Wednesday, November 18, 2009

Green Housing For the Rest of Us

Green Housing For the Rest of Us

Real estate developers at Full Spectrum NY had been told that sustainably designed buildings are only for the rich. The company's response? The Kalahari, a green high-rise with all the latest features but a reasonable price tag.
By Nitasha Tiku | Nov 1, 2007

Not so precious
The Kalahari, located on 116th Street in New York's Harlem neighborhood, has almost all of the accouterments of luxury green buildings--solar panels, vegetated green rooftops, wind-powered electricity, low-flow water fixtures, energy-efficient appliances, and bamboo floors. But nearly half of the 249 condos at the Kalahari are set aside for families earning as little as $56,000 a year--something unheard of in the usually precious world of green architecture.

The Design
The Kalahari is named for the southern African desert. The building's unusual façade is inspired by designs from the region's Ndebele tribes.

Another kind of green
In 1996, Full Spectrum set out to build its first green housing complex in Harlem, called 1400 on Fifth. But officials at New York's Housing and Preservation Department, which had to sign off on the project, were skeptical. "We wanted at least some evidence it was going to be cost-effective," says the department's commissioner, Shaun Donovan. Full Spectrum spent $700,000 gathering research to make the case that green housing was a sound investment. It eventually raised $40 million from a hodge-podge of investors. When 1400 on Fifth finally opened its doors in 2004, it had cost just $135 per square foot, roughly what it costs to build a standard affordable housing complex.

Clean Air Act
Before breaking ground on the Kalahari in 2005, Full Spectrum held a series of focus groups with Harlem residents and potential buyers from throughout the region. "Everyone in each of our groups had family members with asthma," says co-founder Carlton Brown. In fact, a 2003 study by Harlem Hospital Center found that 25 percent of children in central Harlem suffer from the condition, compared with less than 10 percent nationally. That inspired Full Spectrum to install high-efficiency MERV 13 air filters, which remove the particulate matter that aggravates asthma.

Rooftop Garden
On green rooftops, plants, grasses, and mosses are used to help insulate the building and filter pollutants out of air and rainwater. They also look pretty. But in New York City they're even more vital. That's because the city's antiquated sewer system is not equipped to handle storm water runoff during heavy rainstorms, which results in untreated sewage getting dumped in the East River. The unplanted parts of the rooftops use an inexpensive coating that deflects sunlight, thereby cutting down on energy costs.

The Walls
In many residential developments, insulation is installed next to the exterior walls rather than the interior ones. The problem: Condensation in the walls, which leads to mold and mildew, another contributor to asthma. With the Kalahari, Full Spectrum placed the insulation next to interior walls instead, keeping the condensation on the outside of the building--something few builders of affordable housing opt to do.

Friends of Brad
By 2006, Full Spectrum boasted revenue of $20 million. It has developments under way in New Orleans and Jackson, Mississippi, and is talking with community groups in Biloxi, Mississippi, that are hoping to take advantage of the $1.2 billion in tax credits available to build green commercial and retail space in the struggling gulf region, where Carlton Brown was raised. All the activity has dropped a little stardust on the developers. Brown was featured on the Sundance Channel's Big Ideas for a Small Planet in April, and Full Spectrum recently signed on as a consultant for the Holy Cross Project, a large residential development in New Orleans's Ninth Ward. The project is being funded in part by actor Brad Pitt via his involvement in the nonprofit Global Green.

We Are Hard-Wired to Care and Connect

The good news: The changes we must make to avoid ultimate collapse are identical to the changes we must make to create the world of our common dream.

The story of purple America is part of a yet larger human story. For all the cultural differences reflected in our richly varied customs, languages, religions, and political ideologies, psychologically healthy humans share a number of core values and aspirations. Although we may differ in our idea of the “how,” we want healthy, happy children, loving families, and a caring community with a beautiful, healthy natural environment. We want a world of cooperation, justice, and peace, and a say in the decisions that affect our lives. The shared values of purple America manifest this shared human dream. It is the true American dream undistorted by corporate media, advertisers, and political demagogues—the dream we must now actualize if there is to be a human future.

For the past 5,000 years, we humans have devoted much creative energy to perfecting our capacity for greed and violence—a practice that has been enormously costly for our children, families, communities, and nature. Now, on the verge of environmental and social collapse, we face an imperative to bring the world of our dreams into being by cultivating our long-suppressed, even denied, capacity for sharing and compassion.

Despite the constant mantra that “There is no alternative” to greed and competition, daily experience and a growing body of scientific evidence support the thesis that we humans are born to connect, learn, and serve and that it is indeed within our means to:

Create family-friendly communities in which we get our satisfaction from caring relationships rather than material consumption;

Achieve the ideal, which traces back to Aristotle, of creating democratic middle-class societies without extremes of wealth and poverty; and

Form a global community of nations committed to restoring the health of the planet and sharing Earth’s bounty to the long-term benefit of all (see YES! Summer 2008: A Just Foreign Policy).

The first step toward achieving the world we want is to acknowledge that there is an alternative to our current human course. We humans are not hopelessly divided and doomed to self-destruct by a genetic predisposition toward greed and violence.
Culture, the system of customary beliefs, values, and perceptions that encodes our shared learning, gives humans an extraordinary capacity to choose our destiny. It does not assure that we will use this capacity wisely, but it does give us the means to change course by conscious collective choice.

The Story in Our Head
The primary barrier to achieving our common dream is in fact a story that endlessly loops in our heads telling us that a world of peace and sharing is contrary to our nature—a naïve fantasy forever beyond reach. There are many variations, but this is the essence:

It is our human nature to be competitive, individualistic, and materialistic. Our well-being depends on strong leaders with the will to use police and military powers to protect us from one another, and on the competitive forces of a free, unregulated market to channel our individual greed to constructive ends. The competition for survival and dominance—violent and destructive as it may be—is the driving force of evolution. It has been the key to human success since the beginning of time, assures that the most worthy rise to leadership, and ultimately works to the benefit of everyone.

I call this our Empire story because it affirms the system of dominator hierarchy that has held sway for 5,000 years (see YES! Summer 2006: 5,000 Years of Empire). Underlying the economic and scientific versions of this story is a religious story which promises that enduring violence and injustice in this life will be rewarded with eternal peace, harmony, and bliss in the afterlife.

To reinforce the Empire myth, corporate media bombard us with reports of greed and violence, and celebrate as cultural heroes materially successful, but morally challenged politicians and corporate CEOs who exhibit a callous disregard for the human and environmental consequences of their actions.

Never mind the story’s moral contradictions and its conflict with our own experience with caring and trustworthy friends, family, and strangers. It serves to keep us confused, uncertain, and dependent on establishment-sanctioned moral authorities to tell us what is right and true. It also supports policies and institutions that actively undermine development of the caring, sharing relationships essential to responsible citizenship in a functioning democratic society. Fortunately, there is a more positive story that can put us on the road to recovery. It is supported by recent scientific findings, our daily experience, and the ageless teachings of the great religious prophets.

Wired to Connect
Scientists who use advanced imaging technology to study brain function report that the human brain is wired to reward caring, cooperation, and service. According to this research, merely thinking about another person experiencing harm triggers the same reaction in our brain as when a mother sees distress in her baby’s face.

Conversely, the act of helping another triggers the brain’s pleasure center and benefits our health by boosting our immune system, reducing our heart rate, and preparing us to approach and soothe. Positive emotions like compassion produce similar benefits. By contrast, negative emotions suppress our immune system, increase heart rate, and prepare us to fight or flee.

These findings are consistent with the pleasure most of us experience from being a member of an effective team or extending an uncompensated helping hand to another human. It is entirely logical. If our brains were not wired for life in community, our species would have expired long ago. We have an instinctual desire to protect the group, including its weakest and most vulnerable members—its children. Behavior contrary to this positive norm is an indicator of serious social and psychological dysfunction.

