Perspective: Will emotion or policy drive clean-tech movement?

The Internet boom and bust--like all marketplace manias--taught us the pitfalls of sketching out paradigm-shifting business models on the back of a napkin. It also taught us the risk of investing huge sums of money on anticipated and unknown consumer demand. For example, would people actually order their groceries online? In short, it taught us the dangers of basing a technology revolution on emotion.

To be sure, the Internet has transformed our lives--both personally and professionally--but the cost, in terms of corporate carnage and financial fallout--has been steep.

Now, just as Silicon Valley's Internet-inflicted wounds are healing, comes the "Clean-Technology Revolution." This time, everyone reassures themselves, things will be different. This is a sober, science-based and serious-minded transformation, goes the reasoning; it isn't 1999 all over again, and there's no green giddiness or greed. In short, conventional wisdom tells us this is not an emotional technology revolution.

But is that really true? We believe that, on a strictly rational basis, many elements of the Clean-Technology Revolution do not make sense. If it succeeds, this transformation will take hold because emotion is clarifying--not muddying--our choices and decisions; if we develop the right options for the post-petroleum era it will be because of moral and eco imperatives--not conventional economics. In short, the clean-energy movement will be based on a sense of responsibility, not a need for returns. This is all about our commitment to a healthy environment.

Let's look at the facts. If we ignore environmental and geopolitical costs, coal, oil and natural gas are still relatively inexpensive and are likely to remain so for a long time. Renewable energy will drop in cost, but so will energy capture and storage from fossil fuels--whether it's oil sands or synthetic liquid fuels. With a few narrow exceptions, renewable energy is unlikely to be cost effective in the foreseeable future.

If we factor in the geopolitics of oil, the argument is definitely in favor of pursuing alternative fuels; but the economic choice here would be alternative fossil fuels, not renewable energy.

Role of public policy
So, the big question is: how much value do we place on reducing greenhouse gas emissions to combat climate change?

We are convinced that people in the U.S. want to do the right thing when it comes to energy efficiency. This means that companies have to innovate smartly and simply--and not on the back of a napkin--to succeed in this market.

We know that governments have a hard time fixing problems. But they can gear their citizens toward solutions. Mitigating climate change and combating greenhouse gas emissions require strong public-policy initiatives and legislation as well as global cooperation and coordination.

Unlike the Internet Revolution, which forced investors to confront business and technology risks, the Clean-Technology Revolution is about public-policy risk. Without governmental support--at the local, state, federal and global levels--the economic playing field won't be level and a post-petroleum economy won't truly take shape.

Some of the ways we believe government can be helpful include: instituting a reliable federal program to support research and development of renewable energy; creating a national cap-and-trade approach to regulating emissions as soon as possible; and boosting rebates for energy efficiency.

The thought process tying these initiatives together is that people will change their lifestyles if they're presented with the right kind of opportunities and incentives. Often, it takes the nudging of government to cast these opportunities in a good light.

One of our key opportunities lies with energy efficiency, which is seen as one of the least expensive, most effective and immediately adoptable action items for dealing with the environmental challenges we face. If you're generating less energy, you have fewer power plants, fewer pollutants and fewer problems.

Energy efficiency costs an average of 2 to 3 cents per kilowatt per hour, less than half the cost of new power generation; it also saves consumers and companies money.

The alternatives to energy efficiency are more complicated and less proven. Carbon trading is complex; solar energy is expensive; wind turbines can interfere with private-property rights; and a number of new energy sources are too futuristic to attract venture capital funding.

Energy efficiency is already working--and making a difference. California has adopted meaningful energy efficiency initiatives for the past 30 years and the state's per capita energy consumption has remained flat compared with a 50 percent jump for the rest of the nation; at the same time, California's economic output per kilowatt has increased by 40 percent versus 8 percent for the balance of the country. A recent McKinsey study indicates that we can cut the growth rate of worldwide energy consumption by more than half over the next 15 years if we embrace aggressive energy efficiency efforts.

Simple and smart innovation
Emotion plays into energy efficiency solutions, too. We are convinced that people in the United States want to do the right thing when it comes to energy efficiency. This means that companies have to innovate smartly and simply--and not on the back of a napkin--to succeed in this market.

