Why Best Buy Is Rooting for the Smart Grid
The retail giant that helped bring car stereos, camcorders, and CD players to the masses wants to be homeowners' best friend in the emerging world of smarter, greener technology.
Best Buy hasn't been front and center as a green business leader. The corporate responsibility section of its website focuses primarily on Energy Star appliances and e-waste recycling, which the company rolled out to all of its 1,000 or so U.S. stores earlier this year. Beyond that, the company seems to be engaged in the usual efforts to reduce its environmental footprint.
Behind the scenes, however, Best Buy has aspirations to become consumers' go-to resource for a range of green products and services, from e-vehicles to solar panels to a myriad of gizmos designed to help households plug into the smart energy grid as it rolls out in the coming years. The company's thinking, along with its initial efforts, suggests that the mainstreaming of next-gen green products is within view.
At first blush, a company better known for stereos than solar panels may seem an odd match to be ground zero for green tech. But there's a logical link. As the wired and wireless connections grow among home energy systems, electric vehicles, and information technology, consumers will need a reliable resource for finding products and expertise, as well as the ability to make everything work together as advertised. That's where Best Buy hopes to come in.
If you scan the landscape of what's coming over the next few years, you begin to see the opportunities: plug-in electric cars that not only can recharge from a household outlet, but which can serve as an energy storage device to power your home as needed; plug-and-play home solar or wind energy devices that can be installed by homeowners; smart home appliances like refrigerators and dishwashers that can negotiate with the local utility to take advantage of the lowest-possible energy rates, or power down to reduce grid stress; home energy meters and related gadgets that allow you to program lighting, heating, cooling, and appliances so as to maximize comfort and minimize energy bills; the ability to control all this remotely via any computer or smart phone; and more.
"When you turn to the smart grid, the ability to take complex technologies that are going to plug into the home, utilize home area networks, communicate back over broadband to utilities — it's going to be a fairly complex system," Rick Rommel, Best Buy's Senior Vice President, Emerging Business, explained to me recently. "We think that's a place where Best Buy can take our experience in in-home systems sales, support, and installation and apply it to the smart grid."
The fruits of these aspirations are just now finding their way into Best Buy stores. In the past few weeks, the company introduced electric bicycles at 20 stores in Portland, Ore., Los Angeles, and the San Francisco Bay area (as well as online). It also plans to offer a cool electric motorcycle, the Enertia, made by Oregon-based Brammo, in which the retailer's venture capital arm, Best Buy Capital, made an investment last fall. "An electric scooter is really just a battery and a computer on wheels," Rommel points out.
If they get traction from customers, e-bikes and motorcycles could become an entry point for Best Buy as a purveyor of other electric vehicles — both sales and rentals. "The change that's in front of us right now is the transition from gasoline to electric," says Rommel. "And if you look at the disruption that this transition in technology does to sales channels, it opens up opportunities for companies like Best Buy to begin to participate." The company hasn't made any announcements — and Rommel wouldn't say — but what follows could be small neighborhood electric vehicles like the Peapod or the Zenn. And maybe even e-vehicle rentals: "We've heard that the Zipcar community is increasingly asking for secondary cars like trucks and vans that you need just once in a while," says Rommel. "So why invest in a really expensive second vehicle when you can get it only when you need it?"
And then there's the service piece — the critical need to help consumers install and maintain all these gizmos. That's where the Geek Squad comes in. Rommel sees the Best Buy unit — the company bought the Minneapolis startup that specialized in repairing and installing PCs in 2002 — as a natural component of its greentech strategy. "We've been the smart friend that helps the consumer do it themselves, or when they need help in the home we'll do it for them. And that has allowed them to make more sense and get more value from the complex products you put in the home. From a consumer's point of view, if one device that connects to my home area network that does home energy management doesn't work, who do you think they're going to call? Geeks make high-tech house calls, and that is a tremendously valuable asset in a home environment that's becoming increasingly complex."
The story can potentially spin out from there. If Best Buy can garner a following of greentech-minded consumers, the company could play a pivotal role in working with utilities, product manufacturers, and others to design consumer-friendly products — just, as I imagine, it already does for everything from cell phones to flat-screen TVs — along with the technologies that integrate them, leveraging the smart-home communications standards that are beginning to emerge. There's potential for the company to help accelerate markets.
It's a compelling story line, to be sure, but equally important is that it illustrates the potential for incumbent companies to be key players in advancing green technology. While cutting-edge innovation will likely come from countless start-ups, it will be up to the mass merchandisers to accelerate market uptake beyond the green devotees and early adopters.
In the case of Best Buy, it appears to be an early adopter itself, potentially gaining a competitive edge as the green economy truly fulfills its promise.
