6 surprising green tech facts

North America does not have to import any oil: we made an active choice to import oil and that decision costs us billions annually. It’s true, and it is one of six green facts that few people know. But we really should, because understanding the following could actually change our lives.  1 - Fuel-efficient cars would eliminate oil imports: If every car in North America got the same fuel efficiency as my Toyota Prius, there would be no need to import any oil into North America, no need to drill for oil in the Gulf of Mexico and no need to drill in the Arctic.

More than a century ago, Henry Ford’s original Model T got 25 miles per gallon (mpg). Fast-forward through one hundred years of head-spinning, relentless technological progress and today the average SUV in North America gets 17 mpg. So we’ve been going aggressively backwards into the future.

When oil hit US$147 a barrel in 2008, America was transferring US$700 billion a year to the Middle East for oil imports. This led financier T. Boone Pickens, testifying on energy security before the House Committee on Ways & Means, to state: “We’re witnessing the greatest transfer of wealth in human history.” And that wealth transfer is entirely voluntary, and entirely unnecessary.

Amory Lovins is the co-founder of the Rocky Mountain Institute, one of the leaders in energy efficiency. He wryly noted that there’s more oil in Detroit than in Saudi Arabia. There is, obviously, no actual oil there, but by producing the most fuel-inefficient fleet of cars of any of the world’s major car companies, Detroit-based GM, Chrysler and Ford force the U.S. to burn more gas than Saudi Arabia produces annually.

2 - Global oil subsidies total US$557 billion annually

This is a head-spinning fact: more than half a trillion dollars is spent subsidizing oil and gas companies worldwide, according to Fatih Birol, the International Energy Agency’s chief economist. Of the top 20 most profitable companies worldwide in 2009, seven were oil companies, and their cumulative profit was equal to the profit of the other 13 combined, according to numbers from Fortune magazine.

Why are governments subsidizing the most profitable industry in the world? And why are governments literally subsidizing climate change?

And another question: why are oil and gas subsidies continuing even as the largest stimulus spending in the world’s history has created the largest-ever global debt?

The US$557 billion per year in oil subsidies does not include the US$100 billion the U.S. spends annually defending Persian Gulf shipping lanes to ensure the flow of oil, nor does it include the cost of the Iraq war, which Nobel economist Joesph Stiglitz estimates to be US$2.7 billion to $6 trillion in total.

All of this is for oil that should not be needed.

3 - Cutting carbon is profitable

A study by McKinsey & Company shows that cutting carbon is highly profitable: 40 per cent of North American carbon cuts required to meet the Kyoto Protocol targets would generate a profit and, if that profit were reinvested in the next least-cost options, we’d get all the way to the Kyoto goals at no cost to society.

My take on this study: 

1. business leaders should take note, as this isn’t a radical environmental group but a pre-eminent global management consulting firm 
2. this categorically dispels the myth that going green is expensive 
3. cutting emissions increases the efficiency of businesses, homes and society as a whole, thus providing a huge economic benefit to the economy 
4. the study shows that there’s no single silver bullet; instead there’s silver buckshot (literally thousands of solutions) 
5. there are very highly profitable energy efficiency solutions available

Some federal politicians in Canada and the U.S. create the myth that going green would bankrupt our economy, so executives should not be held entirely responsible for inaction to date. But the reality is that cutting carbon is highly profitable and not aggressively pursuing energy and fuel efficiency represents a dereliction of fiscal duty.

Investing US$170 billion a year in energy efficiency for 13 years (a total of US$2 trillion) would provide an Internal Rate of Return (IRR) of 17 per cent, according to The Case for Investing in Energy Productivity, a separate McKinsey & Co. study. To put this into perspective, the historical return for investing in property is 16 per cent and the 30-year average returns for investing in the stock market are 10 per cent. So energy efficiency generates a better financial rate of return than the two sectors always trotted out as having the best long-term returns.

4 - Electricity generation efficiency could be tripled

A staggering two-thirds of the energy from coal, gas and nuclear power generation in North America is wasted in the form of heat vented up smoke stacks and cooling towers. By contrast, combined heat and power (CHP) or co-generation increases system efficiency from 33 to 90 per cent by using the “waste” energy to heat buildings or homes, or is stored at high temperature underground. Denmark obtains 55 per cent of its energy from cogeneration and waste heat recovery, the highest installation of CHP worldwide.

5 - Green generates money

GE launched its ecomagination initiative in 2005 and by 2011 it had sold US$70 billion worth of green products and services. US$25 billion of that was in 2010 alone. GE has committed to doubling its investment in its green offerings to $2 billion a year for the next five years.

Wal-Mart is investing aggressively: the $500 million it’s putting into sustainability projects is projected to have a payback of four years or less and has become an incredible profit engine for the corporation. Begun in 2005, the initiative now saves more than US$500 million a year.

Wal-Mart works on three per cent net profits, so to make another US$500 million in profit it would have to sell an additional US$16.7 billion in goods. Even for the largest retailer in the world, this would be a challenge.

6 - Off switch saves Dell US$1.8 million annually

A staggering 50 per cent of North America’s 108 million corporate PCs and monitors are left on overnight and on weekends, wasting up to US$4 billion of electricity a year, according to the U.S. Environmental Protection Agency. Many IT departments instruct users to leave PCs on so patches and upgrades can be pushed out overnight. But power management software from companies like 1E, Verdiem and Faronics allows IT staff to wake PCs to push out patches, upgrades and new virus definitions. Dell Computers is now saving $1.8 million a year after implementing this for its 50,000 computers. The ROI here averages six to 12 months.

So why isn’t every IT department doing this? Few IT organizations pay for electricity: bills are typically paid by the facilities department. Why would overburdened IT staff implement a new system when another department gets the financial benefit?

What will drive this change? A combination of the following: when the CFO or CEO mandates it, when the responsibility and electricity costs are transferred to IT, and when the performance and compensation of the CIO and IT professionals includes cutting electricity use.

The virtuous green cycle

At the World Economic Forum in Davos this year, Sir Nicholas Stern noted that when corporate leaders embrace green they find it provides a virtuous cycle: the more companies save from energy and resource efficiency, the more they realize they can save. Delving deeper opens new understanding and new savings.

During the recession, Wal-Mart’s chair, Lee Scott, proudly noted the company did not cut back on its sustainability spending at all because it is driving bottom-line benefit. Wal-Mart has a goal of zero waste from its operations by 2025, and one Canadian store has achieved 97.6 per cent diversion.

If being green makes sense for Wal-Mart, Dell and GE, it surely makes sense for every business.

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Jim Harris is the author of Blindsided, a #1 international bestseller published in 80 countries worldwide. He speaks at 40 conferences a year around the world. You can reach him through LinkedIn or through www.jimharris.com.




Also watch:
Jim Harris on Tech Innovations at Backbone's 10th Anniversary - April 2011