Blog Action Day '08: Poverty and Energy

Energy is a basic human need and underlies all economic and social activity. It is an "indispensable element of sustainable human development," according to the International Energy Agency (IEA). "Without access to modern, commercial energy, poor countries can be trapped in a vicious circle of poverty, social instability and underdevelopment."

And yet, today, according to a 2005 UNDP study, Energizing the Millennium Development Goals, "millions of households in the developing world still lack access to safe and reliable energy and pay high prices for poor-quality substitutes. Moreover, poor people spend much of their income on energy, more than a third of household expenditures in some countries."

That would be bad enough were it the only impact, but poor households, especially women, also "devote a large portion of another important asset, their time, on energy related activities--women and young girls spend upwards of 6 hours a day gathering fuelwood and water, cooking, and agro-processing."

Worldwide, around 2.4 billion people still use solid fuels, including wood, dung, agricultural waste, and coal to meet their household energy needs. Cooking and heating using open fires or traditional, inefficient stoves results in health-compromising indoor air pollution, and causes up to 1.6 million deaths every year, according to the Baker Institute Energy Forum at Rice University in Houston. Most of those deaths involve women (60 percent) and children under five with acute respiratory infections.

In some countries, Baker Institute researchers claim, "this neglected health risk is to blame for 3.7 percent of all deaths, making it the most lethal killer after malnutrition, unsafe sex and lack of safe water and adequate sanitation."

Worldwide, according to sources familiar with the situation, two billion people live without any access to modern energy supplies and about 1.6 billion people live without access to electricity.

It's a vicious cycle: poor households do not have the resources to obtain cleaner, more efficient fuels and appliances; so they rely on solid household fuels and limited, often inefficient appliances, which in turn reduces the potential for economic development and affects their health and productivity, keeping them from making their way up the poverty ladder.

One can argue that achieving many of the UN Millennium Development Goals by 2015 is extremely difficult, if not impossible, without addressing the need for increased access to cleaner, affordable, and safer energy.

Researchers at the Baker Institute conclude that, "In order to halve the number of people living on less than $1 per day, there is a concomitant need to reduce the number of people who lack electricity services by some 560-600 million." Their price-tag for providing electricity services to these people? Around US$200 billion.

It's kind of a no-brainer: Better energy services can reduce workloads and indoor air pollution, potentially generate income for poor households, and lead to greater environmental sustainability, encouraging better natural resource management and improved water quality.

Microenergy or small, distributed energy generation may be the key to providing energy services to the global poor. Small-scale solar installations are now affordable for application in most rural, developing countries. Wind turbines, geothermal, and more efficient biomass or biogas stoves can reduce the impact of indoor air pollution and forest degradation.

As microfinance has revolutionized the access of financial services to the poor -- by no means is that revolution complete -- so, too, can microenergy help leverage the rural poor out of their vicious cycle of poverty.

And just as there is a ladder out of poverty, there is a corresponding ladder of energy (see diagram above). Increasing energy access to the world's rural poor can contribute to reducing global poverty. Indeed, you can't reduce rural poverty without it.

(Diagram Source: IEA Analysis, World Energy Outlook 2002)

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O, Canada! There's an Important Election Up North, Too, for Clean Tech

Image by Getty Images via DaylifeFor Canadian Thanksgiving (and because I'm busy with consulting work today and it's a holiday here in the States), I'm going to reblog one of my favorites Canadians Tyler Hamilton's assessment of the Canadian political race (they vote for Prime Minister tomorrow) and the prospects for cleantech and action on climate change.

Tyler recommends Canadian voters choose Liberal Party candidate Stéphane Dion over Conservative incumbent Stephen Harper or even the Green Party, which found some candidates backing out or even backing Dion.

In Tyler's opinion, Dion represents the best hope for clean energy and infrastructure development in the North Country. Read his full column in the Toronto Star (link here or below) for details.

Happy Thanksgiving, Canada! The world can be a crazy place, but we do — in the big picture — have much to be thankful for. Enjoy the time with family and friends, and a week of turkey dinner leftovers.

Today I’ll just post a link to my Clean Break column, which argues that green-minded Canadians heading to the polls tomorrow would be best to vote for the federal Liberals if they hope to see any action on climate change and development of a cleaner, more energy-efficient economy. Now is the time to begin taxing pollution and using that money to tackle poverty, stimulate the economy, and ultimately help Canadian households and businesses operate more efficiently, while at the same time accelerating green innovation that could serve us at home and others abroad.