June 29, 2009 in Business Practices, Clean Tech, Trendwatching | Permalink | Save This Page | Comments (1)
The 'Gigaton Throwdown' and the Big Hairy Audacious Question
Some of my favorite questions begin with the same four words: "What would it take..." What follows those four words can be just about anything, as in: What would it take to ... make solar energy as cheap and efficient as fossil fuel-based electricity?... routinely build zero-waste factories?... recycle 90 percent of the waste in my city within five years?... make organic foods cost-competitive with conventional ones? ... make airplanes operate on electric power? ... create zero-energy low-income housing? And so on.
Such big, hairy audacious questions get past the ideal to the real, looking at the specific changes in technologies, policies, capital flows, and cultural norms that would be required to achieve a goal.
Sunil Paul has asked one such audacious question — and answered it, too. His Gigaton Throwdown report, released today, asks: What would it take to aggressively scale up clean energy to have a major impact on job growth, energy independence, and climate change over the next 10 years? Specifically, the report examines what it would take "to reach gigaton scale for nine technologies currently attractive to investors."
To attain gigaton scale, a single technology must reduce annual emissions of carbon dioxide and equivalent greenhouse gases (CO2e) by at least 1 billion metric tons — a gigaton — by 2020. For an electricity generation technology, this is equivalent to an installed capacity of 205 gigawatts (GW) of carbon-free energy (at 100% capacity factor) in 2020.
The good news, the study concludes:
Eight of the nine technologies that we analyzed are capable of aggressive scale-up to avoid at least 1 billion tons of carbon dioxide equivalent emissions (CO2e) reductions by 2020. Of these nine, there are seven — building efficiency, concentrated solar power, construction materials, nuclear, biofuels, solar photovoltaics, and wind — that are ready to scale up aggressively today. One, geothermal, can scale up fully after an intense period of research, development, and deployment of pilot plants for new engineered geothermal systems. Combined, these eight technologies can meet over 50% of new global energy demand with reliable, clean, low-carbon energy and would avoid over 8 gigatons of CO2e reductions globally.
The bad news: Annual investment in these technologies must grow more than threefold in the next 10 years to make good on climate stabilization goals.
The Gigaton Throwdown project began two years ago, when Paul — part of a wave of successful tech entrepreneurs who found their way to cleantech after the one-two punch of 9/11 and the dot-com bust — heard a friend say, "You know, you clean technology guys could make a bunch of money and not make that big of a difference." As Paul told me recently, "It struck me that, 'Wow, he's right. Many of these technologies could increase by a factor of 10 and I'd do well, but it just would not make that big a difference.' That essentially started a quest on my part to find out what does it take to really make a difference."
A big part of the challenge was creating a framework: How do you think about a problem of this magnitude? The notion of gigatons, says Paul, "made a lot of sense because one gigaton per year is enough to make a major difference by 2020. We chose an amount that matters and we chose a time frame that's relevant to entrepreneurs and investors."
Paul engaged dozens of people — the mailing list of people connected to the project listed more than 130 names, including venture capitalists, academics, entrepreneurs, lawyers, policy makers, nonprofit leaders, and corporate types from utilities, energy companies, Wall Street investment houses, engineering firms, and others. A group of post-docs at the University of Michigan and Stanford, and faculty at Drexel and Berkeley did a lot of the heavy lifting.
Their report (download - PDF) looks at nine "pathways" that could achieve gigaton scale. One of the pathways, wind power, was found to be already growing fast enough to achieve gigaton scale.
The wind industry has been growing at an annual rate of 28% over the last decade and will soon reach 100 gigawatts (GW) of installed capacity globally. At currently projected growth rates, it will exceed half a terawatt (TW) of installed capacity by 2020 and deliver close to 2 gigatons of CO2e reductions. Efficiency technologies, solar, biofuels, and nuclear all offer solutions that have been tested and deployed and can scale more rapidly than the current projections. These are not laboratory curiosities. They are active technologies that are supplying power in multiple markets. With sound policy support, they will do much more.
Meanwhile, another technology, plug-in hybrid electric vehicles (PHEVs), was seen to face "severe challenges to achieving massive scale in the near-term."
To reach the gigaton target, the [auto] industry would need an estimated 300 million PHEVs on the road in 2020. This is equivalent to the total number of new cars to be added to the fleet worldwide in the next 10 years. While perhaps technically feasible, the disruption to current operations, the junking of existing vehicles, and the sheer amount of capital needed for this transition make this pathway infeasible by 2020 in our estimation. We do not include PHEVs in our gigaton projections.
What would it take for technologies reach gigaton scale? In a word: policies. At least, that's the principal conclusion of the Gigaton Throwdown report. And that makes sense, to a point. The Obama administration and Congress — not to mention their counterparts in other countries — are focusing on energy and climate issues like never before. This is a time for policy makers to step up with the right kinds of laws and incentives at a scale sufficient to make a difference. The report urges a range of policy prescriptions: long-term stable carbon pricing, loan guarantees, tax credits, government purchasing, renewable energy standards, fuel standards, efficiency standards, and more — a lengthy list that has long comprised the wish list of the clean-energy community.