Happiness Is a Caring Community
These neurological findings are corroborated by social science findings that, beyond the minimum level of income essential to meet basic needs, membership in a cooperative, caring community is a far better predictor of happiness and emotional health than the size of one’s paycheck or bank account. Perhaps the most impressive evidence of this comes from studies conducted by University of Illinois professor Ed Diener, and others, comparing the life-satisfaction scores of groups of people of radically different financial means. Four groups with almost identical scores on a seven-point scale were clustered at the top.

Consistent with the Empire story that material consumption is the key to happiness, those on Forbes magazine’s list of richest Americans had an average score of 5.8. They were in a statistical tie, however, with three groups known for their modest lifestyles and strength of community: the Pennsylvania Amish (5.8) who favor horses over cars and tractors; the Inuit of Northern Greenland (5.9), an indigenous hunting and fishing people; and the Masai (5.7), a traditional herding people in East Africa who live without electricity or running water in huts fashioned from dried cow dung. Apparently, it takes a very great deal of money to produce the happiness that comes with being a member of a caring community with a strong sense of place. The evidence suggests we could all be a lot healthier and happier if we put less emphasis on making money and more on cultivating caring community.

The purple American desire to create a society of healthy children, families, communities, and natural systems is no fluke. It is an expression of our deepest and most positive human impulses, a sign that we may overall be a healthier and less divisive society than our dysfunctional politics suggest.

Beyond the minimum level of income essential to meet basic needs, membership in a cooperative, caring community is a far better predictor of happiness and emotional health than the size of one’s paycheck or bank account.

Learning to be Human
If the properly functioning human brain is wired for caring, cooperation, and service, how do we account for the outrageous greed and violence that threaten our collective survival? Here we encounter our distinctive human capacity to suppress or facilitate the development of the higher order function of the human brain essential to responsible adult citizenship.

We humans have a complex three-part brain. The base is the “reptilian” brain that coordinates basic functions, such as breathing, hunting and eating, reproducing, protecting territory, and engaging the fight-or-flight response. These functions are essential to survival and an authentic part of our humanity, but they express the most primitive and least-evolved part of our brain, which advertisers and political demagogues have learned to manipulate by playing to our basest fears and desires.

Layered on top of the reptilian brain is the limbic or “mammalian” brain, the center of the emotional intelligence that gives mammals their distinctive capacity to experience emotion, read the emotional state of other mammals, bond socially, care for their children, and form cooperative communities.

The third and, in humans, largest layer is the neocortical brain, the center of our capacity for cognitive reasoning, symbolic thought, awareness, and self-aware volition. This layer distinguishes our species from other mammals. Its full, beneficial function depends, however, on the complementary functions of our reptilian and mammalian brains.

Most of the development of the limbic and neocortical brains essential to actualizing the capacities that make us most distinctively human occurs after birth and depends on lifelong learning acquired through our interactions with family, community, and nature. Developmental psychologists describe the healthy pathway to a fully formed human consciousness as a progression from the self-centered, undifferentiated magical consciousness of the newborn to the fully mature, inclusive, and multidimensional spiritual consciousness of the wise elder.

Realizing the fullness of our humanity depends on the balanced development of the empathetic limbic and cognitive neocortical brains to establish their primacy over the primitive unsocialized instincts of the reptilian brain. Tragically, most modern societies neglect or even suppress this development.

A depersonalized economic system with no attachment to place disrupts the bonds of community and family and makes it nearly impossible for parents to provide their children with the nurturing attention essential to the healthy development of their limbic brains. Educational systems that focus on rote learning organized by fragmented disciplines fail to develop our potential for critical holistic thinking. Leaving social learning to peer groups lacking the benefit of adult mentors limits development of a mature, morally grounded social intelligence. We are conducting an unintended evolutionary experiment in producing a line of highly intelligent but emotionally challenged reptiles wielding technologies capable of disrupting or even terminating the entire evolutionary enterprise.

The Power of Conversation
Getting out of our current mess begins with a conversation to change the shared cultural story about our essential nature. The women’s movement offers an instructive lesson.

In little more than a decade, a few courageous women changed the cultural story that the key to a woman’s happiness is to find the right man, marry him, and devote her life to his service. As Cecile Andrews, author of Circles of Simplicity, relates, the transition to a new gender story began with discussion circles in which women came together in their living rooms to share their stories. Until then, a woman whose experience failed to conform to the prevailing story assumed that the problem was a deficiency in herself. As women shared their own stories each realized that the flaw was in the story. Millions of women were soon spreading a new gender story that has unleashed the feminine as a powerful force for global transformation.

The voluntary simplicity movement organizes similar opportunities for people to share their stories about what makes them truly happy. The fallacy of the story that material consumption is the path to happiness is quickly exposed and replaced with the fact that we truly come alive as we reduce material consumption and gain control of our time to nurture the relationships that bring true happiness.

We must now begin a similar process to affirm that those of us who choose to cooperate rather than compete are not fighting human nature. We are, instead, developing the part of our humanity that gives us the best chance, not merely for survival, but for happiness.

The process of changing the powerful stories that limit our lives begins with conversation in our living room, library, church, mosque, or synagogue. By speaking and listening to each other, we begin to discover the true potentials of our human nature and our common vision of the world. It is not a new conversation. Isolated groups of humans have engaged in it for millennia. What is new is the fact that the communications technologies now in place create the possibility of ending the isolation and melding our local conversations into a global one that can break the self-replicating spiral of competitive violence of 5000 years of Empire.

As this conversation brings a critical mass of people to the realization that the Empire story is both false and devastatingly destructive, we can turn as a species from perfecting our capacity for exclusionary competition to perfecting our capacity for inclusionary cooperation. We can create a cultural story that says competition and polarization, whether the red-blue political divide or the rich-poor economic one, is not the inevitable result of being human. It is the result of suppressing the healthiest part of our humanity.

There are no trade-offs here. The institutional and cultural transformation required to avert environmental and social collapse is the same as the transformation required to nurture the development of the empathetic limbic brain, unleash the creative potentials of the human consciousness, and create the world we want. It is an extraordinary convergence between our reptilian interest in survival, our mammalian interest in bonding, and our human interest in cultivating the potentials of our self-reflective consciousness.

David Korten wrote this article as part of Purple America, the Fall 2008 issue of YES! Magazine. David is co-founder and board chair of YES! His latest book is The Great Turning: From Empire to Earth Community. His website is

Wednesday, November 11, 2009

Save The World, Inc.

For Love or Money?
VIEWPOINT April 3, 2009, 3:00PM EST
For Love or Money
Is forming a nonprofit the way to solve social ills, or is it more efficient for business to do it?

President and CEO
National Council of Nonprofits
Washington, D.C.

As a nonprofit you have an opportunity to get foundation dollars. Foundations are required to spend at least 5% of their assets every year on either internal operations or contributions to nonprofits. But with asset values down so much, it's becoming harder to get funding.

Sometimes there's no direct link between the issue and a sustainable business model. Take human rights in China, for example. I don't see a way to take that on through a for-profit model. Whereas I can see setting up a nonprofit where you get a foundation and some individuals to invest their dollars knowing they will not get a [monetary] return on it.

As a nonprofit you have the ability to wear the white hat. I started a nonprofit center on leadership ethics and public service. If it had been a for-profit consulting firm or law firm, there may have been pressure to give the client the answer they want instead of the right answer.

Founder and CEO
Root Capital, a nonprofit investment fund
Cambridge, Mass.

If you can use a for-profit model, you should. There's going to be a Darwinian flush on the nonprofit side as the financial meltdown causes funding to be reduced. So if you don't have to be out with your hat in hand, you are in a better position.

Business has the ability to scale. If you can bring the engine of business and real capital to bear, you can really move the needle. You can unlock billions and even trillions of dollars to address problems that are so huge. There just isn't that kind of money in the philanthropic world.

You have to be a starry-eyed romantic to think you won't have the dilemma of profit vs. the public good [if you use the for-profit model]. But the answer is to build awareness so that you have real consumer demand and shareholder pressure for ethical sourcing and environmentally responsible production.

