last updated: September 26 2007 19:37

Al Gore, the former US vice-president, on Wednesday called for a “Marshall plan” to make job creation and measures to address climate change compatible and urged President George W. Bush to commit to mandatory cuts in carbon dioxide emissions.

“This is an emergency,” Mr Gore told the opening session of the Clinton Global Initiative. “I think that the key to fighting global poverty is to have the wealthy nations and the developing nations join together to reduce global warming … I think what we need is a global Marshall plan to make the creation of jobs around the reduction of carbon the central principle for how we develop this.”

Mr Gore said Mr Bush should follow the example of former US president Ronald Reagan, who after an initial delay responded to the 1985 discovery of a hole in the ozone layer by supporting a marked reduction in chlorofluorocarbons, or CFCs.

“We have to have a binding reduction on carbon,’’ he said.

Robert Zoellick, the head of the World Bank, sounded a sceptical note on the developing world’s ability and desire to reduce carbon emissions, however. Poorer countries are worried aid is going to be “hijacked” by the climate change agenda, Mr Zoellick said.

Countries such as China and India threaten to become the world’s top producers of carbon dioxide, as they ramp up energy use to feed rampant economic growth. The rapid development of poorer countries is considered by many scientists and economists to be one of the chief challenges in tackling climate change.

“There is some sensitivity in the developing world that resources that can be channelled to climate change will come at the expense of other development needs,” Mr Zoellick said. “It needn’t be that way, it shouldn’t be that way… but it is the responsibility of the developed world to reassure the developing world that it doesn’t come at their expense and instead can come in support of their aims of overcoming poverty.”

“Every place I went, people are very worried that developed countries are going to hijack spending,” he added. “We have to explain how it fits their energy and growth needs.”

Mr Zoellick said the bank could assist developing countries combat climate change through advice in taking part in carbon-trading markets, assisting in accessing technological advances and innovations, but “always putting the focus on development”.

The World Bank estimates that 1.6bn people around the world do not have access to electricity. The developing world currently has a funding gap of around half of the $160bn investment needed annually to fulfil growing demand for electricity, the bank says.

Bill Clinton, the former US president whose organisation is hosting the philanthropic forum for world leaders and top businesses, also called on the World Bank to promote ways of dealing with climate change to the governments it deals with. He argued that the organisation needed to persuade developing countries that they could grow in ways that would alleviate damage to the environment and benefit economic growth.

“We don’t have a right to ask anybody in the world to stay poor, but if you can show them that they can get rich quicker … by pursuing a cleaner energy path… that would be a valuable role for the World Bank,” he said. “People can’t seize options they are not aware of.”

Are we headed for an epic bear market?

By Jon Markman
MSN Money

Satyajit Das is laughing. It appears I have said something very funny, but I have no idea what it was. My only clue is that the laugh sounds somewhat pitying.

One of the world's leading experts on credit derivatives, Das is the author of a 4,200-page reference work on the subject, among a half-dozen other tomes. As a developer and marketer of the exotic instruments himself over the past 30 years. He seemed like the ideal industry insider to help us get to the bottom of the recent debt crunch -- and I expected him to defend and explain the practice.

I started by asking the Calcutta-born Australian whetherthe credit crisis was in what Americans would call the "third inning." This was pretty amusing, it seemed, judging from the laughter. So I tried again. "Second inning?" More laughter. "First?"

Still too optimistic. Das, who knows as much about global money flows as anyone in the world, stopped chuckling long enough to suggest that we're actually still in the middle of the national anthem before a game destined to go into extra innings. And it won't end well for the global economy.

An epic bear market

Das is pretty droll for a math whiz, but his message is dead serious. He thinks we're on the verge of a bear market of epic proportions.

The cause: Massive levels of debt underlying the world economy system are about to unwind in a profound and persistent way.

He's not sure if it will play out like the 13-year decline of 90% in Japan from 1990 to 2003 that followed the bursting of a credit bubble there, or like the 15-year flat spot in the U.S. market from 1960 to 1975. But either way, he foresees hard times as an optimistic era of too much liquidity, too much leverage and too much financial engineering slowly and inevitably deflates.

