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The 2 I's that keep America chugging along

The best professor I had in business school was the wisest. He once commented that only two things fuel the American economy: immigration and innovation. I was reminded of that last summer when I went to the InterSolar Conference in San Francisco—most of the vendors there were either German or Chinese . . . with Indian, Canadian, and Japanese companies having a strong presence as well.

Take our energy policy. Our dependence on fossil fuels made sense generations ago during the industrial age, and frankly, as with cholesterol, sun exposure, chemical dumping, and deforestation, we just didn’t know any better. We do know now, but we’re so behind other countries on the renewable energy front . . . and companies here in that space (many of which have been started by immigrants) are struggling to find a footing and funding. Meanwhile, cloudy Germany is the leader in solar technology, the Chinese and Japanese are exploring fuel options using technologies that we can’t even pronounce, and the country with the most flex-fuel vehicles isn’t the US (thanks or no thanks to corn ethanol), but . . . is in South America (more on that country later!)

Remember that business school term, “economies of scale” (no, not cheap reproductions of Louis Vuitton crocodile suitcases) . . . as long as the USA is married to cheap, polluting fossil fuels, there’s no incentive to focus on other sources of clean energy . . .meaning those innovators who want to market their new technologies have no market, which means the prices remain high, which means there are no incentives for consumers or businesses to take a hard look at more sustainable energy—and construction—and water conservation approaches.

Take Obama’s announcement on new fuel standards last week. Hasn’t this been discussed since the 1970s? The automobile manufacturers and unions resisted for years, and we know how the results turned out. I know it was like pulling teeth to get all these folks around the table to finally agree to some tepid new standards, but it’s a step. But is it too late? In a recent online discussion in which I participated, an executive across the pond made this statement which is spot on: “When oil prices rise again, American truckers won't be able to deliver essential goods and America hasn't exactly got a good railway network alternative. Cheap energy has destroyed American innovation and created a very wasteful culture.”

I won't go into the immigration debate now--but it's a fact that most new companies with the most cutting edge technologies in any industry are founded by immigrants . . . combine an anti-immigrant government policy with a poorly thought out energy agenda, and the future certainly doesn't look sunny.

Ontario thumbs its nose at Ottawa and Washington

The cap-and-trade debate is getting more fired up . . . or offset . . . or making others green with dollar signs or exasperation . . . the provincial government of Ontario is about to introduce legislation pushing a cap-and-trade system.

Picture California, Texas, and New York, and the next six largest US states' population combined, and you've got the idea of how influential Ontario is in Canada. It's home of the country's capital and largest city, and has most of the country's largest banks and cities.

While the province's premier, Dalton McGuinty, was evasive about some tough questions, including if and when the provinces coal plants would close, the degree to which polluters would be penalized, or even how the system would work, the impending legislation shows that this debate won't go away--and may be one of the cogs in sorting out how we can wean ourselves off of fossil-based fuels.

And any step taken by a Canadian government is a great step--yes, the USA consumes about 25% of the world's energy, but surveys show that the country with the highest energy consumption per-capita is . . . Canada!

Forget Green - What about White?

It's a headline too cool to pass up . . . Energy Secretary Steven Chu wants roofs around the world to be painted white.

It sounds ridiculous at first--what about hydrogen, solar, switchgrass, etc.? But if the data rings true, painting cars, houses, and roads white or a pale color would be equivalent to taking every car off the earth for 11 years. Even if that's an exaggeration, Dr. Chu is onto something. It makes no sense painting your house a dark color with a black roof if you live in Southern California. And ever walk down a street in Phoenix in August? As far as cars go, Japan would already be ahead--they all drive white cars as it is, and lighter colored cars would use less fuel to run air conditioning units (then again, they show dirt, so that's more water being consumed, but anyways . . .

It's no secret it'll take us years to wean us off of fossil fuels--doubtful in our lifetimes. So it's approaches like Chu's that'll give us opportunities to save the earth.

Geesh, why wasn't this in the stimulus package? Could you imagine the queues at Lowe's or Home Depot for free white paint?

How can we become energy independent?

There is not one straight path to energy independence and efficiency. While some sources such as biofuels and hydrogen are “sexy” and “exotic,” they are not a complete solution to the fix we find ourselves in.

I find that the environmental movement has too many constituencies that can’t seem to agree on anything. Also, what does “green” or “clean” mean? For example, some folks are aghast at the thought of nuclear energy—it’s harmful, dangerous, etc. But France gets 70% of its electricity though nuclear energy, and our current dependence on fossil fuels has a horrible effect on our air, land, and water. Biofuels have the “cool” factor, but the corn ethanol push in the US had a disastrous effect on fuel prices. Solar, hybrid battery and wind also have their toxic issues, and algae and cellulosic technologies aren’t ready for prime time.

There also isn’t enough emphasis on energy efficient technologies—while we wait for the next generation of fuels to become more cost effective and abundant, let’s face it, folks, we’re still using fossil fuels. So why not encourage r&d of technologies that will improve the grid, that will allow large buildings and warehouses to create their own energies through mini-turbines, or battery storage technologies that will allow homes to become mini-utilities?