But it's not all about government — and it's not even all about money. The markets for clean technology involve a coordinated effort in three principal areas: technology, policy, and capital. Each of these plays a role in scaling technologies, clean or otherwise, and each of these "levers" must be pulled in proper sequence so as to create sustained, orderly markets that can exist without subsidies. Oh, and education, too — lots of it, to encourage legislators, business executives, investors, and voters about these critical needs.
"We sort of already get the technology pieces of it," Paul responded when I pointed this out. "And we know there is a lot of capital sitting on the sidelines that is ready to invest given the right kind of long-term opportunity." What's needed now, he says, is political leadership and action.
"The single most important action to direct this flow of capital is stable policy that establishes a meaningful price on carbon," he explained. "This will encourage investment across the clean energy sector and allow capital to flow to the most cost-effective technologies."
There's no shortage of capital needed: The eight technologies at gigaton scale represent an investment opportunity of over $5 trillion dollars over the next 10 years, according to the report. At this scale, says Paul, clean energy — including efficiency improvements — would meet close to two-thirds of the new global capacity requirements in 2020.
I'm not able to quibble with such figures — or the overall strategy, for that matter. In fact, despite some skepticism about the approach, I like the overall vision. Thinking in gigatons should become the new metric for considering technologies, policies, and investments. Paul says that at least two companies — Serious Materials, a green buildings materials start-up based in Silicon Valley, and Novozymes, a Danish company focusing on biofuels and other "bioinnovations" — have already started doing so, with others to follow. Paul says his own investment firm, Spring Ventures, is doing likewise.
If that's the case — if "gigaton-scale" becomes a lens through which innovators and policymakers view their work — the considerable efforts of Paul and his colleagues will represent a valuable contribution to moving clean energy technology forward to achieve the scale and speed it deserves.
June 24, 2009 in Clean Tech, Climate Change | Permalink | Save This Page | Comments (2)
The Green Future of the "New GM"
What to make of this week's bankruptcy filing by General Motors? The beginning of the end? The end of the beginning? A death? Rebirth? Something in between?
Given the months-long anticipation of this development, much already has been written and said, and many fingers pointed. GM, as Paul Ingrassia recently opined in the Wall Street Journal, made "decades of dumb decisions." And while there's truth to that, GM, Chrysler, and the other automotive companies didn't create this mess by themselves. It took a village — unions, consumers, regulators, and assorted others — to bring the car companies to their knees.
What of the environmental community? That term, of course, is a loose one, given that this "community" rarely speaks with a singular voice. As a rule, environmentalists have long been harsh critics of GM, citing the gas-guzzling Hummer, the company's participation in an industry lawsuit against California's regulation of carbon dioxide as a pollutant, its longstanding opposition to government-mandated fuel-efficiency regulations, and that "fact" that it "killed" the electric car. Of course, it wasn't just GM. Many other car makers — foreign and domestic — sided with GM on the lawsuits and the regulatory stance, marketed gas-guzzling behemoths, and dragged their collective feet on developing alt-fuel technologies. But the iconic GM got the brunt of the activists' criticism.
Today, many of these criticisms are nearly moot. GM reportedly has found a buyer for Hummer, something it has been trying to do for the past year. Several weeks ago, the White House proposed the first federal standard for greenhouse gas tailpipe emissions, and said it would harmonize those standards both with California's proposed "Pavley" emissions standards and with national corporate average fuel economy standards. And, of course, GM has been working for more than two years on its revolutionary Chevy Volt, an "extended range" electric vehicle that's received high praise from activists and engineers alike. Even with the bankruptcy, the Volt remains on track to hit the market at the end of next year.
In my recent book, I chronicled how GM began changing the conversation with the environmental community, beginning in late 2005, as the company promoted biofuels as a potential alternative fuel. In late 2006, GM leaders briefed a group of environmentalists about the Volt, even before it unveiled the car to the press, helping to ensure a group of supportive voices at the car's debut in early 2007. (Remarkably, the greenies kept their promise of confidentiality: There were no leaks.)
Over the past year, and especially over the past six months, GM stepped up its outreach to the major environmental groups, engaging them several times in conference calls and face-to-face meetings, seeking their support during the federal government's deliberations over its fate. GreenOrder, the sustainability strategy firm with which I am affiliated, helped facilitate many of these calls, which included Elizabeth Lowery, GM's Vice President, Environment, Energy, and Safety Policy, and — on two occasions — Rick Wagoner, GM's now-vanquished CEO. The calls offered an opportunity for GM's leadership to engage directly with one of its key stakeholder groups to describe its vision and plans, field questions, and listen to concerns.
I was struck by the civility of the whole affair, as two battle-scarred warriors — Big Auto and Big Green — came together, if not as friends, at least as colleagues with shared goals. The enviro leaders were surprisingly supportive — surprising, that is, because of the animosity and lack of trust that had grown and hardened over the years between the two camps. The activists offered support and encouragement to the auto maker. It was heartening to witness the rapprochement, though in the end, it may have been too little, too late.