—As told to Amy Barrett

BusinessWeek Magazine
Making a Profit and a Difference aren't mutually exclusive. Five entrepreneurs show how it's done

As the economy reels, enterprising individuals who apply business practices to solving societal problems are gaining support from public and private sectors
By Stacy Perman

Social entrepreneurs—enterprising individuals who apply business practices to solving societal problems, such as pollution, poor nutrition, and poverty—are now 30,000 strong and growing, according to B Lab, a nonprofit organization that certifies these purpose-driven companies. Together, they represent some $40 billion in revenue.

The idea of blending a social mission with business is not new. One of the founding forces behind the movement, the Ashoka Foundation, since its inception 1981 has granted multiyear living stipends to support more than 2,000 fellows dedicated to finding answers to a host of social ills through business ventures. Indeed, the concept of building a profitable business model in which doing good is an intrinsic part of the business and not just a philanthropic sideline has been gaining ground in recent years. Sally Osberg, president and chief executive of the Skoll Foundation in Palo Alto, Calif., another guiding force within the social venture community, says the number of institutes, universities, and organizations that are now tapping into social entrepreneurship has mushroomed since former eBay (EBAY) President Jeff Skoll established the foundation in 1999.

Now, as the economy reels, both the government and the private sector are looking for inventive ways to bring back prosperity, and many are counting on these entrepreneurs as a powerful tool for change. "Social entrepreneurship correlates to this growing realization that entrepreneurs are the key to a vibrant economy and to solutions that are badly needed," says Osberg. It's not all pie in the sky, says Bo Fishback, vice-president for entrepreneurship at the Kauffman Foundation in Kansas City, Mo. "Many social entrepreneurs have shown they can accomplish their mission," he says. "They can deliver on the social good and report a cash flow."

Not surprising, then, that they've caught the attention of such venture capitalists as those at Acumen Fund, a nonprofit that invests in companies that try to alleviate poverty, and Bay Area Equity Fund, which backs businesses aiming to make social or environmental improvements to San Francisco's needier neighborhoods. (See these additional resources for entrepreneurs seeking funding sources that back social ventures.) President Obama has even suggested starting a new government agency to help socially conscious startups gain more access to venture capital.

In January, we asked readers, staffers, and members of the social venture community to nominate candidates whose trailblazing companies, in operation for at least a year, aimed to turn a profit while tackling social ills. The 200-plus nominations we received included such entrepreneurs as Alex Mittal, whose Philadelphia-based Innova Materials makes antimicrobial products for private industry, then uses revenues from these efforts to develop water purification systems for the developing world. Kirsten Tobey and Kristin Richmond, founders of Revolution Foods, deliver nutritious lunches to more than 100 schools (that's 20,000 meals a day) in low-income areas in San Francisco and Los Angeles. Rachel Sterne, another social entrepreneur, encourages those living under repressive regimes to post their own reportage at her profit-sharing Web site, You can take a look at each of the 25 ventures we profiled in our slide show, then vote for the business you feel holds the most promise.

Some attribute social models pioneered by small outfits to the social responsibility efforts espoused by large corporations. For instance, about three years ago, Wal-Mart Stores (WMT), the world's biggest retailer, launched a program to promote sustainability, urging its many vendors to produce ecofriendly products while encouraging its consumers to buy them. General Electric (GE) made its green mark manufacturing high-efficiency incandescent light bulbs, and such manufacturing giants as Clorox (CLX) have begun to roll out their own lines of "green" cleaning products. In March, Cadbury (CBY), manufacturer of England's top-selling chocolate bar, announced a deal to use 15,000 tons of Fair Trade certified cocoa from Ghana by the end of this summer for its popular Dairy Milk bar. The company said the move would improve the standard of living of thousands of Ghanaians by tripling the sales of cocoa farmers there.

One of this year's finalists, Daniel Lubetzky, founder of $25 million Peaceworks, which works as a catalyst for peace by encouraging joint snack-food ventures among people of different backgrounds in volatile regions around the world, says it is not enough to impose an artificial business model on a social issue. Lubetzky, who was awarded a $1 million grant from the Skoll Foundation in 2008, says that doing good alone will not ensure success. "I had an earlier company that totally tanked," he says. "I didn't understand the product line well, but I was passionate about the mission. The failure taught me that one can't advance a social mission if the business model doesn't sell. You can't just sell a social mission. You still have to come up with the best product with the best prices." Given the current economic climate, that rings particularly true.

For a look at all 25 businesses, flip through this slide show. More elements of this special report are available here.

Perman is a staff writer for BusinessWeek in New York.

Monday, November 9, 2009

The California Experiment

Busted budgets, failing schools, overcrowded prisons, gridlocked government—California no longer beckons as America’s promised land. Except, that is, in one area: creating a new energy economy. But is its path one the rest of the nation can follow?
by Ronald Brownstein
The California Experiment

AMID ALL THE starpower assembled in the White House Rose Garden on a crystalline afternoon last May, the unassuming gray-haired woman who sat beaming in a prime first-row seat went largely unnoticed. But if not for California state Senator Fran Pavley, none of the other people who had gathered might have been there at all. In 2002, as a first-term member of the California Assembly, she had steered through the nation’s first law requiring automakers to reduce the tailpipe emissions of carbon dioxide and other gases linked to global warming. Fourteen other states indicated they planned to adopt the California law. But George W. Bush’s administration refused to provide the federal waiver the state needed to proceed, and the major auto companies added new hurdles by challenging the state law in court. In January 2009, when Bush left office, the California plan was as stuck as a commuter caught behind a rush-hour pileup.

With the change of administrations, though, the road suddenly cleared. Candidate Obama endorsed the California initiative, and once he became president, his aides negotiated an agreement between the state, environmentalists, the auto-workers union, and the leading auto companies to use the California law as the basis for nationwide regulations to dramatically improve the fuel efficiency, and reduce greenhouse-gas emissions, of all new cars and trucks. The result was the unprecedented, almost unimaginable, scene that unfolded, fittingly enough, under perfect California weather that May afternoon in the Rose Garden. On the podium, President Obama stood flanked by senior executives from 10 global auto companies (including eight that the U.S. government did not own). In the chairs arrayed across the lawn, environmentalists mingled with auto-industry lobbyists, and Californians who had led the fight for stronger fuel-economy standards, like Pavley and Republican Governor Arnold Schwarzenegger, wedged in beside Michigan legislators who had fiercely resisted them. Obama didn’t acknowledge Pavley by name, but he made clear that without California’s “extraordinary leadership,” the landmark environmental agreement he was announcing might never have been reached. Californians “have led the way on this,” Obama said, “as they have in so many other efforts to protect our environment.”

In politics and policy at large, the time is long past when the nation routinely looked to California, as it did in the 1960s and the ’70s, as the most fertile incubator of new ideas. On many fronts, the state government appears almost dysfunctional, hobbled by constitutional constraints and partisan polarization. The collapse of the state’s (latest) real-estate bubble has sent California’s economy into free fall. A short list of the state’s current problems would include surging unemployment, struggling schools, and a budget deficit larger than the entire budget in almost every other state.

But on energy and climate change, the story is very different. Ever since the first Arab oil embargo, in 1973, California has consistently defined the forward edge of energy-policy innovation in America. In 2006, California’s per capita energy consumption was the fourth-lowest in the country. The state emits only about half as much carbon per dollar of economic activity as the rest of America. It generates significantly more electricity than any other state from non-hydroelectric renewable energy sources like solar, wind, and biomass. California registers more patents associated with clean energy than any other state and attracts most of the venture capital invested in U.S. “cleantech” companies exploring everything from electric cars to solar power generation.

“I unequivocally believe we are a model for the rest of the country,” says F. Noel Perry, the founder of Next10, a nonpartisan Silicon Valley–based think tank, whose “California Green Innovation Index” studies have tracked these trends.

