How Can Business Leaders Accept the Challenges of the New Energy Era?

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"How Can Business Leaders Accept the Challenges of the New Energy Era?"

I have one word for you — scalability

by Ned L. Harvey, reposted from the Rocky Mountain Institute

If you’ve have heard about Reinventing Fire, Rocky Mountain Institute’s roadmap for a secure, renewable energy future, and are like almost everyone with whom I have talked about it, you wonder where to start. This blog is the first of several by RMI staff to help business leaders identify the steps they can take now to begin seizing the economic and competitive opportunities available by leading in the new energy era.

Since releasing Reinventing Fire back in October, I’ve been on the road introducing its vision. The majority of my time has been spent with senior business executives, most of whom recognize the risks associated with our aging energy systems but struggle with the magnitude of the challenge and a clear picture for what they can do about it.

A lot of execs are already taking the initial, common sense steps to move their businesses and industries toward a new energy economy. Many others, though, despite their concerns about the consequences of business as usual in our energy system, seem to want that same business as usual to make things better.

Thankfully, Reinventing Fire provides a robust framework to develop solutions that transcend the industrial boundaries and entrenched interests hard-coded into our energy systems over the past century. Our guide to a 2050 energy system that requires no oil, coal or nuclear power includes detailed recommendations for key players within the relevant sectors: transportation, buildings, industry, and electricity. These suggestions range from no-regrets actions everyone can take today to truly innovative actions steps for the most progressive leaders.

Yet, faced with such complex and interconnected issues, many readers are still asking: How do I gain traction personally and professionally? Are there other tangible steps to take now, and how can I influence those around me to join in this grand quest? And, maybe most difficult to answer, how do I know if I am making progress? When asked these questions, I have a few suggestions. They include: Focus on the economics of opportunity vs. the economics of cost. The math may be the same, but people and organizations seem willing to accept a lower potential ROI or assume more investment risk when pursuing an opportunity they are excited about vs. trying to justify a cost they would prefer to avoid. Establish a winner’s mindset as winners and losers are sorted out in the shift from fossil fuels to a more efficient, renewable energy base. Accomplish this by focusing your own and your business’s attention on the opportunities created by action. Keep in mind the risks associated with inaction and maintaining a business-as-usual attitude toward energy.

Own your role in contributing to the problem — and pursuing the solution. I recently had a transformational experience at an event hosted by the Pew Center on Global Climate Change. Up on stage, in front of several hundred people, the CFO of UPS opened his presentation with a simple statement: “We are polluters.” His point was clear and honest — that in the execution of its core business, UPS generates a lot of pollution. The CFO said he — and all of UPS management — own this as a real business challenge, and have made addressing their environmental impact a top-line priority.

I realized that at some point the energy at UPS must have shifted from denial and obfuscation of the obvious facts to acceptance, so all the energy wasted before that turning point could be redirected to solutions. I was left wondering how many coal-based utilities would openly and honestly acknowledge that they were polluters, and how much energy and resource might be unleashed if they just accepted that fact and owned the responsibility to deal with it.

Become present with the problem and challenges for all stakeholders, and look across boundaries to embrace “coopetition.” It’s one thing to understand a problem from your own perspective. It’s another thing to really experience it — to internalize the challenges that the problem causes and really commit yourself to being an active, vital part of the solution. Yet, you’ll also want to understand the perspective and roles that others will play in the transformation and work in concert with them to achieve progressive alignment across all the powers with a stake in the game.

A great example of this is playing out in the renewable energy space, especially in the solar industry. Ultimately, deep penetration of renewables will require broad acceptance by electric utilities. However, management and engineers within today’s utilities often see renewables as a major nuisance with technical and economic hurdles that are not worth overcoming compared with the alternates at hand. While most entrepreneurs and renewables advocates are spending their energy and precious resources lobbying for mandates to force utilities to use renewables, a few are starting to understand they might gain more by working with utility leadership to envision solar and other renewables as a problem-solving asset.

Avoid a too big a focus on quick wins or buzz about the latest and greatest technology. Instead, measure progress one step at a time and in terms of potential scalability. Solutions to messy problems including climate change, national security and economic competitiveness take a long time to develop and rarely take the shape or form expected at the outset, so it’s really hard to predict and measure progress.

That’s OK, and as such it’s essential to see and celebrate small wins and to recognize that in many ways the ultimate scalability of what we are doing today may contribute more than the specific ideas themselves.

For example, many of today’s very successful solar business models and products, which work really well under subsidies, are likely not terribly scalable since they are often unintentionally customized for success within an artificial market. Conversely, some of today’s more moderately successful solar business models and products are slowly proving themselves in unsubsidized and less solar-friendly markets, likely building on a core set of customer-oriented values, which will serve them well in when all the subsidies fade away.

As visionary business leaders have shown, we can all take immediate actions in this grand effort to transform the biggest and most complex system in modern society. Beyond the first steps, diligent application of tested approaches including systems thinking to look beyond narrow boundaries will, in time, create solutions to some of the most wicked problems of our time.