But those conversations may yet prove their value, as the "New GM" emerges in the coming months. Before the economy tanked last fall, GM seemed to be "getting it," shifting its focus toward vehicle electrification and renewable fuels for the vehicles on its drawing boards. Its R&D leaders were pondering a world in which there could someday be 2 billion vehicles, roughly twice as many as today, and what that might mean for safety, road congestion, and the environment. They were designing prototypes of small neighborhood electric vehicles. And they were thinking about the second and third generations of the Volt technology that will follow in 2011 and beyond.
No one really knows what form the New GM will take, of course, but from what I can tell, all these efforts will continue. Earlier this week, on the day GM filed its bankruptcy petition, Beth Lowery sent an email to her network of environmental leaders and other stakeholders, offering her perspective of what the filing meant for the car company's future. It said in part:
The New GM will focus on reinventing not just ourselves, but transportation systems around the world. An essential starting point is vehicle electrification, including our new advanced battery lab in Warren, Michigan, where we will continue to develop battery technology to support electric vehicle programs such as the Chevrolet Volt. Also, we will continue to work with partners to develop the infrastructure necessary to support advanced technologies, from flexible-fuel vehicles to urban electric vehicles.
I'm encouraged by that. While it will take months, if not years, to see whether and how the New GM will survive, let alone thrive, there are rays of hope amid the corporate carnage. And while the cynics and skeptics may deride the taxpayer-funded New GM as "Government Motors," I still have high hopes that in the coming years, it actually could stand for "Greener Mobility."
June 2, 2009 in Business Practices, Clean Tech, Trendwatching | Permalink | Save This Page | Comments (4)
Clean Technology and the Aroma of Emerging Opportunity
I'm writing this from Northern California wine country, where I've come for my annual infusion of hope.
No, it's not an alcohol infusion, though there's some decent vintage flowing. The hope comes from the conversations I've been having with a collection of venture capitalists, entrepreneurs, and corporate innovation leaders, at an annual gathering convened by VantagePoint Venture Partners, the cleantech venture fund to which I am an advisor. Each year, this event reinvigorates and reminds me why I love what I do for a living: The copious innovation and ingenuity taking place in the emerging green economy by companies both large and small.
This is no conclave of companies that are "going green" or "greening up." The businesspeople present here in Napa are at the center of a revolution that even some of them aren't yet able to clearly see: a mash-up of energy technology, information technology, building technology, vehicle technology, material technology, and water technology — and the products, services, and businesses that stand to transform our lives over the next decade or two, just as much as, say, the Internet has.
This is hardly the only cleantech conference I attend during the course of a year, but it's the only one that includes a frank and open discussion among a small group of big companies about their perspectives and strategies on cleantech and the green economy, and how they're addressing them. The participants aren't corporate marketing executives or even chief sustainability officers. Rather, the representatives of the global companies present have titles like Vice President, Strategic Planning and Development; Senior Vice President of Emerging Business; and Chief Innovation Catalyst. They are joined here by the founders of two dozen or so entrepreneurial cleantech companies.
As much as I love hearing from the entrepreneurs — each one's presentation offers a cram course in a technology or trend, as well as some innovative approach to addressing it — it's the big corporations that I find most interesting. The VantagePoint event is a rare opportunity to get past the marketing pitches and well-scrubbed executive talking points to hear the real skinny: how some of the world's largest companies are thinking about sustainability and harnessing it as an foundation for innovation.
It's nearly impossible to relate the full measure of the discussions, but I thought I'd share some tidbits about several companies, including a chemical company, a consumer products company, and a major retailer. The rules of engagement for this event are what's known as the Chatham House Rule — in essence, that the information discussed can be shared, but not the individuals' names or affiliations. The Chatham House Rule typically governs meetings where people want to share information openly and speak freely, but not beyond the immediate group.
First, the chemical company. For several years, it has been engaged in an aggressive effort to do with biology what chemistry can't do, creating products that are manufactured at lower temperatures and with far fewer toxic inputs. The company says it is pursuing what it dubs "unique, disruptive science with significant market opportunity." In the lab are a range of biofuels, biomaterials, bioadhesives, and more. For example, there's a carpeting fiber made from corn instead of petro-based nylon that requires nearly a third less energy and emits nearly two-thirds fewer greenhouse gases. It is being manufactured at a repurposed polyester factory. The demand is there from both consumers and corporate buyers, the company says, though pricing is a challenge: With oil prices down, the cost of nylon has dropped by nearly two-thirds over the past year, making the bioproduct less competitive than the petro-based one. Still, the company is optimistic over the long term. "We see many places where biology can win over chemistry."