Like an ex-mobster turning state's witness, Das has turned his back on his old pals in the derivatives biz to warn anyone who will listen -- mostly banks and hedge funds that pay him consulting fees -- that the jig is up.

Rather than joining the crowd that blames the mess on American slobs who took on more mortgage debt than they could afford and have endangered the world by stiffing lenders, he points a finger at three parties: regulators who stood by as U.S. banks developed ingenious but dangerous ways of shifting trillions of dollars of credit risk off their balance sheets and into the hands of unsophisticated foreign investors; hedge and pension fund managers who gorged on high-yield debt instruments they didn't understand; and financial engineers who built towers of "securitized" debt with math models that were fundamentally flawed.

"Defaulting middle-class U.S. homeowners are blamed, but they are merely a pawn in the game," he says. "Those loans were invented so that hedge funds would have high-yield debt to buy."

The liquidity factory

Das' view sounds cynical, but it makes sense if you stop thinking about mortgages as a way for people to finance houses and think about them instead as a way for lenders to generate cash flow and create collateral during an era of a flat interest-rate curve.Although subprime U.S. loans seem like small change in the context of the multitrillion-dollar debt market, it turns out these high-yield instruments were an important part of the machine that Das calls the global "liquidity factory." Just like a small amount of gasoline can power an entire truck given the right combination of spark plugs, pistons and transmission, subprime loans became the fuel that underlays derivative securities many, many times their size.

Here's how it worked: In olden days, like 10 years ago, banks wrote and funded their own loans. In the new game, Das points out, banks "originate" loans, "warehouse" them on their balance sheet for a brief time, then "distribute" them to investors by packaging them into derivatives called collateralized debt obligations, or CDOs, and similar instruments. In this scheme, banks don't need to tie up as much capital, so they can put more money out on loan.

The more loans that were sold, the more they could use as collateral for more loans, so credit standards were lowered to get more paper out the door -- a task that was accelerated in recent years via fly-by-night brokers now accused of predatory lending practices.

Buyers of these credit risks in CDO form were insurance companies, pension funds and hedge-fund managers from Bonn to Beijing. Because money was readily available at low interest rates in Japan and the United States, these managers leveraged up their bets by buying the CDOs with borrowed funds.

So if you follow the bouncing ball, borrowed money bought borrowed money. And then because they had the blessing of credit-ratings agencies relying on mathematical models suggesting that they would rarely default, these CDOs were in turn used as collateral to do more borrowing.

In this way, Das points out, credit risk moved from banks, where it was regulated and observable, to places where it was less regulated and difficult to identify.

Turning $1 into $20

The liquidity factory was self-perpetuating and seemingly unstoppable. As assets bought with borrowed money rose in value, players could borrow more money against them, and it thus seemed logical to borrow even more to increase returns. Bankers figured out how to strip money out of existing assets to do so, much as a homeowner might strip equity from his house to buy another house.

These triple-borrowed assets were then in turn increasingly used as collateral for commercial paper -- the short-term borrowings of banks and corporations -- which was purchased by supposedly low-risk money market funds.

According to Das' figures, up to 53% of the $2.2 trillion commercial paper in the U.S. market is now asset-backed, with about 50% of that in mortgages.

When you add it all up, according to Das' research, a single dollar of "real" capital supports $20 to $30 of loans. This spiral of borrowing on an increasingly thin base of real assets, writ large and in nearly infinite variety, ultimately created a world in which derivatives outstanding earlier this year stood at $485 trillion -- or eight times total global gross domestic product of $60 trillion.

Without a central governmental authority keeping tabs on these cross-border flows and ensuring a standard of record-keeping and quality, investors increasingly didn't know what they were buying or what any given security was really worth.

A painful unwinding

Now here is where the U.S. mortgage holder shows up again. As subprime loan default rates doubled, in contravention of what the models forecast, the CDOs those mortgages backed began to collapse. Because they were so hard to value, banks and funds started looking at all CDOs and other paper backed by mortgages with suspicion, and refused to accept them as collateral for the sort of short-term borrowing that underpins today's money markets.

Through late last month, according to Das, as much as $300 billion in leveraged finance loans had been "orphaned," which means that they can't be sold off or used as collateral.