Ned Harvey is the Chief Operating Officer of the Rocky Mountain Institute. This piece was originally published at RMI.

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11 Responses to How Can Business Leaders Accept the Challenges of the New Energy Era?

  1. Mike Roddy says:

    There are a couple of things telling me that RMI doesn’t quite grasp the urgency of the problem. One is the assumption that switching to clean power must pencil out, which is a daunting challenge unless fossil fuel externalities are accounted for. It should be sufficient for companies to do the right thing. Corporations are supposed to have a social contract, not continue to insist on the bottom line as the only thing that ever drives them. Shareholders are not God.

    The other issue is the old “by 2050″ mantra. This provides a perfect excuse for corporations to ship changes into their long term planning departments, as opposed to actually doing anything. Newsflash: We don’t have that much time to wait. Incremental reductions in our emissions, ramping up in, say, the 2040’s, won’t get it done. The time to begin specifying clean energy is now.

    RMI has done some very interesting work, especially in energy efficiency and materials science. Unfortunately, they are largely funded by polluting corporations, whose prefer to be fascinated by studies instead of inconvenienced by actual changes.

    I don’t see this changing without government action. Corporations’ and utilities’ insistence on using the cheapest power got us into this mess. They are not going to be the ones to get us out.

    • fj says:

      Mike Roddy, Yes, these are points that I tend to agree with but optimistically like to believe that RMI knows what it’s doing attempting to provide an interface or tolerance for change; and, “Focus on the economics of opportunity vs. the economics of cost,” seems to address this.

      And again, the scale of the change that must be accomplished is far beyond any existing precedent; and a multiplicity of methods including direct and positively disruptive innovations and concrete actions including broad deployments should also crucially enhance expediency to the state where we are addressing climate change at wartime speed.

  2. fj says:

    Scale may be one the most underappreciated important concepts.

    This well-though-out and perhaps quite dense post by RMI makes me want to really detail through what’s proposed in the Reinventing Fire roadmap.

  3. fj says:

    There seems to be some disruptively good news from Peter Sinclair (twitter: @greenman3601)

    Solar PV Reducing Price of Power in Germany

    http://climatecrocks.com/2012/02/20/solar-pv-reducing-price-of-power-in-germany/

    Solar Power to the Rescue as German Sun Bails French Nukes

    http://climatecrocks.com/2012/02/20/solar-power-to-the-rescue-as-german-sun-bails-french-nukes/

  4. John Tucker says:

    Unfortunately eliminating nuclear power or its growth is a luxury we probably cannot afford. When someone approaches climate change with an anti-nuclear agenda – Thats a big red flag now for me. Right away, that tells me there is another agenda and probably serious problems.

    This entire estimate looks to just one-day in the future maintain lifestyle now, Energy requirements will likely grow a good deal. Especially if the transportation sector moves to electric vehicles.

    Inventing being a large part of “Reinventing” most of this stuff isn’t even doable and will produce considerable emissions in the conversion process making waste and dead ends all the more relevant. (
    40 percent of our emissions being involved in packaging land use and consumer goods produced here)

    Related to the above, a considerable portion of our renewables produced NOW in China STILL have not been evaluated for carbon footprint. That seems beyond incompetent. Especially after recent studies of electric vehicles there.

    HUGE Expansion of mining for rare earths, chemical processing and metallurgy type work will be required. That needs to be addressed.

    Economically on this scale, I think its also almost a requirement that goods be subsidized and manufactured in the US.

    • John Tucker says:

      Im not trolling or trying to be mean and I dont mind changing my mind to valid arguments.

      This just looks too rosy, like we can continue the way things are now with little sacrifice, “no nukes”, “no GM”, “no fertilizers”, “no mining”, “no pesticides” great pay for no or negative work and all live in a green happily ever after.

      There is simply too many of us now for that. I dont think we should let anyone, whole species or anythign fall off the cliff behind us for feel good unrealizable plans or partial plans with combined open market disasters.

      Like it or not, in many venues we are rapidly reaching the outer stone wall of destructive, over simplified, disconnected, excessive, entertainment driven profiteering behavior.

      After once breached we probably wont even have the luxury to pretend we are free, nice and fair again. At least not on this planet.

    • John Tucker says:

      Certainly not to imply by general negativity there are not plenty of really good ideas in here.

      Very good charts/illustrations and pictures too BTW.

  5. fj says:

    A rapidly changing environment is making an offer business leaders can’t refuse.

    Megaforces Doubling Environmental Costs on Businesses, Equal 40% of Profits

    http://blog.cleantechies.com/2012/02/20/megaforces-doubling-environmental-costs-on-businesses-equal-40-of-profits/

    @TomasWyns

  6. Tom says:

    Where is the beef? This article has no detail, no mention of scalability other than the title.

    What is UPS DOING about being polluters? WHICH solar strategies will work in the post-incentive era?

    This would be a great place for an article about how UPS is responding to global warming, and how a scalable approach is helping businesses figure out practical steps (you know, like the intro promised…)