Next up, the consumer products company. It has created a set of sustainability design principles for all of its thousands of products — "supported by sound and transparent assumptions, good science, and substantiated by data" — and has amped up its commitment to make these products with significant environmental improvements and no price premium to customers. And at the same time, it aims to reduce its overall emissions of carbon dioxide and waste, and use of energy and water, by 20 percent within five years.
Along the way, the company is asking the tough questions: Given that almost all of its packaging is petroleum-based, "How do we make packaging from alternative, renewable material" — and do so without adding costs? There are promising experiments — in one case, working with a Brazilian company to make plastics from sugar.
Many of these innovations are coming from new kinds of partnerships, in which it is working with others to find breakthrough green innovations. That's a new approach for the company, and one it views as its path forward. "Companies that don't adopt an open innovation approach won't be competitive in 10 to 20 years," says the executive. "You have to look outside your walls."
Finally, the retailer. It's probably not the one you think — this one hasn't been particularly visible in the green world — but its ambitions are significant: It wants to become the hub for your home energy needs. For this retailer, that involves selling a vast range of emerging products: electric bikes and scooters, maybe even electric cars; home energy optimization products, including both hardware and software that monitors your energy use and helps you control it; solar panels and other renewable energy products.
And services: shared-use vehicles, solar installation services, home energy audits, and the like. This retailer views a multi-billion-dollar opportunity in becoming the go-to place for homeowners and small businesses to save energy and costs and to buy and install cutting-edge green technologies into their homes and offices.
What these three companies have in common, other than their vast global reach, is a strong vision of where the world is going and what's needed to succeed in the coming years. They understand that markets are shifting, as technology inexorably marches forward. Combined with growing environmental and energy concerns and emerging markets around the world, it creates an unparalleled opportunity to manufacture and sell products with more benign inputs and outcomes. And they're doing this amid one of the worst economies ever, pushing forward with the understanding that tough times often create the best opportunities to advance breakthrough change.
Their efforts are buttressed by innovations coming from hundreds of start-ups that are creating the next-gen building blocks of the green economy — ambitious entrepreneurs, many with awesome track records of creating transformative technologies and companies. Some of them are here, sharing their innovations with their larger corporate brethren, both parties looking for the Next Big (Green) Thing.
There's a palpable sense of excitement here in Napa, as companies large and small sip cautiously the fine wine of emerging opportunity and inhale the delicate aroma of hope. For the moment, at least, it's intoxicating.
April 28, 2009 in Business Practices, Clean Tech | Permalink | Save This Page | Comments (1)
The Future of Green Product Design
We're about a month away from our upcoming conference, Greener By Design 2009, and I wanted to share what's coming and why I think this will be an extraordinary event. I also want to share information about a limited number of unpublished deep-discount registrations I have available for a few lucky blog readers. (More about that in a moment)
Greener By Design focuses on the intersection of product design, innovation, supply chains, and sustainability — how both large and smaller companies are baking environmental thinking into their products and manufacturing processes in a way that makes products not just greener, but better. This year's theme, "Greener Products for Leaner Times," reflects the elephant in the room — the economy — and how companies are aligning green considerations with the need to make products cheaper, lighter, simpler, and more energy efficient.
Suffice to say, this is no mean feat, though part of the problem is perceptual. Most companies still view that designing and building greener products is a costly endeavor resulting in products that are inferior, either in quality or in their ability to be cost-competitive with their conventional counterparts. As we report regularly on GreenBiz.com (and GreenerDesign.com), this is no longer the case. Companies making everything from clothing to cleaners to chips are finding their way.
And it's not just small innovative companies, though many of them are leading the pack. According to a recent survey by the research firm Forrester, a large number of companies are developing greener products, looking at outside factors as well as who within companies are pushing for product changes. Eighty-four percent of the consumer product strategy professionals surveyed said that their companies have environmentally conscious or socially responsible products in development or on the market.
We saw ample evidence of that at last year's Greener By Design (click here for video and other highlights), with companies ranging from 3M to Nike to Xerox — as well as upstarts like IceStone and Method — shared their learning and insights.
That trend has only grown over the past year, as the twin pillars of environment and cost-cutting have led companies to accelerate plans, as Forrester found. Much of the pressure is coming from retailers like Wal-Mart, which itself is ramping up efforts to push suppliers to innovate, reducing or eliminating packaging, making products more energy-efficient, and reducing toxicity — without raising prices. Clearly, this is no longer a "nice to do." It is the future of product design.
This year's event builds on that theme, as well as on last year's success. It includes keynotes from green design master Bill McDonough and iconoclastic entrepreneur Tom Szaky of Terracycle, along with the kinds of panels you'd expect. But also things you wouldn't: a hands-on workshop on innovation, by the renowned firm Systemic Inventive Thinking; small, consultative "guru" sessions with designers and innovators, in which attendees can pose their own design questions and challenges; and an Innovators Showcase, with entrepreneurs doing lightning-fast elevator pitches of their creations. We'll also have products on display from the latest electric vehicle to a new machine that's about to be released across Whole Foods Markets that I can't yet describe. (Click here for the current agenda.)