From the perspective of a green-technology advocate, one could just as easily support the Green Party and, to a lesser extent, NDP on this issue, but the Liberals are the most likely to defeat the federal Conservatives, which have proven in their two years of power that they don’t take green job creation or climate change seriously. This is an important federal election, coming at a time when even the U.S. is likely to vote in a new president — i.e. Obama — who has declared energy and green-economy building as his top priority. -- Tyler Hamilton, Clean Break

Tyler is senior technology reporter and columnist for the Toronto Star, Canada's largest daily newspaper. His bi-weekly column, Clean Break, is the basis of a blog of the same name that discusses trends, happenings and innovators in the cleantech market.

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On Panic and an Opportunity in the Midst of Crisis

"Can't you understand what's happening here?" George Bailey says in "It's a Wonderful Life," as the crowd gathers in the Bailey Brothers Building and Loan to make a run on their accounts.

"Don't you see what's happening? Potter isn't selling. Potter's buying! And why? Because we're panicky and he's not. That's why. He's pickin' up some bargains. Now, we can get through this thing all right. We've, we've got to stick together, though. We've got to have faith in each other."

The scene ends with the financial wizards of the BBB&L toasting the last two dollars they have before closing time. Hope springs eternal, even in the worst of times.

I kept thinking of that scene during the past few weeks and, while there are comparisons to that earlier era, the "Debtpression" is different from the Depression. And while the seemingly socialist tools of nationalizing banks and credit institutions seems like a "New Deal," I don't think it is the answer and may end up being a raw deal.

We need to rethink the whole premise of our economy and of what growth looks like, and what our country is built upon. For far too long, our economy has been built on unsustainable growth, and greed.

When housing starts are the bell-weather of growth and consumption fuels the GDP, what do we expect? What do you do when new housing slows down? Make loans more available to those who can't really afford the mortgage you're selling. And extend their credit so they can buy more things to fill up those houses. How long could that have gone on?

We need to rethink the foundational elements of our growth. Why can't growth be equivalent to healthy communities, to greater efficiency, and improved and better uses of existing infrastructure? Why can't our economy be built on sustainable innovations?

Fred Wilson of Union Square Ventures and author of the popular blog, A VC, wrote today about the effects of the economic downturn on his portfolio companies. And (pardon me Fred if I've misinterpreted) it seems that he actually finds opportunity for these companies in the challenging times we're facing.

He writes, "Much has been written about how the 'nuclear winter' of 2001-2003 led to many of the innovations we've been tapping into since. Clearly the capital efficiency revolution was fanned in the nuclear winter. When capital is scarce, smart people figure out how to do more with less. So first and foremost, let's all take advantage of this capital efficiency to get our costs down and build businesses with even more operating leverage. And hopefully there are new tricks out there that we can use to get even more capital efficient."

Gregor Macdonald, an oil analyst and energy sector investor, who also focuses on the coming transition to alternatives, seems to share this view of a leaner, more efficient financial engine.

"What’s needed now is a flowering of smaller investment banks and private equity, to fund the next wave," he writes on his blog Gregor.us. "The financial landscape should become 6 inches high, and 3000 miles wide. We are going to have to cut in the opposite direction, from the current consolidation in US banking. And it will take time. But I think what the country needs is to see a lively investment community in all major cities. Not just New York and Silicon Valley."

Greater capital efficiency and more dispersed investment community. Lean business models and more operating leverage. Sounds more sustainable.

I can't help thinking that out of this crisis -- if we can avoid the noise and abject panic -- can come a new path; a second chance, really. A path that is fundamentally about triple-bottom value creation, where profits are good, but so is people and the planet.

And I keep thinking, as I know Gregor does, that the three areas crying out for investment and that could provide a foundation for a new economy are energy, infrastructure, and new financial service models. Really, a new green economy.

"We invested in the wrong things," Gregor writes. "We invested in the wrong infrastructure. We invested in things that are now paying us little, in the way of return. I’m certain a new era dawns for energy and finance. The investment failures of this decade have likely made the ground fertile, to make it happen."

So, I'm trying to pay attention to a different kind of noise right now -- although it has been tough. It's a bunch of conversations, dialogues, monologues, and even rants by people a lot smarter than me in this arena. It's happening in a community that has a gathered on services like Twitter and StockTwits and Disqus. And it's a more hopeful noise. Concerned, yes, but already beginning to think about what happens post-panic.

As Andy Swan put it in his blog tonight, starting to move from despair to opportunity:

Despair : Opportunity

Fully Invested : Cash Heavy
Short Term : Long Term
Employee : Entrepreneur
Noise : Vision

STOP leveraging your bottom-calls.
STOP thinking in terms of next week or next month.
STOP just being an employee.
STOP listening to the noise.