One of the wonders of leverage is that it amplifies losses on the way down just as it amplifies gains on the way up. The more an asset that is bought with borrowed money falls in value, the more you have to sell other stuff to fulfill the loan-to-value covenants. It's a vicious cycle. In this context, banks' objective was to prevent customers from selling their derivates at a discount because they would then have to mark down the value of all the other assets in the debt chain, an event that would lead to the need to make margin calls on customers already thin on cash.

Now it may seem hard to believe, but much of the past few years' advance in the stock market was underwritten by CDO-type instruments which go under the heading of "structured finance." I'm talking about private-equity takeovers, leveraged buyouts and corporate stock buybacks -- the works.

So to the extent that the structured finance market is coming undone, not only will those pillars of strength for equities be knocked away, but many recent deals that were predicated on the easy availability of money will likely also go bust, Das says.

That is why he considers the current market volatility much more profound than a simple "correction" in prices. He sees it as a gigantic liquidity bubble unwinding -- a process that can take a long, long time.

While you might think that the U.S. Federal Reserve can help prevent disaster by lowering interest rates dramatically, as they did Wednesday, the evidence is not at all clear.

The problem, after all, is not the amount of money in the system but the fact that buyers are in the process of rejecting the entire new risk-transfer model and its associated leverage and counterparty risks.

Lower rates will not help that. "At best," Das says, "they help smooth the transition."

he fine print

Das notes that Japan in the 1990s lowered interest rates to zero and the country still suffered through a prolonged recession. His timetable for the start of the next serious phase of the unwinding is later this year or early 2008. . . . Das' most readable book for laypeople is "Traders, Guns & Money," an amusing exposé of high finance, published last year. Das occasionally writes a blog at his publisher's Web site. Also available are a boxed set of his reference books on derivatives and his book specifically on CDOs. . . .

Perhaps the oddest line on the subject by a world leader was uttered by Luiz Inacio Lula da Silva, the president of Brazil. Asked if he was worried about the effects of the credit crunch in his country, he dismissively called it "an eminently American crisis" caused by people trying to make a lot of "third-class money." . . . CDOs were first widely used back in the late 1980s by Drexel Burnham Lambert junk-bond king Michael Milken to sell off damaged and previously unsellable debt in a way that was more palatable to customers.

The Global Water Tool

by Joel Makower
August 2007
The Global Water Tool: Making Corporate Water Data a Little Less Dry
World Water Week ends tomorrow, an annual fete of all things H2O. The event, held in Stockholm, is the leading global meeting place for experts from businesses, governments, science, NGOs, academe, and United Nations agencies. This year's event featured the launch on Tuesday of a remarkable Global Water Tool, a free online resource to help companies calculate water consumption and efficiency across a portfolio of facilities around the world.

The tool is the product of the World Business Council on Sustainable Development, a Geneva-based organization of some 200 international companies representing 30 countries and 20 industrial sectors. Nearly all of its members have core businesses that depend heavily on water: Alcan and Alcoa (aluminum production), ConocoPhillips and Shell (oil production and refining), Dow and Dupont (chemicals and ag products), Rio Tinto (mining), Lafarge and Holcim (cement), Pepsico and Suez (water and beverages).

Indeed, pretty much all large companies depend heavily on water.

One of the challenges such companies face is assessing the potential risks posed by water's uneven quality and quantity from place to place, and even from time to time in the same place. For companies, the questions are many: How many sites are in extremely water-scarce areas? Which sites are at greatest risk? How that will change in the future? How many employees live in countries that lack access to improved water and sanitation? How many suppliers are in water-scarce areas now, or will be in ten or twenty years?

Few companies can comprehensively answer such questions, leaving them at risk for disruptive water shortages and droughts. A recent study by the Pacific Institute found that while most corporate sustainability reports address freshwater use, "few offer insight into many water-related risks facing businesses. Most reports lack context, quantitative data, supply chain information, and consistent methods and definitions," the institute reported. That's a risk unto itself, akin to being a timber company that isn't measuring and tracking the future of forests.