One of the things that most impressed me about the audience at Greener By Design is the sheer diversity of professionals it attracts. In my opening remarks last year, I scrolled the job titles of everyone in the room across the screen. It was a remarkable assemblage: designers, brand managers, and supply chain professionals, of course, but also engineers, biologists, chemists, and chief marketing officers, among many others. It was that diverse and high-level mix that contributed to the event's success just as much as the program itself.
So, about that discount: Thanks to the generous, record sponsorship we've had this year — from Autodesk, HP, Steelcase, UL Environment, and others — I have a handful of sponsored conference passes for less than half-price of the going rate — sort of my Earth Day gift. I'd like to make them available first to loyal readers of this blog — first-come, first served, and there are only a couple of minor qualifications required for eligibility.
If you're interested, send a note ASAP.
April 22, 2009 in Business Practices, Clean Tech, Green Marketing | Permalink | Save This Page | Comments (0)
Reinventing Mobility: It's Not Just the Cars, Stupid
For all the aiding and abetting taking place on behalf of the automobile industry — the transfusions, the transformations, and the TLC — one thing remains constant: It's all about the cars. The quest, as just about everyone sees it, is to figure out how Detroit automakers and their global competitors can build smart, compelling, and reliable vehicles that appeal both to our pragmatism and passions — and do so profitably and more ecologically. That's the basic drill, right?
Well, maybe not. The near-obsessive focus on building greener vehicles — just about every global auto maker is now in a drag race to create an electric vehicle or plug-in hybrid — obscures the bigger challenge, and the bigger opportunity: to reinvent our personal transportation systems in ways that are better in every way — economically, socially, and environmentally.
Consider: It's become dogma in the United States and other developed and developing countries that "Cars give us freedom." Entire generations of Americans have been reared on that assumption. Detroit was built on it.
But cars are a burden: You have to purchase them, maintain them, fuel them, park them, and insure them. If you live in a city and lack a garage, the challenges and costs multiply. They're expensive and a hassle, and they sit idle 95 percent of the time. When you actually use them, there's the challenge of getting around on ever-congested streets and highways. Not exactly "freedom."
What gives us freedom isn't cars, but mobility, the ability to go where and when you want in the way that's most appropriate and affordable for your needs and style. That's true at every point on the economic spectrum. Indeed, in emerging economies, mobility is a prerequisite to sustainability. When people can move freely from hither to yon, they're better able to have a job, trade goods, seek an education, obtain health care, perhaps even explore other places to broaden their horizons.
So, why, in the digital age, when just about every product and service is undergoing fundamental change, if not outright reinvention, is our transportation future still rooted in the mode of manufacturing and selling cars, electric or otherwise? Why aren't the titans of industry reimagining the larger system in which these vehicles operate? As we try to reinvent the auto industry, shouldn't that be part of the equation?
Dan Sturges thinks it should be. "There's a role for auto companies if they stop focusing on making cars and start thinking about enabling people to move."
Sturges has taught me a great deal about mobility, a subject about which he's both extremely knowledgeable and passionate. A former car designer for General Motors, Sturges now focuses on developing community-improving transportation systems — how to marry an array of personal vehicles with public transit while leveraging the latest in digital telecommunications to create integrated and efficient mobility systems. As an entrepreneur, Dan led the effort to invent the first mass-produced neighborhood electric vehicle (NEV), the GEM car, now owned by Chrysler. These days, Sturges is the visionary behind Colorado-based Intrago, a company that makes "size-appropriate transportation options for people to move about local environments." (Full disclosure: I'm on Intrago's advisory board.)
In Sturges' world, all the talk about alt-fueled vehicles — whether from the major automakers or any of the dozens of start-ups, from Apterra to Zenn — is necessary, but hardly sufficient, especially if cities are too congested for these vehicles to get around. That inefficiency is already apparent, he says. "Here in Denver, we have an average 1.1 people occupancy per vehicle. That's a 20 percent load factor. An airline cannot stay in business a week at a 20 percent load factor." And yet, says Sturges, our national conversation on environmentally responsible transportation has us simply transfering all of that inefficiency over to electric vehicles instead of gas-powered ones. The result is a lot of energy wasted to move all those empty seats. Moreover, he says, studies have shown that in some cities as many as 40 percent of the vehicles on the streets are driving around looking for parking. Simply switching to electricity, even from renewable sources, to power all those underutilized vehicles trolling for a place to park won't get us very far, in terms of our energy and climate goals.
So, we'll need not just new types of vehicles, but new types of vehicle systems.