Some of California’s edge can be traced to the state’s natural advantages, particularly a temperate climate that does not require as much heating in the winter or cooling in the summer as do many other parts of the country. But the difference is also rooted in conscious policy decisions. The American Council for an Energy-Efficient Economy, a leading nonprofit research group, recently ranked California first among the states in promoting energy efficiency.

“California has fouled up plenty of things,” said John Bryson, the former chairman of both the California Public Utilities Commission and Southern California Edison, the major Los Angeles–area utility that is a national leader in energy efficiency. “But on this set of issues—the clean-energy issues, the kind of things that need to be done in terms of the risk of climate change—I think California is getting it right… More than any other state I know of, California has done already most of the things that need to be done.”

California hasn’t solved all the puzzles associated with replacing fossil fuels. And its successes cannot necessarily be easily replicated. But the state is grappling with every major energy-related issue that currently faces the country. Its experience doing so is also likely to shape an intensifying national debate, because so many key players have roots in the state, from Barbara Boxer and Henry Waxman, who chair the Senate and House committees that are considering climate change, to Energy Secretary Steven Chu. California’s story illuminates some of the obstacles the nation will need to overcome as it seeks cleaner forms of power. But more broadly, California demonstrates how sustained political leadership can reshape how we produce, sell, and use energy—can “bend the curve,” as they say in Silicon Valley.

The epicenter of California’s energy revolution might justifiably be considered a roomy, dimly lit office in the bunker-like Energy Commission building in downtown Sacramento. There, behind a long conference table, surrounded by an untouched cup of chili and plates of apples, bananas, grapes, and tomatoes, sits Art Rosenfeld, at 83 years of age compact and contained, with thinning gray hair and a slight hunch. Looking natty in a hunter-green wool sport coat and a plaid shirt, Rosenfeld has hearing aids in both ears and a BlackBerry on his belt. Nothing about Rosenfeld is imposing, except his ideas, which for decades have earned him an audience at the highest levels of government. Former Vice President Al Gore, for one, described him to me as “a national resource. He’s quite a thinker. I like him a lot.” Then Gore laughed. “I also like that he starts to get more innovative as he gets older.”

In 1973, Rosenfeld was working as a particle physicist at the Lawrence Berkeley National Laboratory. That September, the Democratic-controlled state legislature passed a bill creating a commission to manage California’s energy policy. Ronald Reagan, then governor, vetoed it as an intrusion on free enterprise. But after the first Arab oil embargo caused energy prices to spike, two things happened. First, Reagan switched his position. Stung by popular discontent in car-conscious California, he agreed in 1974 to create what eventually became known as the California Energy Commission. Second, Rosenfeld shifted his focus toward energy efficiency, organizing a working group (which eventually became the Center for Building Science) at the laboratory. “I thought,” he told me dryly, “we had better do such things as learning how to turn out the lights.”

California’s new commission was born with something of an identity crisis: environmentalists hoped it would promote conservation, while utilities wanted it to fast-track production (particularly of nuclear power) to close a potentially crippling shortage in electricity generation. Rosenfeld, who had initially come to the commission’s attention when he critiqued its first energy-efficiency standards for residential buildings, quickly proved instrumental in setting the agency’s direction. In 1976, San Diego Gas & Electric Company asked the commission to approve a nuclear-power plant called Sundesert. Jerry Brown, the eclectic Democrat who succeeded Reagan as governor, didn’t want to authorize the plant, but he faced pressure to close the anticipated gap between electricity demand and supply. Rosenfeld squared the circle for him, telling Brown that if the state imposed efficiency standards on refrigerators (which then consumed about 20 percent of a typical home’s power), it would save at least as much electricity as Sundesert could produce. The state went on to block the Sundesert plant, and in 1977 the commission approved aggressive efficiency standards not only for refrigerators and freezers but also for air conditioners.

“Efficiency just gradually took over,” Rosenfeld said. In the next decade, the Energy Commission followed with efficiency standards for furnaces, dryers, swimming-pool heaters, household cooking appliances, heat pumps, showerheads, and fluorescent-lamp ballasts, among other products. Those rules became models for use in other states and, eventually, for federal appliance standards. In 1978, using a pioneering computer program developed by Rosenfeld and his colleagues, the Energy Commission opened another front by approving more-sophisticated energy-efficiency standards for new buildings. Other states, and even other countries, followed.

Around the same time, an even more obscure California regulatory agency produced another landmark innovation. Utilities traditionally make more money when they sell more electricity, especially since the fixed investment of building power plants and transmission lines comprises such a large part of their costs. As a result, their natural inclination is to encourage their customers to use more. With the state trying to save energy through its efficiency standards, that incentive seemed increasingly perverse—especially after energy prices again soared after the second oil shock, in 1979. John Bryson, a founder of the Natural Resources Defense Council, whom Brown had appointed as chairman of the California Public Utilities Commission, began looking for ways to enlist the utilities in promoting efficiency.

“I thought it was evident that [they] could make a big difference,” Bryson recalled. “But there was the fundamental fact that you were asking utilities, under the regime that existed at the time, to forego returns for their shareholders, because their returns were meaningfully based on increasing electricity sales.”

The solution was a policy known as “decoupling” because it severed the link between consumption and profits. Here’s how it worked: the commission first set a revenue target for utilities by calculating how much money they needed to make to recover their fixed costs, plus an approved profit rate. Next, the commission estimated how much power it expected the utility to sell. Then, it established an energy price that would allow the utility to meet its revenue target at the expected level of sales. If the utility sold more power than it needed to meet its target, the difference was returned to consumers. If it sold less, rates were increased to make up the difference. Applied to natural-gas sales in 1978 and electricity in 1982, decoupling had a profound effect.

“Utilities were rendered indifferent to sales,” says Ralph Cavanagh, a senior NRDC attorney and central figure in California energy policy since the late 1970s. “They couldn’t make more money by selling more; they didn’t lose money by selling less. Their addiction to increased sales was eliminated.” In September 2007, the state utility regulators shifted the incentives for utilities further toward conservation by allowing them to split the savings with customers whenever energy use falls below state targets.

How much those twin rules—decoupling and decoupling-plus, as they are known—have changed the motivation of utility companies became clear when I visited Peter A. Darbee, the chairman, CEO, and president of Pacific Gas & Electric. Darbee works on the 24th floor of a San Francisco office tower in a glass-enclosed corner office that looks like a ship’s bridge. The office has panoramic views of the Embarcadero, and on the windy, sunny day we spoke, boats silently glided through the water in the distance, as if a painting had somehow been set into motion.

“I think the biggest key to the success in California was putting in place the right incentives for California utilities,” Darbee noted. Echoing Cavanagh, Darbee said that decoupling made the utilities “neutral or indifferent” to sales; then decoupling-plus provided utilities “an incentive to sell less power rather than more.” With those economic signals nudging the utilities, he continued, “all of a sudden you’ve unleashed the power of these huge organizations to work with you rather than against you.” Darbee said that sometimes when he’s out sailing with customers, they will say to him, “‘Peter, you would love us, because we have all sorts of lights and air conditioning and we are using a lot of your power.’ And I look at them and say, ‘Well, actually I’d prefer that you use a lot less.’ And they look at me like I’m crazy. And then I say to them, ‘We actually make more money if we sell you less power, and we make less if we sell you more power.’”

Efficiency and decoupling have helped California to consume electricity far more thriftily than the rest of America. At the time of the 1973 oil shock, California used about 17 percent less electricity per person than the country at large. Since then, as Rosenfeld likes to point out in a chart that has been dubbed “the Rosenfeld Curve,” per capita electricity use in the nation has increased by about 50 percent to about 12,000 kilowatt-hours annually. Meanwhile, over that same period, per capita electricity use in California has remained absolutely flat at about 7,000 kilowatt-hours per year. That means the average Californian today uses about 40 percent less electricity per year than the average American.