As I've noted in the past, water issues are of growing concern to business, especially with the rising tide of concern about climate change:

Unlike climate issues, where problems and their solutions have global impacts, water will be seen as a mostly local issue requiring local actions. But, if as experts predict, warmer climates and lowered water tables lead to widespread disruptions, activists and regulators will begin to connect the dots, foisting regulations or global treaties upon the business community.

It's not just the poorest economies where water is a concern. Wealthy nations, too are increasingly facing water stress for their plants, animals, and humans. In Australia, for example, what's been called the worst drought in a thousand years is pitting farmers selling food for export -- a major source of national income -- against households, communities, and industries needing water on the domestic front.

The World Water Tool aims to help companies evaluate and address water risks and impacts in their operations and supply chains in order to minimize risks. The tool is the brainchild of Jan Dell, vice president of CH2M Hill, the global engineering and construction firm, which has been doing water risk analyses for big companies for years. Dell was frustrated at the dearth of readily accessible up-to-date data about water at the local level around the world. Each time her firm did an analysis, they had to go online, pull data from a series of databases maintained by United Nations and other organizations, and put it together in some comprehensible way. It wasn't easy or efficient, even for experienced pros.

With good reason. Gathering data about water for a far-flung operation can be more complex than analyzing something like greenhouse gas emissions, which itself can be overwhemling for many companies. With climate, you simply add up the data from each location to measure your company's footprint; a ton of carbon is the same wherever you go. With water, your company's footprint depends in part on local water conditions. If water is scarce, even the most efficient operation may be too much. When it's plentiful, conservation measures may not make sense. So, you need to understand the local situation to make sound business decisions. For example, in areas with lots of water, it may not be cost effective to put in energy-intensive water recycling facilities.

"It occurred to me a that a tool could be created, and that it shouldn't be a commercial one," Dell recounted to me last week. With the strong backing of CH2M Hill chairman and CEO Ralph R. Peterson, Dell donated countless hours in partnership with WBCSD and its member companies to create a tool that would simplify the data gathering and analysis process -- and to make it free to all users.

The resulting tool has two parts: an input sheet and an online map. The input sheet contains the company's site location and water use information. After entering your company's water use figures, the sheet automatically provides outputs, including water indicators compatible with the Global Reporting Initiative requirements and downloadable metrics charts that demonstrate the company's data combined with both the country and watershed figures.

The online mapping feature enables companies to plot their sites with external water datasets (from the U.N.'s Food and Agriculture Organization, World Health Organization, and Unicef, among others) and download those locations in a map. These datasets provide several key metrics, including renewable water resource per capita, mean annual relative water stress index, and access to improved sanitation. The tool is linked to Google Earth, which provides spatial viewing of a company's site locations in relation to detailed geographic information, including surface water.

The product of all this is a comparison of your company's water uses with key external water-related data; key water GRI Indicators, inventories, risk and performance metrics and geographic mapping; an assessment of relative water risks in your company's portfolio; and the calculation of water consumption and efficiency data.

It sounds complex, but it's not. The tool is fairly intuitive to use. Says Dell: "It could have been a spaceship, but we really tried to build a bicycle that everyone could ride."

Poring over such calculations and assessments may seem, well, dry, to most of us, but they are nothing short of revolutionary for those inside companies seeking to understand how climate change and other environmental challenges create both risks and opportunities.

Of course, the goal in all of this is for companies to take action, "not just to collect data and make charts," as Dell put it. But one tends to follow the other, and that makes the World Water Tool an essential part of any big company's efforts to quench its thirst for water in a way that is sustainable -- economically, environmentally, and socially.

The Rise of the Chief Green Officer

The Rise of the Chief Green Officer
Source: John Davies, AMR Research

While solving the world's biggest problems profitably may seem like a stretch goal, industry leaders understand the need for building a sustainable business. Few, if any, question the impact of global warming, all have concerns about energy security, and the role of globally responsible citizenship is taken seriously. They also see unique opportunities for new products and services for the emerging green economy. The intersection of business risk and profitable opportunity is giving rise to a new role in the organization: the chief green officer.

The Journey from Compliance to Sustainability

Global enterprises do not pick up a focus on sustainability overnight. While many companies can rightly point to a long history of good citizenship and responsible stewardship, the impact of a business on the environment has become an increasingly important issue for senior management.