We're seeing some of this already. There's Zipcar, City Car Share, I-Go, and other forms of car sharing and mircorental services, which provide alternatives to car ownership. In Paris, there's Véllib, the system of 20,000 rental bikes and 1,500 automated stations — roughly one every 300 meters throughout the city center — which affords members with low-cost bike rentals (the first half-hour is free) that can be returned to any station. In Ulm, Germany, Daimler has launched Car2Go, a similar system using small NEVs. As the company describes:
The principle is simple yet brilliant: Whenever you need a car, you can book (spontaneously or in advance) one of 200 car2go that are in Ulm. With a minimum amount of effort, an almost free choice of return location, and without fixed costs. That represents modern mobility for us, which improves the quality of life, and sets Ulm in motion.
Vélib, Car2Go, and the car-sharing services represent parts of the larger system Sturges envisions. "Once you start to see the congestion issue, then you can have a discussion of how can we reinvent or rethink the way that we move. And at that point it gets really interesting. This digital revolution — the thing that's enabling the car sharing and enabling our iPhones to become hitchhiking tools — is a really exciting new world, where this three-dimensional web is unfolding around us."
In that three-dimensional web, you might not own a vehicle, but have access on demand to whatever style and size you need — a small NEV for a quick jaunt to the market, a minivan for a family vacation, a slick sedan for a client meeting, a convertible for a nice day, a sturdy pick-up for a trip to Home Depot. The cars might be delivered to you or be available within reasonable proximity of where you need it. The rental rate might adjust based on time and convenience: If you need a vehicle delivered to your door within 30 minutes you'll pay a higher rate than if you're more flexible about where and when you get it. Of course, all of this is as simple as tapping an icon on your smart phone, texting a request, making a call, or showing up at a kiosk.
And it's not just cars. In the "smart multimodal transportation future," as Sturges calls it, there's a world with a diverse array of transportation choices, from shared electric bikes and scooters to private vehicles of all kinds. (Intrago, Sturges' company, offers technology to create such personal vehicle networks.) "You jump from one mode to the next mode," he says. "The future urban traveler we see is more like Tarzan, swinging from vine to vine." You already do that when you take an airplane trip: You drive or take public transit to the airport, fly to another airport, then "swing" to whatever mode of transport is appropriate and affordable to take you wherever you're going. In Sturges "Tarzan" world, we'd do that locally, too. The result: We'd get there with less wear and tear on ourselves and the planet, and maybe faster, too.
The thing is, it makes economic sense. According to AAA (Download - PDF), the typical midsized car costs about $23 a day — every day, 365 days a year — when you factor in a gas, maintenance, tires, insurance, license, registration, depreciation, taxes, and finance charges (assuming driving 15,000 a year). At that rate, your basic two-car garage runs a cool $16,500 a year. Cutting that in half to own just one vehicle can still leave more than enough to afford all the vehicle sharing and mobility services — even taxi rides — that you need.
Of course, there's a cultural mind shift needed for all this to happen. What will it take for consumers to give up one of their family cars? Could owning fewer cars become a status symbol? Could we reach a point where not owning any car is the ultimate in luxury? That cultural challenge seems nearly as big as the technological ones.
And can the big guys — the General Motors and Chryslers — play in this new world of transportation services, or will their laser-like focus on selling cars lead them to become dinosaurs, even if they survive their current travails? I asked Sturges if the Big Three would be really able to turn the ship toward this new direction. "There is so much talent in Detroit," he replied. "I don't think you need a new ship. You've got all kinds of engineering resources and really bright people. But they'll need less of a focus on selling cars, and more of a focus of enabling people to move. They need to move off the idea that people need one car that can go everywhere and do everything. But I don't think you have to throw the whole thing out. I think you just have to be imaginative."
April 6, 2009 in Clean Tech, Climate Change, State of the Art | Permalink | Save This Page | Comments (15)
AT&T's Driving Ambition
Today, AT&T made a major announcement: that it will invest more than a half-billion dollars over the next decade to purchase more than 15,000 alternative-fueled vehicles — 8,000 vans powered by compressed natural gas, and another 7,100 hybrid passenger cars. The telecommunications giant estimates that the new vehicles will save 49 million gallons of gasoline and reduce carbon emissions by 211,000 metric tons over the 10-year deployment period — equivalent to removing the emissions from more than 38,600 traditional passenger vehicles for a year.
You can hear a podcast interview I did last week with two AT&T executives about why — and how — they did this.
Making a commitment like this is no mean feat. For starters, it means placing a decade-long bet on a dynamic technological market: No one really knows exactly what the technological landscape of automobiles and delivery vans will look like in 2019 — the fuels, powertrains, and other innovations that will become the state of the art. Moreover, there's the problem of ensuring that there's a critical mass of natural gas fueling stations ready when the vehicles hit the streets. Toward that end, AT&T is contracting to have between 35 and 40 fueling stations built on its property, Jerome Webber, AT&T's vice president of fleet operations, told me last week. That's hardly enough to accommodate 8,000 vehicles, but the company hopes that it will help stimulate a market for more.