James Sweeney, who runs Stanford University’s Precourt Energy Efficiency Center, has calculated with Anant Sudarshan, a colleague, that much of that difference can be explained by factors such as California’s temperate climate, less heavy industry, and even smaller-sized households. But, Sweeney says, the state’s policy decisions still account for a substantial amount—roughly one-fifth to one-fourth—of the gap in electricity usage between California and the nation. The focus on efficiency has produced huge savings: though per kilowatt electricity rates are higher in California than in most other places, consumers pay lower electricity bills because they use so much less power than people elsewhere. A few years ago, the California Energy Commission calculated that the state’s efficiency efforts had preempted the need for 24 large-scale power plants and saved state consumers $56 billion.

Rosenfeld says the past generation’s gains indicate the state can improve its energy intensity (the amount of energy required to produce each dollar of GDP) by about 30 percent every decade. “Efficiency,” he says with a twinkle, “seems to be a renewable resource.”

And there is the initial lesson from California’s energy experience: efficiency is the foundation of any effort to reduce reliance on fossil fuels. As California has learned, the most cost-effective way to replace coal or natural gas or petroleum isn’t to rely on solar or wind or biofuels; it’s to squeeze more work out of less energy.

After the state’s early breakthroughs, the 1990s were largely a lost decade for California on energy. The state detoured into a failed experiment with utility deregulation that produced price spikes and rolling blackouts, forced PG&E into bankruptcy, and helped to make Enron a household name. But even that disaster, which ended when the state legislature suspended the deregulation experiment in 2001, fueled another burst of energy innovation in California.

In July 2002, the legislature passed Fran Pavley’s bill establishing the precedent-setting requirement for auto companies to reduce the tailpipe emissions of the gases linked to global warming, a standard the companies had been expected to meet primarily by improving the fuel efficiency of their vehicles. Since the Clean Air Act in 1970, California—alone among all states—has had the authority to impose pollution-control standards more stringent than the national rules, so long as the federal Environmental Protection Agency concluded that the regulations were not arbitrary or unreasonable. But the lawsuits from the major auto companies, and the Bush administration’s refusal to provide an EPA waiver, had prevented California from implementing the Pavley law until President Obama announced the breakthrough with the auto industry this May.

Those anticipating that the name Pavley is some clever policy acronym like CAFE or COBRA are sometimes surprised to find attached to the legislation the actual Fran Pavley. “It’s really quite hysterical,” she says. “I’ve been at some conferences and there will be legislators from different states and they will go around the room and they’re like, ‘We’ve adopted Pavley.’ ‘They killed Pavley.’ ‘I can’t bring up Pavley.’ And I’ll go, ‘I’m Pavley.’ And they’ll go, ‘What?’ I don’t know what they thought.”

Disarmingly informal and chatty, Pavley is in her spare but somehow homey office in the California Capitol in Sacramento, talking as if we were sitting across a kitchen table. Though we were deep inside the dusky Capitol building, a pair of sunglasses was improbably perched in her hair. Before going into state politics, first in the Assembly and now in the Senate, she had spent most of her career as a middle-school teacher. Even though she had accumulated some political and environmental background as a local mayor and a member of the state Coastal Commission, Pavley might have seemed an unlikely architect of such important legislation. In fact, she benefited from being underestimated (“First-term freshman, middle-school teacher—the opposition didn’t show up in droves,” she recalls), and ultimately she assembled a broad coalition.

Pavley also benefited from another factor she had not anticipated: California’s legacy as an environmental pace-setter. That work dates back to the 1940s, when concern about smog in Los Angeles led the state to establish the nation’s first county-level air-pollution-control districts. Rather than being intimidated by the prospect of setting a new national standard, legislators seemed to welcome that role, particularly after George W.Bush in 2001 renounced the global climate-change treaty. “They weren’t going anywhere [in Washington],” Pavley said. “We had pushed the envelope on unleaded gas and catalytic converters. This was sort of the same.” Governor Gray Davis signed the tailpipe bill into law in late July 2002.

Just weeks later, in September, Davis signed another landmark bill. This one required the state’s three investor-owned utilities to generate 20 percent of their electricity from renewable sources like solar and wind by 2017. This wasn’t the nation’s first so-called Renewable Portfolio Standard for utilities, but it was among the most ambitious. After Schwarzenegger arrived, the state raised the bar on the utilities’ renewable-power requirement twice more: the utilities must generate 20 percent of their power from renewable sources by 2010 and fully 33 percent by 2020.

The state approved its initial renewable-sources standards law soon after the collapse of the dot-com bubble. The new mandates on utilities to buy renewable power reinforced the nascent sense among investors and entrepreneurs that clean energy might be the Next Big Thing. From 2005 through 2008, the amount of venture capital flowing into cleantech start-up companies in California exploded from about $456 million a year to $3.3 billion. By one estimate, California was home to nearly three-fifths of all the U.S. venture capital invested last year in clean energy. With the investment spigots opened, the number of clean-energy companies in California increased by nearly 30 percent between 1995 and 2007.

All of this activity points to the second lesson from California’s energy experience: regulations can create markets. “It’s much easier to make a big investment knowing that there will be a market and an opportunity to participate in it,” says Ellen K. Pao, a partner at Kleiner Perkins Caufield & Byers, a leading Silicon Valley venture firm. Initially, neither the utilities nor the investors seemed convinced that state regulators would enforce the renewable standards. But once the legislature and Schwarzenegger sent a clear message by toughening the requirements, the pace of activity enormously accelerated. Solar energy today provides less than 1 percent of the state’s power, but over the past few years, PG&E and Southern California Edison have leapfrogged each other in signing contracts with start-up companies for what is planned as the world’s largest solar production facility. (The California utilities find solar more attractive than wind because the sun’s energy is available on the hottest days, when demand is greatest, but hot days in California are usually still; the wind in the state blows mostly at night, when demand is lower.) Both SoCal Edison and, more recently, PG&E are also seeking approval from state regulators to operate their own large-scale photovoltaic arrays, many on the roofs of warehouses and other big commercial buildings.

The slow start, and the long lead time needed to construct large renewable facilities and the associated transmission lines, mean the utilities are unlikely to reach the state’s 20 percent threshold by 2010. But most experts believe they will meet the goal not long thereafter. And the tilt in the utilities’ priorities toward alternative energy now appears irreversible.

“There is a smattering of activity in other states… but not what you’d call a marketplace with a recurring flow of opportunity,” says Mike Ahearn, the CEO of First Solar Incorporated, which is manufacturing thin-film solar panels for SoCal Edison’s rooftop project. “California is the solar market in the United States.”

Storm clouds, both literal and metaphoric, were buffeting the Capitol building on the blustery day when I met with Schwarzenegger to discuss the state’s energy strategy. Schwarzenegger and Democrats in the state legislature were still locked in a budget standoff with legislative Republicans. (The immediate impasse was finally broken two days later, but the state didn’t reach a final resolution on the budget until this summer, after voters rejected all but one of the ballot initiatives central to the original agreement.) We met in a tent Schwarzenegger has had constructed, complete with Astroturf flooring, in an interior courtyard of the Capitol building, where he can smoke cigars without violating the building’s no-smoking rule. When I arrived, Schwarzenegger, in a blue suit and cowboy boots emblazoned with the California state seal, was contentedly puffing a stogie. For a man facing fiscal meltdown, he appeared remarkably relaxed, though the weather seemed to be offering its own commentary: the torrential downpour lashing Sacramento that day drummed on the tent so loudly that at times it was hard to hear him talk.

Schwarzenegger had pledged to advance environmental causes during his initial gubernatorial campaign in 2003. But when he arrived in Sacramento, environmentalists and legislative Democrats were skeptical about the commitment of a Republican governor whose most prominent previous association with energy issues had been to encourage General Motors to adapt the Humvee for civilian use. “They felt … when I came here, ‘Oh, here’s a Republican, he is going to set us back seven years, so let’s not hope for much,’” Schwarzenegger told me. Legislators may have heard all his campaign promises, but “they thought it was just stuff that you say in order to get elected.”

