Tech Industry

Will emotion or policy drive clean-tech movement?

Steve Westly and Kevin Klustner say government support needed for economic playing field to be level and post-petroleum economy to take shape.

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; 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.