In some regards, the AT&T announcement represents another in the continuing series of corporate environmental initiatives that my colleagues and I at GreenBiz.com see (and report on) every day, despite the recession and credit freeze. But it's more than that. It also marks the resurgence of AT&T as an environmental leader.
Say what?
Odds are, you haven't heard much lately about AT&T from an environmental perspective. But the company was a pioneer in such fields as industrial ecology, design for environment, and telework. It still funds an Industrial Ecology Faculty Fellowship Program, annual grants intended "to stimulate interdisciplinary research involving social and environmental issues, engineering, science, economics, management, business, law and public policy issues." The company's iconic Bell Labs (now part of Alcatel-Lucent) fostered and supported some of the leading thinkers on such topics, the ones who wrote the textbooks now used in progressive engineering schools on how to integrate ecological systems thinking into product design and manufacturing.
As GreenBiz.com reported in a 2001 article on AT&T:
Industrial ecology systematically studies the environmental consequences of production and consumption. It addresses product-life-cycle planning that examines how the design, production, use, and final disposal of products affect the environment.Industrial ecology includes the creation of eco-industrial parks that provide for the cleaner production of goods. The field also considers extended producer responsibility, known as product stewardship; eco-efficiency; and environmental policies that produce social and environmental benefits to the company and to society as a whole.
AT&T is sometimes erroneously credited with inventing the concept of industrial ecology. In fact, it was first introduced to the general public in 1989 by Robert Frosch and Nicholas Gallopoulos, research scientists at General Motors, who believed that
industrial systems should emulate the best features of biological ecosystems, thereby reducing energy and material consumption and waste generation. The benefits of such operations are reduced environmental damage and increased sustainability for both natural resources and human activities.
Today, that's still cutting-edge thinking.
But AT&T — specifically, Thomas E. Graedel and Braden Allenby, two company engineers — popularized the concept, at least among some early green business thought leaders and practitioners. While at AT&T, Allenby, for example, wrote more than 100 publications and four books: "Industrial Ecology," "Design for Environment," Industrial Ecology and the Automobile," and "Industrial Ecology: Policy Framework and Implementation." (He also has contributed scores of thought-provoking essays to GreenBiz.com since its launch in 2000, archived here.)
Design for environment (DfE) is one means by which the principles of industrial ecology can be implemented today, within the overall perspective of a global economy that is increasingly service oriented. As a U.S. EPA fact sheet (Download - PDF) puts it:
DfE pursues industrial ecology principles by requiring that industrial designers and managers think in terms of cycles or complex systems rather than traditional linear process flow diagrams. DfE locates environmental concern within the most positive stages of the production process. Rather than trying to mitigate environmental consequences of production after the products have been defined and the processes designed, DfE encourages consideration of environmental issues to help shape the context of the industrial designer or process engineer in the same way that manufacturability, cost competitiveness, and consumer satisfaction currently shape that context.
And then there's telework, defined as "working from home or nonoffice locations during normal business hours," which AT&T pioneered in 1992. The company became a champion of the concept long before telecommunications and information technology — not to mention rising real estate and facility prices — made working from home a fairly common practice among many large companies. As recently as four years ago, AT&T — which, of course, benefited from sales of telecommunications products and services resulting from telework - boasted $180 million in business benefits annually from increased productivity by employees and reduced real estate needs from telework. (We've brought telework trends up to date in our annual State of Green Business report.)
So, why this trip down memory lane? AT&T isn't the first or only green business pioneer to fall off the radar. (Another early adopter is 3M, whose environmental mission statement was written in 1975 and still sounds fresh today, and who began a highly successful Pollution Prevention Pays program that same year. Haven't heard much from them lately, though their early initiatives continue.) AT&T is basically a different company today than then, having absorbed BellSouth, Cingular, and several smaller companies. (3M, for its part, lost its pollution prevention czar and got distracted by a myriad other things. Every company has a story.)
As Beth Shiroishi, AT&T's VP for Citizenship and Sustainability, told me last week: "At the close of the BellSouth-Cingular merger, we really still had almost four different operating companies with different programs, operations, even different cultures. At that point, we took a look across all the operations and said, 'What are the best practices? What do we want to be from a holistic standpoint?' A lot of good work had continued throughout those mergers, but looking operationally across the board, we took a couple of steps to really manage that, including elevating citizenship and sustainability to the board of directors." AT&T created an officer-level steering committee to help manage sustainability throughout the company, says Shiroishi, "and then we put in place kind of an expert team structure to look at all the issues and integrate that into our business." She says the company is committed as ever to being an environmental leader.
That remains to be seen, but the vehicle commitment represents a respectable re-boot. "We're all fired up about this," says Webber. "This is the right thing to do and we're doing it, and that's exciting. If you think about it, you've heard certain things coming out from the administration about infrastructure and jobs. This is the real deal."
March 11, 2009 in Business Practices, Clean Tech, State of the Art | Permalink | Save This Page | Comments (1)