START raising money.
START thinking about 2012
START thinking (and working) like you own the place

START FOCUSING.

To which, I can only reply (and did), "Amen, brother."

We can get through this thing all right, as George Bailey told the investors of BBB&L. We've, we've got to stick together, though, have faith in each other, and stay focused on a vision and a plan for 2012.

We Need a Buildup, Not a Bailout: Van Jones and The Green Collar Economy

"We don’t just need a bailout. We need a buildup," Thomas Friedman wrote in the New York Times last month. "We need to get back to making stuff, based on real engineering not just financial engineering.

"We need to get back to a world where people are able to realize the American Dream — a house with a yard — because they have built something with their hands, not because they got a 'liar loan' from an underregulated bank with no money down and nothing to pay for two years. The American Dream is an aspiration, not an entitlement."

Friedman described what a new economy could look like for America and how more important it is that we don't just see this bailout as a respite, but a wake-up call "to launch an E.T., energy technology, revolution with the same urgency as this bailout."

As Friedman wrote, "The exciting thing about the energy technology revolution is that it spans the whole economy — from green-collar construction jobs to high-tech solar panel designing jobs. It could lift so many boats.

"In a green economy, we would rely less on credit from foreigners 'and more on creativity from Americans,' argued Van Jones, president of Green for All, and author of the forthcoming The Green Collar Economy.

"'It’s time to stop borrowing and start building. America's No. 1 resource is not oil or mortgages. Our No. 1 resource is our people. Let's put people back to work — retrofitting and repowering America. ... You can’t base a national economy on credit cards. But you can base it on solar panels, wind turbines, smart biofuels and a massive program to weatherize every building and home in America.'"

Van Jones is a familiar figure to readers of this blog. Now, you can read the words of the man himself, as his book is released tomorrow. (Pre-order it here.)

I'd like to see copies in the hand of the presidential candidates at the debates tomorrow night.

"The 'green' in 'green-collar' is about preserving and enhancing environmental quality—literally saving the Earth," Jones wrote in his Introduction. "Green-collar jobs are in the growing industries that are helping us kick the oil habit, curb greenhouse-gas emissions, eliminate toxins, and protect natural systems.

"Today, green-collar workers are installing solar panels, retrofitting buildings to make them more efficient, refining waste oil into biodiesel, erecting wind farms, repairing hybrid cars, building green rooftops, planting trees, constructing transit lines, and so much more. California has shown that a state can still grow its economy while reducing the rise in greenhouse-gas emissions. The nation can do the same thing.

"We have the chance now to create new markets, new technology, new industries, and a new workforce. Let's do it right—with good wages, equal opportunity, and pathways to success for those whom the pollution-based economy left behind."

(I'll write a review of the book in the coming weeks.)

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Steve Rayner: Dear Mr. President, Deal with Climate Change

Steve Rayner, climate policy expert and lead author of The Wrong Trousers: Radically Rethinking Climate Policy (PDF), is featured in this month's Wired Magazine. He's on the "2008 Smart List: 15 People the Next President Should Listen To" (no matter who wins).

Read this carefully, for Rayner is onto something. He declares that cap and trade won't work and that new technology investment is critical. Here is Professor Rayner's letter:

Mr. President:

The outgoing administration failed to come to grips with climate change out of fear that reducing greenhouse gas emissions would damage the economy. But the decision to deal with climate change doesn't lend itself to cost-benefit analysis. It is a strategic choice, like the decision to get married. You have an opportunity to define the nation's character and upgrade its infrastructure -- and bold action would be consistent with America's historical role as a leader in innovation. It would also encourage India and China to participate in the effort. Here are a few points to keep in mind.

Cap and trade won't work. The market for carbon offsets is widely touted as the best way to curb greenhouse gases. This would be fine if time were unlimited. However, the best available science suggests that we need to stabilize emissions by mid-century. That's too soon for carbon prices to rise enough to drive the R&D necessary to enable cleaner alternatives to compete with fossil fuels. It doesn't help that the cap-and-trade approach relies on underdeveloped monitoring and accounting systems that inevitably leave plenty of wiggle room for unscrupulous speculators to work the system, amassing fortunes while achieving nothing for the atmosphere.

New technology is critical. The only plausible way to curb emissions in the next few decades is to accelerate the development and adoption of low-carbon energy sources. Rather than setting targets for greenhouse gases, we should establish goals for installed technology, beginning with the most energy-intensive sectors, like electricity generation, ground transportation, and cement manufacturing. Similarly, international cooperation on emissions reduction should focus on the handful of countries responsible for the lion's share of the problem. In the US and elsewhere, R&D funding should be directed toward technologies that otherwise might not come online for up to 20 years. This would fill the gap between the turnaround timeline for venture capital (three to five years) and for basic research (beyond 20 years).