And I love the idea of the Southwest being a vast solar field, the plains from the Dakotas to Texas living off of T. Boone Pickens’s wind, and Florida becoming a haven for algae. But what works in one region won’t fly in another—some fuels are perfect for a fleet-based approach in the transport sector, such as DME or used cooking oil for buses and trucks, or plug-in hybrid cars for commuters.

In the end, none of these technologies will work if there isn’t a market—it’s not politically correct to say so, but that’s the truth. A combination of government incentives and timely private investment can get us on the right path to a cleaner and more sustainable future.

Cap-n-Trade . . . or Cap’n Crunch?

There’s been much discussion in the US and abroad about moving to a cap-and-trade system. How can I put this term in layman’s terms? Okay, I’m a dog owner, so let’s give you a real life scenario (if there’s such a thing in LA): There are 10 dogs in our neighborhood and none of us can afford a dogwalker, so we take turns walking each other’s dogs. So, we all get 4 chips, each good for one dog walking hour. If I walk the neighbor’s dog, I get a chip, and vice versa. Maybe I’m delaying doing the housework or working in the garden, so I keep walking other neighbors’ dogs, collecting more chips, which I may need if I leave town for a week and need lots of folks walking the shih-tzu while I’m gone. But there’s a problem: dogs leave a mess, and oops, some of us aren’t so good at picking up the dog poop. So the neighborhood association sends us all nasty-grams and the amount of dog walking chips are reduced . . . so we need to get more creative . . . one neighbor on Occidental puts her dogs on a treadmill, I tie the garden hose to my shih-tzu so he can water the plants, etc. . . . we all have to get creative as to how to exercise the dogs to reduce their waste or well suffer the fate of Santa Cruz, where dogs are banned from walking in parts of town (oh, I could start a ranting blog on this—but I digress—again).

Okay, maybe not the best analogy, but you get the concept—in cap-and-trade, companies that pollute can trade or buy carbon credits—the government reduces the number of carbon credits each year, with the idea that companies, utilities, etc., will find new clean ways of obtaining energy.

Cap-and-trade has caught on in Europe, with CEOs there saying they were behind this system and are urging the USA to get on the bandwagon. It won’t be easy, in the US, however, and results in Europe are mixed. There’s the argument that companies will just pass on the costs to consumers, and some areas could get even more polluted while other areas get more “green.” And the recent Waxman-Markey Bill floated in Congress is either a tepid or disastrous attempt, depending on one’s point of view. For example, while the bill pushes alternate sources of energy, hydropower and nuclear energy aren’t considered “clean,” despite the fact they emit ZERO emissions (my stance on nuclear may get me in trouble) . . . others are upset that 85% of the credits will be given without any cost to the electric utilities . . . with the result that well, we could end up with even MORE air pollution.

And like many bills that flail through Congress, Waxman-Markey, to some, has been devoured by special interests, most prominently the utilities. Finally, the coal industry could get a US$10 billion carbon capture sequestration research bootie, caps on greenhouse gases and carbon emissions are too weak, and many complain that requirements to create renewable energy sources are way too weak . . .

Cap-and-trade is not perfect, but it’s one part of the puzzle that we need to look at if we’re going to stall global warming. But cap-and-trade as proposed by the current Congress will be like Cap’n Crunch cereal—looks good, you want a lot of it, but in the end much of it is artificial and there’s just no value—and it could even harm your health.

Making the Sea Green

We always hear so much about hybrid cars, solar panels, and now when we think about farms, wind comes to mind.

True--homes, cars, and factories emit much of the pollution. But there are other culprits as well. Research indicates that air travel is especially harmful to our earth’s atmosphere, making Continental’s recent biofuel test flight compelling (more on that later!). But ships use energy that’s especially dirty—the diesel by which they are often fueled belch out emissions that would make your favorite oil company CEO blush.

So what are we to do? A conference I was recently at almost left a permanent smirk on my face. I was at a panel where one person said that we need to stop importing goods—oh, and on the other hand, we should grow LA’s economy and put people to work by shipping organic products.

Okay, this is an odd argument not worth picking apart. We are no longer villagers who can grow and produce everything we need in our neighborhood. Nor should we. LA’s biggest employer, after all, is logistics—not entertainment—and international trade is the circulation system of our global economy. Trade builds economies, economies foster jobs, jobs keep us buying goods and services—the Venetians invented this, and I think they were on to something.

Yes, hybrid cars are cool and sexy—after all the American Idol Top Two got 2010 Hybrid Ford Fusions, so they must be cool. And yes, I salivate at the opportunity to get my roof solar’d up so I can become a mini-utility.

But why aren’t we focusing on creating clean fuels for the engines behind our economic growth? Clean-fuel ships would be a start. The ports of LA and Long Beach are on a start, moving towards cleaner-running trucks. But what about the ships? Maersk is starting in the right direction with their LPG and LNG fueled tankers. But with neighborhoods near ports often suffering from high pollution levels, there needs to be more focus on having tankers and ships run from renewable and cleaner sources.