Many of the companies describe a journey of transformation -- a journey some have only recently begun while others started decades ago when their businesses faced critical environmental challenges.

For each of these companies, the journey can be characterized by four major stages:

• Compliance: Being legally accountable isn't really an option, but as a director at a large chemical company explained, "compliance by itself is extremely expensive. You need to integrate compliance to be a minor piece in a broader framework of sustainability."


• Personal commitment: In many of the leadership companies we visited, while past and present CEOs may have provided the initial enthusiasm, they also recognized the need for institutionalizing a philosophy of sustainability.


• Public trust: Earning public trust is a matter of mitigating risk as well as increasing brand attractiveness. While public relations, marketing, and lobbying efforts are sometimes viewed as "greenwashing," executives in leading companies dismiss that label. Their response is typically, "Don't trust us, track us."


• Sustainable growth: Besides being good community citizens, green business leaders are identifying opportunities to develop new green products as well as technologies that increase energy efficiency, reduce waste, and conserve critical resources.

Flipping the equation requires a change in perspective. While the journey for many enterprises can be described as a movement from compliance to corporate sustainability, the strategy needs to have teeth to be effective.

Enterprises that want to succeed in this new marketplace must integrate "green" thinking into their overall approach to business growth and profitability. One of the world's largest retailers described the change in perspective as follows: "At first, it was all defensive; we created checklists of things to do. But as the program evolved, it became more about being connected as a business in society. It was then that we saw the opportunities for growth as well as the savings from these initiatives."

As part of our work at AMR Research, we've developed the Green Leadership Framework, below. The framework is comprised of two axes of engagement: internal and external.

The lower left quadrant is relegated to issues of compliance. Green efforts driven by regulatory and legal compliance include responses to initiatives such as the following:

• Facility compliance: ISO 14000 is part of a series of international standards on environmental management.


• Product compliance: Includes legislation such as Restriction of certain Hazardous Substances (RoHS) and Waste Electrical and Electronic Equipment (WEEE).


• Health and safety management: Includes OHSAS 18001, an international occupational health and safety management system specification. For many companies, compliance is a collection of tactical initiatives.

Leaders, however, focus on more strategic engagement, both internally and externally. Internal engagement efforts tend to not only comply but embrace required compliance initiatives and view them only as a starting point to drive greater change throughout the organization. Internal initiatives target efficiency improvements with goals set at local sites and measurement systems providing a global rollup of corporate performance.

For many leaders, the eventual measure of success is a zero environmental footprint. In terms of external engagement, compliance initiatives serve to provide greater organizational transparency.

Beyond transparency, enterprises strive for a position of greater public trust. To achieve that, they must approach external engagement with a more proactive approach in terms of communicating their green strategies as companies engage with a wider variety of stakeholders than has been the norm in the past.

This can include creating closer ties with communities where the enterprise does business along with partnerships with non-governmental organizations such as Greenpeace and the National Resources Defense Council (NRDC) -- organizations that may have been viewed previously as adversaries.

The companies that exist in the green leadership quadrant are characterized by a corporate strategy that leverages both internal and external engagement to create green business opportunities. Initiatives undertaken by these companies are characterized by integrating their internal and external efforts through a cross-functional approach. In terms of supply chain, this includes working closely with suppliers and customers to share best practices and green strategies for success. For new product and service areas, this requires a new level of engagement with customers to create new opportunities for them to be more efficient and green.

Structuring the Organization for Green

In leadership organizations, we have noticed two distinct trends in terms of defining the role of the chief green officer. The single most important trend is the appointment of a chief green officer reporting directly to the CEO. This senior executive has a broad span of influence and control in terms of pursuing the company's green agenda.

Organizationally, the chief green officer oversees both internal and external opportunities. This translates to having direct and indirect reports that oversee environmental health and safety (EH&S), energy, procurement, and regulatory affairs. In addition to these organizations, the chief green officer in many cases is also directly or indirectly responsible for environmental stewardship, corporate communications, strategic partnerships, and product innovation.