Let the market decide. No amount of public investment will succeed if politicians are allowed to pick the winners. The program must be designed to widen the choices available to the market, not to preempt them. There is no silver bullet, but we can develop silver buckshot. The point is to ensure that money flows to a variety of options from which the market can select, not just the one that's being developed in the district of a powerful member of Congress.

Mr. President, this strategy is not just about throwing money at the problem. It will be necessary to review a wide range of policies that affect technology development and deployment, including intellectual property, defense procurement, taxation, and performance standards. Moreover, stabilizing the atmosphere does not address the legacy of past emissions. It is equally important to invest in infrastructure that will head off damage from extreme weather events caused by the climate change we've already set in motion.

Twice in the past century, the US dragged its feet before confronting threats to our civilization in the form of two world wars. But when it finally committed itself, it shot straight into the leadership position and dealt decisively with the problems. Climate change poses the same sort of challenge -- and opportunity -- at the beginning of the present century.

Sincerely,

Steve Rayner

Steve Rayner is Professor of Science and Civilization at Oxford University.

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Mr. September? RGGI Holds First CO2 Auction, Clearing Price of $3.07

Reggie Jackson may have been Mr. October, but there's a new RGGI in town.

The states participating in the Regional Greenhouse Gas Initiative (RGGI) recently announced that the auctioning of carbon dioxide (CO2) emissions allowances in North America is off to a strong start.

All of the 12.5M allowances offered for sale on September 25, 2008 were sold at a clearing price of USD$3.07 per allowance, which is about 65 percent more than the minimum set price of $1.86. $2 per ton had been a reasonable estimate of what a RGGI CO2 allowance is really "worth" in 2009, according to energy consultants at Webb, Scott & Quinn.

RGGI, Inc. reports that 59 participants from the energy, financial, and environmental sectors took part in the first-in-the-nation auction, starting the first of many CO2 allowance auctions.

Demand for the allowances appeared to have been strong with a total of 51,761,000 allowances demanded or four times the available supply for this first auction.

The USD$38.5M in proceeds produced from the auction will be distributed to Connecticut, Maine, Maryland, Massachusetts, Rhode Island and Vermont, the six RGGI states that offered allowances for sale during the first auction. The states are expected to invest those funds in energy efficiency and renewable energy technologies, along with programs to benefit utility rate payers.

Pete Grannis, Commissioner of the New York State Department of Environmental Conservation and Chair of the Regional Greenhouse Gas Initiative, Inc. "RGGI’s example shows that an open and competitive carbon market can be implemented."

Any CO2 allowances purchased at the first auction can be used by a regulated facility for compliance in any of the RGGI states, even if that state did not offer allowances in the first auction. Four out of the ten did not participate in this first auction.

The RGGI auction was administered by World Energy Solutions, Inc (TSX:XWE), which operates online exchanges for energy and green commodities, and overseen by Potomac Economics, RGGI's independent market monitor.

The next allowance auction is set for December 17, 2008. These early auctions, combined with the others being held in the first compliance period, according to RGGI, will ensure an ample opportunity for bidders to obtain the allowances they will need for compliance across the entire 10-state region. RGGI intends to hold quarterly auctions during the first RGGI three-year compliance period, which runs from January 1, 2009 to December 31, 2011.

James Letzelter of Webb, Scott says that "RGGI is indeed a real cost. At $3 per ton, a 10,000 Btu/kWh coal plant faces about $3 per MWh. A 7,000 Btu/kWh gas-fired combined cycle faces a cost of about $1.50 per MWh."

While that's not onerous, Letzelter concludes, "these prices will increase power market prices slightly (figure about $1.50 per MWh). Count that as "RGGI Bonus" revenue picked up by all market players, especially nuclear, hydro and renewable players with no RGGI costs."

The Regional Greenhouse Gas Initiative (RGGI) is the first mandatory, market-based effort in the United States to reduce greenhouse gas emissions. Ten Northeastern and Mid-Atlantic states will cap and then reduce CO2 emissions from the power sector 10 percent by 2018.

Other regional greenhouse gas coalitions, such as the Western Climate Initiative and the Midwestern Greenhouse Gas Accord, are in the early stages of development.

Sources: RGGI, World Energy Solutions, Clean Edge News, Webb, Scott & Quinn

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