In fact, Schwarzenegger would bang heads with environmentalists and their legislative allies on some regulatory issues. But on questions surrounding the transition toward a new energy economy, no governor would prove as visionary or determined. Ambitious new initiatives have cascaded out of Schwarzenegger’s office—including the two measures raising the renewable-power requirement on utilities, a state subsidy program to encourage the installation of electricity-generating solar panels on 1 million California roofs, and in January 2007, an executive order establishing the nation’s first “low-carbon fuel standard,” which requires a reduction of at least 10 percent in the carbon emissions from transportation fuels by 2020.

“People make decisions in this building, a lot of times, based on what is their term,” he told me, gesturing with his cigar toward the offices around him. “So they make a decision, what can be done in the next four years … I always look 50 years ahead, because to me, I cannot think just about what can I accomplish while I am in office. The thing that is important is, what should the state look like 20, 30, 40 years from now.” The search for a new energy strategy also spoke to Schwarzenegger’s desire to define California (and undoubtedly himself) as the forward edge of innovation. “My idea [was] that you shouldn’t just do it for California, that everything we do, we should use as a way of pushing the rest of the world, because I am a big believer in marketing,” he said.

Schwarzenegger’s interest in big, course-changing initiatives, and the continuing desire among Democratic legislative leaders to challenge then-President Bush’s energy policies, converged to produce yet another landmark initiative in 2006. After some occasionally tense maneuvering, the legislature passed and Schwarzenegger signed a Pavley-sponsored bill imposing the nation’s first mandatory statewide reductions in greenhouse-gas emissions. The bill required the state by 2020 to roll back its emissions to the 1990 level—a reduction of about 15 percent from the current level. (By separate executive order, Schwarzenegger also committed the state to an 80 percent reduction by 2050.) Environmentalists had been promoting exactly those goals as national policy without success under Bush. Once again, the stalemate in Washington emboldened Sacramento. California acted, Schwarzenegger told me, “because we saw no hope on the national level.” It was, he continued, “very important to let Washington know, ‘Look, you are not the one making all the decisions.’”

Once California had passed its greenhouse-gas-emissions law, Schwarzenegger deputized Terry Tamminen, his key environmental adviser, to encourage other states to follow. That effort has been a striking success: six states, and four Canadian provinces, have joined with California in the Western Climate Initiative, which has pledged to impose mandatory greenhouse-gas-emission reductions comparable to California’s 2020 goal through a market-based regional cap-and-trade system.

The passage of California’s climate-change legislation captured a third major lesson of the state’s experience: just as regulations create markets, markets create constituencies. Much of the state’s business establishment opposed the bill. But the legislation drew countervailing support from the state’s cleantech community, which was growing partly in response to the state’s earlier alternative-energy initiatives. At a critical moment, a delegation of Silicon Valley venture capitalists and entrepreneurs led by John Doerr of Kleiner Perkins Caufield & Byers visited the Capitol to declare that the greenhouse bill would, in the group’s words, “stimulate innovation, efficiency, and economic benefits.” “It changed the whole dynamic,” Pavley said. “Before, all the papers were [saying], ‘This is an environmental bill,’ and businesses were opposed. After that… It changed the whole discussion.” Schwarzenegger meanwhile helped coax support from more-traditional business interests, including PG&E.

Peter Darbee, a self-described conservative, has become an ardent proponent of mandatory carbon-emission reductions. After assuming PG&E’s top job in 2005, he convened a series of meetings for senior executives with scientists on both sides of the climate issue. The conclusion he reached was unequivocal: “The Earth was warming, mankind was responsible, and the need for action is now.” And partly because of the utility’s experience at meeting the state’s energy-efficiency goals, he said, he also concluded that while there will be “some cost” to reducing greenhouse-gas emissions, “that cost is very small, compared to the cost of not doing something. If people approach this, as we have, as an opportunity, it could actually have zero or little cost, or [produce] a net benefit.”

Darbee’s optimism reflects a larger truth about the politics of energy in California: unlike in most states, enough industries in California have found ways to profit from the state’s first waves of reform to create a durable constituency for continued change and innovation.

As a result of the climate-change bill, the state is several years ahead of the country again, this time in exploring what reducing carbon emissions will actually take. “There was no model to work from,” said Mary D. Nichols, the chairwoman of the California Air Resources Board, which has been tasked with administering the climate bill. Last December, the board approved a “scoping plan” that offered the most detailed road map any government agency has yet charted for reducing greenhouse emissions. It pointed to a fourth major lesson from the California energy experience: moving toward a low-carbon economy will require attacking the problem from almost every conceivable angle.

The plan anticipates that the largest reductions will come from the major reforms the state has adopted in recent years, including the Pavley emissions law, the renewable portfolio requirement, and the cap-and-trade system itself. But it also envisions renewed efficiency efforts, improved regional planning to reduce sprawl, more installation of distributed solar power on rooftops, changes in forestry and water-distribution practices, and so on.

For all of the changes required, Nichols is confident the state is on course to launch its cap-and-trade system one year early (in 2011) and to meet its 2020 carbon-reduction goals. Still, California’s experience highlights several obstacles the country may face in any transition toward a lower-carbon economy. Foremost among these, ironically, may be the environmental challenges of producing more renewable power. Large-scale solar arrays consume substantial amounts of land. As plans move forward for new facilities in the Mojave Desert and elsewhere, environmentalists are uneasily monitoring the potential impact on sensitive habitats. Even more daunting are the extended permitting and regulatory processes for building the transmission lines required to carry wind and solar power to population centers.

“Transmission is the biggest constraint,” says Michael R.Peevey, who is the president of the California Public Utilities Commission. Typically, he says, it takes eight to 10 years to plan, permit, and build a high-voltage transmission line. The commission has projected that California will need to build five such lines to meet its 2020 renewable-power goals. The likelihood that that will happen is even lower than the likelihood that Los Angeles will ban Botox.

Another challenge is the precarious financial condition of some of the start-up alternative-energy companies that the California utilities are relying upon to deliver wind and solar power. Even before the credit crunch, skeptics questioned whether the new energy companies possessed the financial, engineering, and logistical capacity to fulfill their agreements with state utilities to build huge generation plants. The difficulty in obtaining credit will likely make it harder for some suppliers to reach the size required to deliver their technologies at an industrial scale. Some analysts think many of the alternative-energy start-ups may instead need to license their technology to the utilities, which can more easily raise the money to build generating facilities themselves. But while more direct ownership by the utilities (or, for that matter, oil companies) might speed the deployment of alternative energy, it would also raise concerns about concentrating control over the next century’s energy supplies in the same behemoths that dominated the fossil-fuel era.

Other technological challenges also loom—from upgrading the electricity grid so it can handle the intermittent nature of solar and wind power, to developing the battery capacity required to make electric cars more than a niche competitor. But the greatest unknown may be whether the state’s energy agenda will eventually provoke a backlash among voters. To meet the greenhouse-gas reduction targets, the state may need to consider measures that average families might consider too intrusive, like imposing fees on the owners of cars that emit the most carbon dioxide. Energy prices are another wild card. If household utility bills noticeably rise, the political calculus might change, particularly if the economy remains weak.

Yet, for now, the key to energy politics in California is that the state has transcended the assumption, common in many other regions, that sustainability requires scarcity. The California perspective reflects the fusion of the state’s long-time environmental ethos with the techno-optimism of Silicon Valley. “We look at this as an economic opportunity,” says Doug Henton, an economic consultant to Next 10 and the chairman and CEO of Collaborative Economics. “What’s been holding back other states and [the nation] is this fear that we’re going to lose more than we gain.”

Clearly, some structural advantages have encouraged that attitude in California. It is easier for California to shift toward renewable sources of electricity, for instance, because it never relied as much as most states on low-cost coal (even including its imports of coal-generated power from neighboring states); it also has an unusually favorable climate for generating solar energy.

“This isn’t something you can design as an exact blueprint, a cookie cutter that is applicable everywhere,” says Mary D. Nichols. But in moving toward a low-carbon future, California has its own unique challenges, starting with its excessive reliance on cars. On balance, the state’s energy successes have been shaped less by the state’s underlying circumstances than by the public policies California has pursued.