While the span of influence for the chief green officer is broad, corporate staff is kept lean. Rather than create a green bureaucracy, this person leads by taking a program management office (PMO) approach. The most important task for the chief green officer is to work with the management team to set the overall corporate strategy.

Once the corporate strategy is set, and the requisite goals and metrics established, the chief green officer works with various cross-functional groups within the organization to identify opportunities. His or her staff is then responsible for finding the disconnects within the business and identifying gaps where intervention is required. A common approach by many companies is to employ lean or Six Sigma expertise to address issues, disbanding the team once success is achieved.

As the role of the chief green officer becomes more well-defined, senior management is looking for an agenda that positions their company for success in the future along with results today. There are three key items on this his or her agenda:

• Reduce environmental footprint


• Engagement with diverse stakeholders


• Discover new revenue opportunities

Toward a Zero Environmental Footprint

Companies are exploring a large number of initiatives to reduce their environmental footprint. These include purchasing a higher percentage of renewables (such as solar, wind, and cogeneration) for their energy portfolio. This must be balanced by investment opportunities in efficiency and conservation. The effects of these initiatives are not only bottom-line savings, but potentially new revenue opportunities as new commodities markets emerge for carbon dioxide and other greenhouse gases. Green leaders aren't debating the issue of global warming. In fact, many have outpaced the Kyoto Protocol to post inspiring results.

• Since 1990, DuPont has reduced global greenhouse gas emissions measured as CO2 equivalents by 72%.


• IBM has reduced emissions 39% on 1990 levels by 2005 and saved over $800M.


• 3M has achieved a 37% reduction in worldwide emissions between 1990 and 2004.

These efforts not only derive immediate benefits for the company and the communities they serve, but provide a long-term advantage when new commodities markets become mainstream.

Engagement with Diverse Stakeholders

Attaining a green leadership position also requires engaging with a broad constituency of stakeholders, including investors, clients, suppliers, and employees. Of an enterprise's traditional stakeholders, the greatest impact in the next five years will be on their supply base as chief green officers establish requirements for not only packaging and "greener" products, but also results by suppliers in lessening their impact on the environment.

Chief green officers will also engage more directly with governmental bodies and NGOs. This can make for interesting alliances:

• The Nature Conservancy and Xerox: Together these organizations are defining third-party forest certification standards to ensure that the company's paper is derived from responsibly managed forests, identifying best forest biodiversity management practices, and communicating them broadly with forest managers, paper suppliers, and others.


• Environmental Defense and DuPont: Both enterprises have formed a partnership to develop a framework for the responsible development, production, use, and disposal of nanoscale materials. The result will help ensure that nanotechnology's benefits are maximized while the potential risks are effectively assessed and managed.


• MTV and Wal-Mart: These groups have partnered for "Everyday Green," a unique joint initiative designed to promote sustainability and demonstrate to consumers how to work environmentally-friendly products into their lives.

Discovering New Revenue Opportunities

Finally, the chief green officer will be on a relentless search for new green products and services. This includes coordination between client advocacy boards and internal product development organizations as well as evaluating M&A opportunities.

Several firms have announced aggressive targets to grow annual revenue from products that create energy efficiency and/or significantly reduce greenhouse gas emissions reductions for their customers. Opportunities aren't limited to physical products, though. Financial services companies are financing alternative energy projects while others look to complement green products with new service offerings.

The Rewards of Going Green

Companies progressing toward a role of green leadership are reaping the rewards that this new perspective is bringing to their companies. Early movers are reporting long-term advantages, both in cost savings as well as new revenue opportunities. But the rewards extend well beyond the walls of the company to the response from the communities they serve, including the financial community.

Financial analysts and investors are embracing strategies that correlate environmental performance with a firm's financial performance, in part that environmental performance is a proxy for financial performance. One example of this is Innovest's Carbon Disclosure Project, which rates companies in terms of their environmental impact. Innovest has developed this ranking on behalf of 155 institutional investors that have assets under management of $21T.

AMR Research predicts that the next few years are critical for manufacturers, retailers, financial services firms, and others as they establish their roadmap toward green leadership. While early adopters are already reaping rewards, there are still significant opportunities for a new generation of chief green officers.