Well thought-out energy efficiency solutions can help facilitate and spur the Internet and Clean Technology revolutions--both of which are essential for continued economic growth and quality-of-life improvements. And our increasingly digital world, which will extend commercial progress and productivity, clearly doesn't have to be at odds with sustainability. We hope readers will recognize that last sentence as a non-emotional statement of purpose as well as a call to action.

Biography

Steve Westly is a venture capitalist who invests in clean-technology companies; he worked on energy conservation in the Carter administration, assisted the president of the California Public Utilities Commission and served as California's state controller.

Kevin Klustner has more than 20 years of experience in the technology industry and is currently the CEO of Seattle-based Verdiem Corporation, which develops and distributes energy-efficiency software to public and private-sector entities.

Severin Borenstein is the E.T. Grether Professor of Business Administration and Public Policy at the Haas School of Business at the University of California at Berkeley and director of the University of California's Energy Institute.

More Perspectives

[Troll Hard]

Emotion will clean up

because there is nothing logical about environmentalism and environmentalists who think with their emotions instead of logic.

They will use their emotions to try to clean up the environment, and because they do, it will fail and so will their policy.

Global warming theory is based on fear and anger which are emotions, and not logic. It is also based on secular humanism and secular progressivism, and not science.

Environmentalist and left-wingers in general think with their emotions, and not logic, which is why people perceive them as being dumb.

[billmosby]

Sad but true.

Just look at the economic and human carnage caused by one facet
of leftist thought back there in the 20th century- call it
progressivism, socialism, whatever other names it has had.

[maxink]

your "logic" is flawed

First of all, environmentalists are worried about global warming
because the VAST majority of the scientific community,
including some of the most brilliant minds on this planet, agree
that it is real. To have a moral and ethical responsibility to this
planet is everyones obligation more than it is an emotional
persuasion.

Secondly, Climate change is not a theory at all. There is
unbiased and irrefutable scientific data that proves that it is
happening right now. Pay attention to global weather patterns
and you will see this for yourself and if you don't see it, try
reading some scholarly periodicals. Approximately 97% of the
scientific community agree that climate change is as real as
gravity (you do believe in gravity right) and the 3% or so that
refute it are in the pocket of big oil.

Lastly, environmentalism should not be a left wing term. If our
planet becomes inhospitable it effects every one of us on our
planet. Money, politics, power, and everything else are
contingent to the fact that we are able to exist at all.

This is not a hippie-dippy issue. We all must do what is right
to solve climate change. It is logic that should be driving your
emotions

[cturkin]

Who has the fear

"Global warming theory is based on fear and anger which are emotions"

Actually I think the fear is the other way around. Global warming denial, and your claims about illogical behaviour are driven by a fear of having to change, compromise or give something up. That's where the fear is.. You can read more about this topic on http://www.talkclimatechange.com

[zeeboid]

Perhaps they should just pay carbon credits like Gore

Or they could confess their sins to a Church of Global Warming priest:

http://www.churchofglobalwarming.com/index.php?option=com_content&task=view&id=34&Itemid=42

[cturkin]

The problem is that we ignore the true cost..

"If we ignore environmental and geopolitical costs, coal, oil and natural gas are still relatively inexpensive and are likely to remain so for a long time."

And that's the problem. In using these cheap sources of energy we are ignoring the true cost of thier use, and leaving it to someone else to pay the cost of cleaning up.

Only if we have a "user pays" solution can markets be truely effective.

Good post here on the pro's & con's of a user pays solution to climate polution http://talkclimatechange.com/phpBB3/viewtopic.php?f=7&t=58

[zeeboid]

"True Cost" is just a wealth relocation

True cost of something is what you pay.... not what the govenrment wants to take from you in addation to what you pay.

[nextcube]

Make a business case, don't pass a law

Improving energy efficiency has one HUGE advantage over any kind of "carbon tax" or whatever - there's a business case for it WITHOUT GOVERNMENT INTERVENTION. Promote it, publicize it, show people the numbers and they'll go this way all on their own.

[Penguinisto]

Heh...

"[i]California has adopted meaningful energy efficiency initiatives for the past 30 years and the state's per capita energy consumption has remained flat compared with a 50 percent jump for the rest of the nation[/i]"

...and the term "rolling Black/Brown-outs" is also more common in California than in the rest of the United States.

QED, I wouldn't count on gov't regulation or any kind of Wunderkind-style environmentalism for keeping California's energy consumption "flat"...

/P