The big lessons of the California energy experience—rely on efficiency first, use regulation to create markets, use markets to create constituencies, attack the problem from all angles—might be implemented in different ways, but their basic principles can be applied everywhere. California’s experience says the evolution to a lower-carbon, more energy-efficient economy is possible and compatible with economic growth, but that the change requires endurance, consistency, and flexibility. Schwarzenegger captures the point with a characteristically personal metaphor:

“The key thing with everything is not to concentrate so much on the process but to concentrate on the goal. When I said I am going to be Mr. Universe, and I was 15 years old in Austria, I had no idea how to train and how to get there. But I had the fire in the belly, and I had the will to say that I will be the world champion even though it was not an Austrian sport, and no one had ever done it in Austria … The will was there. So the same is here. We have the will to get there by 2020 …and therefore we are going to … make decisions based on getting there.”

No one exemplifies that spirit of persistence more than Art Rosenfeld. He has been around long enough that as a graduate student he studied under Enrico Fermi. The wall of Rosenfeld’s office is covered with awards that stretch back decades. Yet, at 83, he has a new passion. Rosenfeld is crusading to replace dark roofs, which trap most of the sun’s heat, with white or “cool” roofs that are far more reflective, and thus save energy by keeping the building below cool. California has accepted his logic by requiring all newly constructed commercial buildings with flat roofs to use white. In 2010, Energy Commission rules will encourage new homes and remodeling projects in the state’s five hottest regions to use “cool color” roof surfaces in green, brown, or other shades that reflect more heat than dark roofs.

Rosenfeld finds those rules a little disappointing, because the cool-color roofs reduce energy use by only about one-third as much as white roofs, but he understands the need to ease homeowners into a new approach. And even those requirements could yield substantial reductions. Rosenfeld has calculated that a global conversion, over the next 20 years, to white flat roofs and cool-color sloped roofs as far north as Chicago and as far south as Buenos Aires would reduce carbon emissions by an amount equivalent to taking about one-half of the world’s passenger cars off the roads. Rosenfeld is content to start small but, as always, he’s thinking big. To him, after all, it seems an eminently reasonable proposition that one American state can prompt the entire country, if not the world, to save massive amounts of energy and combat climate change, by reconsidering a central pillar of how buildings have been designed for centuries. Based on California’s experience over the past 35 years, I wouldn’t bet against him.

Saturday, November 7, 2009

NextEra Energy Resources

The Fast Company 50
Even in these tough times, surprising and extraordinary efforts are under way in businesses across the globe. From politics to technology, energy, and transportation; from marketing to retail, health care, and design, each company on the following pages illustrates the power and potential of innovative ideas and creative execution. These are the kinds of enterprises that will redefine our future and point the way to a better tomorrow.

#16 NextEra Energy Resources
Juno Beach, FL

"Who is the largest renewables company in the country?" demands Mike O'Sullivan, senior vice president of development for NextEra Energy Resources. "Is it GE? Goldman Sachs? BP? If you read the ads on the back of The Wall Street Journal you would think these guys are the big gorillas. But in fact, nobody in the U.S. has invested as much in renewables as we have."

Since 2000, NextEra has quietly -expanded to become the nation's No. 1 producer of green energy from both wind and solar. It has invested $8 billion in wind alone. But what may be most interesting about NextEra, a national independent power producer, is how differently it behaves from its very own sister, Florida Power & Light Co., a more conventional regulated utility serving 10 million people across half the Sunshine State. Both are owned by FPL Group, a $20 billion public company, yet their respective performances illustrate how ground rules can drive an industry toward innovation -- or reinforce the status quo.

NextEra operates in 25 deregulated states and Canada, wherever it has the right to compete. Where the existing utilities have sunk large costs in fossil-fuel plants, NextEra can invest shareholder capital in renewables to help states meet increasingly stringent green-energy quotas. Its projects include the world's largest wind farm, the 735-megawatt Horse Hollow in Texas, and the world's largest solar-thermal plant, the 310-megawatt Solar Electric Generating System in California's Mojave Desert. It buys more wind turbines from both GE and Siemens than anybody else. Even after bowing to the economy by cutting costs and shelving some expansion plans, NextEra still grew earnings 18%, to $650 million, in the first three quarters of 2008, and plans to add 1,100 megawatts of wind power in 2009, compared to 1,000 added in 2007.

Jay Apt, director of the Carnegie Mellon Electricity Industry Center, calls the staff "alpha geeks" whose wind-control center in Juno Beach, Florida, is "state of the art," as good as anything he has seen in Europe. "It's the most data-driven utility I think I've seen, and I've seen some very good ones," he says. In 2006, NextEra bought one of the industry's leading consulting firms, WindLogics; there, a staff of PhDs uses the latest National Weather Service data to figure out the optimal placement for turbines and forecast their likely output. O'Sullivan calls them "our rocket scientists."

Florida Power & Light Co., meanwhile, looks a lot more like business as usual. The regulated utility has clashed with activists -several times in recent years over plans to build fossil-fuel power plants on environmentally sensitive land in and near the Everglades; its power mix includes 52% natural gas, 19% nuclear, and 6% coal; and it is proposing new coal and Nuclear plants. "Coal is a four-letter word to us," says O'Sullivan. Eric Silagy, an FPL Co. VP, counters, "For certain folks, coal is an important resource."

Why the split between the two subsidiaries? "Follow the money!" says Stephen Smith, executive director of the Southern Alliance for Clean Energy, who watches the overall company closely. "These guys love to go into somebody else's service territory and compete with clean energy. But when they've got a monopoly, a captive customer base, they revert to the business-as-usual rate-base paradigm: large nukes and coal."

Lately, with Governor Charlie Crist pushing for a renewable portfolio standard in Florida, FPL Co. has been moved to follow its sister's lead. In December, the utility broke ground on the world's first hybrid solar plant, using solar thermal to boost natural gas, the first of 110 megawatts of planned solar plants that represent $729 million in new investments and, when completed around 2010, will make Florida the second-biggest sun-power state in the country after California.

If the nation's objective is to see more power companies behave as innovatively as NextEra does, the solution is clear: Introduce real competition across the country, create strong portfolio standards, and allow better price signals into the market through a carbon tax or a 100% auction-based cap-and-trade system for greenhouse gases. Even Smith gives FPL Group credit for advocating the latter. "It is one of the most forward-looking utilities on climate and global-warming policy," he says. "One-hundred-percent auction is the position of the president, and it's the right position."

Friday, November 6, 2009

Green Energy Agenda Favors Rural Denmark

Green Energy Agenda Favors Rural Denmark
The Danes' shift to renewable, local energy sources have revitalized former textile towns and turned blacksmiths into wind-power entrepreneurs.
By Sam Adams
Daily Yonder

The Danish port of Frederikshavn, pop. 25,000, is dedicated to becoming the first city ever powered entirely by renewable energy. Green energy is not only powering Denmark’s homes and appliances, it is powering Denmark’s rural economy.

On Samsø Island, a farming and tourist destination in the Kategat, wind turbines can churn out 13 times the electricity the 4,100 residents need, and farmers are selling their wheat straw to be burned in district heating plants.

On the Jutland Peninsula, manure produced by cattle and pig farms is turned into biogas and mixed into the natural gas in pipelines. And Vestas Wind Systems, the world’s largest wind turbine maker, was founded and maintains factories on Jutland.

Far from taking jobs, green energy is creating jobs in Denmark and, more and more, around the world. Vestas, for example, employs 20,000 people worldwide, many in small towns like Ringkøbing, Denmark, population about 9,300, and headquarters of Vestas Nacelles. (Nacelles are the streamlined housings that hold the inner workings of wind turbines).

“We have created thousands and thousands and thousands of jobs in this sector,” said Connie Hedegaard, Minister for Climate and Energy. Even amid the economic crises of 2008, the Danish export of energy efficient technologies grew by 19 percent last year. “It has tripled over the recent 10 years,” said Hedegaard, “and if you go and see where we have some of those strongholds … they will often be located in rural areas very far from here in Jutland.”

Denmark was forced into green energy production by the oil crisis of 1973. At that time, the nation was 100 percent dependent on foreign energy, with all of its oil coming from the Middle East. The situation became so bad that weekend driving was curtailed, and residents were only allowed to drive on alternating Sundays based on their car license numbers.

Since then, the country has discovered oil and gas reserves in the North Sea and invested heavily in renewable energy sources. Denmark now gets 17 percent of its energy through renewable sources. While it still produces about 60 percent of its electricity from imported coal, it is now a net exporter of energy.

Connie Hedegaard, Denamrk's Minister for Climate and Energy, sees environmentalism and economic growth as compatible. Perhaps surprisingly to Americans, Hedegaard is a member of the Conservative Party; conservative by Danish standards, it is still slightly to the left of most European conservative parties, and far to the left of the U.S. conservative movement. Hedegaard said that the “Greens” in Denmark had created an “anti-growth” agenda. She adheres to another brand of environmentalism, quite the opposite.

“I have been working with this for five years now,” said Hedegaarrd, “and I have tried to turn this into a growth agenda”

She said much of the growth in the green energy sector has been in areas where there had been tremendous job loss in the textile industry. With the help of green energy and conservation measures, Denmark’s current unemployment rate is less than two percent while per capita energy use has declined for the past three decades.

To those who would argue that green energy standards restrict economic growth, Hedegaard answered, “No. We can prove that we have had 30 years of high growth when we kept our energy use stable, and from that we gained money from not pouring it into the Middle East.”

The Danish government has invested in green infrastructure with a variety of programs. One, a contest, funded a community as a pilot for energy planning (Samsø Island won); others have offered tax breaks for using wind energy. The government has also matched money for communities to build biogas facilities and plans 50 new biogas plants by 2020.

But while government has worked to spur local investment in green energy, much of the reason the renewable energy industry has boomed in rural areas is the character those areas. Vestas wind systems, for example, grew out of a firm that company vice president Peter Wenzel Kruse described as “the Danish version of John Deere,” a tractor company based on the West coast of Denmark.

“It was in the windy part of Denmark, which happened to be rural area with a long history of blacksmiths. That was the cradle of entrepreneurism in Denmark, in the back of Jutland,” Kruse said.

That farming background has also helped bring wind energy and biogas production to rural areas. Biogas has flourished in farm country because farmers have to do something to get rid of manure, and sending it to biogas plants is cheaper than any other disposal method available to them.

On Samsø, Danish Energy Academy president Søren Hermansen said farmers were used to investing in expensive pieces of farm equipment and jumped at the chance to buy wind turbines.

For Peter Kruse, the wind power executive, selling communities on wind power is simple.

“What is wind power offering today? We call it an ‘investor’s high five.’ It’s competitive – it’s no more far more expensive than fossil fuels.” In places like Texas, natural gas may be free, “but it won’t last,” Kruse said. Alternatively, wind power “is competitive, it’s independent, it’s local power – it’s up there – and it’s local jobs.”

Journalist and author Sam Adams [5] lives in Letcher County, Kentcuky.

Rural Economies Must Change or Die
Danville Regional Foundation
Rural economies can be both old and new.
If we bail out New York City, what about New York Mill? Are we in this together, or are we on our own?
By Karl Stauber

Dear Mr. President:

Your presidency occurs at a critical time. Americans are afraid; we are having trouble seeing the future and our places in it. We can see that you are trying to create a new social contract and a renewed faith in the common good. The vast majority of Americans want prosperity for themselves and their families and are willing to work hard and play by the rules to achieve it. But people must believe, and that includes the 20 percent of America that is rural. Continue here.

Thursday, November 5, 2009

Future Wonders of Green Technology and Green Design

15 (More) Future Wonders of Green Technology: From Spinning Towers to Seawater Greenhouses

As the world increasingly focuses on sustainable initiatives, green architecture is a booming industry. Everything from single-family residences to giant 1.2-million-square-foot complexes complete with giant skyscrapers is getting the green treatment, and the innovation that iss going into these plans is more complex than ever. Some of these structures will debut as early as the fall of 2008 while others present a view of what 100 years from now may hold, but all represent amazing leaps in green technology that push the boundaries of what we’ve ever thought possible.

24 Fantastic Future Wonders of Green Design

The ‘green movement’ has swept the world and architecture is at the forefront of the new industrial revolution – buildings being by far the biggest energy-sappers in the world. Many contemporary architects are limited by the confines of budgets, time tables and constricting clients. Some industrious innovators, however, are breaking convention and collaborating to launch our imaginations into the future of green design. A surprising number of the following projects are even slated to be built.

Wednesday, November 4, 2009

Why For-Profits Need Not-For-Profits

Jurassic Park Syndrome
Why corporations shouldn't take the cause out of cause marketing
Why For-Profits Need Not-For-Profits
BY: NANCY LUBLIN Tue Feb 3, 2009 at 12:29 PM

In Jurassic Park, the dinosaurs roam the island terrorizing the humans, who seek refuge in the main building -- a sanctuary with security that beasts surely aren't smart enough to breach, right? Wrong! The big moment of terror is when those dumb animals learn to turn the doorknobs. Uh-oh. Now the humans hiding in the kitchen are really screwed.

We're witnessing a Jurassic Park moment in the social-good space: Not-for-profits are screwed, and it's partly our own doing. For years, we -- the martyrs, the saints, the do-gooders -- have had the keys to that door to heaven. But then we shared them with corporate America, through a practice known as "cause marketing" since 1983, when American Express launched a campaign in partnership with the National Park Service for the Statue of Liberty restoration project.

You see these campaigns everywhere now. Companies buy goodwill by touting that "a percentage of the proceeds goes to ..." or slapping a charity's logo on packaging. Want to show moms that your company cares about children? Partner with the Make-A-Wish Foundation or St. Jude Children's Research Hospital -- moms love sick kids. Need marketing oomph with African-Americans? Call the United Negro College Fund or the National Urban League.

Both sides benefit: Not-for profits get brand recognition from being featured on that cereal box, and of course we ♥ the funds -- more than $1.5 billion per year -- which are usually "unrestricted," meaning we can spend the money on unsexy things like rent. Corporations improve their image and build internal pride. Cause marketing has been one big lovefest; we all reaped rewards -- and together did a lot of good.

But what if corporate America didn't need charitable America to show love? What would happen if they, the dinosaurs in our story, learned to turn that doorknob by themselves? In September, Macy's hosted "Shop for a Cause" in its stores. It bought full-page newspaper ads to promote the day "in support of nonprofit organizations." No mention of specific groups. The day's real draw? Simply the notion of shopping for a cause. Any cause. In fairness to Macy's, it did raise more than $9 million for deserving groups (whose names you can find on its Web site). But the cause-agnostic ads proved that organizations are easily written out of the cause-marketing story line.

Aleve has taken it even further. One TV ad for the painkiller shows a woman "on a three-day walk for charity." She is strong in her spandex, putting her body on the line for her cause -- and no specific cause is named. Another ad features a woman who volunteers at a homeless shelter. The medication helps her enjoy the physical work. Did Aleve give to a worthy group that helps the homeless? No idea, but it's the preferred pain medication of people who care!

Corporate America has realized it can bask in the glow of causiness without actually partnering with a cause. That could mean the end of a gravy train for not-for-profits and the beginning of competition with big, well-funded companies. (Read: We're all kinda annoyed and scared.)

But does that make good business? Charities lend more value than just their good names. Cause is our core competency. It's what we do. We might not know how to make lipstick or sell shoes, but what do those companies know about curing cancer? Plus, we're incentivized to make the campaign work, and have our own promotional armories -- which often include celebs!

Partnering with a dot-org is simply smart outsourcing. Because, besides eating humans, what else can dinosaurs really do in the kitchen?

Nancy Lublin founded Dress for Success and is CEO of the not-for-profit Do Something.