3/23/14 9:27 PM Is Sustainability Talk a Distraction from What Really Matters?

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Is Sustainability Talk a Distraction from What Really Matters?
Mahesh Bhave, Indian Institute of Management
March 19, 2014 | 24 Comments
Most talk of "energy efficiency" and sustainability is insidious or nave, or even misdirected. We all should switch off
the lights when we leave a room, use efficient, gas-fired tankless water heaters (even when they are uneconomical),
and work in LEED certified buildings. Intelligent thermostats Nest, for instance may regulate our air-conditioning
to assure comfort while generating savings, and shaving peak load on the electricity grid. Using LED lamps and star
rated appliances is admirable too. These solutions and behaviors, while praiseworthy, are beside the point; we should
rather favor supply action before demand response.
While environmentally conscious behavior is essential for the planets health, a better battle
toward the same objective is to diminish emissions at the source power plants and
petroleum-based transport. Between them they account for over 60 percent of GHG emissions,
while residences and office buildings account for about 11 percent, according to the EPA (see
Figure 1, right).
Emissions as Smoking
Consider smoking as an analogy. Yes, smoking causes cancer and people should be
encouraged to give up the habit. Taxes on cigarettes and tobacco products, and smoking bans
in enclosed spaces, do discourage buying and use at the retail level. Research money to cure tobacco addiction is fine
too. But would it not be better to focus on cigarette factories and diminish supply of the tobacco plant?
The Drug Enforcement Administration chases drug lords across foreign lands and seas, disrupts their supply chains,
and destroys fields growing poppy. What could be the fossil-fuelled energy equivalent?
Imagine if carbon dioxide were visible like black smoke plumes come out of households, and the messages on TVs
and roadside displays say: The Environmentalist General has determined that such emissions are dangerous to the
planet and your health. Fair enough, but just outside the city, some giant power plant emits huge amounts of smoke,
from multiple chimneys, continuously. If we cut the smoke from the chimneys and create clean electricity, the little
smoke plumes from individual homes may diminish, and matter little.
When the electricity value chain is regarded as a whole, nipping emissions in the bud makes a lot of sense.
Is there a tacit understanding among certain stakeholders to focus on green buildings, appliances, and peoples habits
in order to divert attention from the emissions sources?
Sustainability? Oh, Please!
Just as efficiency efforts are misdirected, so also is the talk of "sustainability."
The word likely originated with Gro Harlem Brundtlands report, Our Common Future, where the term sustainable
development was first introduced. That makes sense we wish for development, but with inter-generational equity.
As trustees of the bounty of the earth, we wish to leave behind a habitable planet with resources for future inhabitants.
3/23/14 9:27 PM Is Sustainability Talk a Distraction from What Really Matters?
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Former Vice President Al Gore and his colleague David Blood coined Sustainable Capitalism; this advances the
dialogue because it recommends a means toward sustainable development.
But much is lost in leaping from the adjective sustainable to the noun sustainability. The latter neither states the
challenge to be addressed with practical clarity nor proposes any means toward it. In fact, combine sustainability with
climate change or global warming, and we enter the realm of sappy kitsch and futile meetings among international
bureaucrats. Actionability is largely lost.
Renewable Portfolio Standards (RPS) mandating a certain amount of renewable energy in the overall generation mix,
in given timeframes, is an interim step. When centrally generated, say from concentrated solar, RPS does not dislodge
the existing paradigm it shores up the present grid topology.
Only distributed generation, starting with rooftop solar and progressing to microgrids, dislodges the present paradigm.
What is needed is full-blown competition for electricity, with numerous service providers to choose from and a variety of
solutions. Technologies allow this; a new generation of entrepreneurs has to define new business models.
Utility and oil industry executives are likely delighted at all the noise from sustainability, efficiency, and climate change.
It means little will change while everyone feels virtuous. The focus overwhelmingly should instead be on clean,
distributed power generation, and progressively diminishing amounts of traditional, grid-delivered, coal-generated
electricity.
Restructuring Electricity Business
From a business perspective, this means industry structure has to change. The entire edifice of centralized generation
with gigantic transmission and distribution, and the regulated monopoly structure, is obsolete. How do we go from
today to the future?
In the case of telecom, it began with improbable entrepreneurs betting against impossible odds. William McGowan, a
founder of MCI, had a prominent role in breaking up the AT&T monopoly. This quote from Entrepreneur describes it
succinctly: "To implement its long-distance service, MCI's networks needed to be connected to local telephone
networks, which were owned by subsidiaries of AT&T. When AT&T refused to allow any interconnections except at
exorbitant prices, MCI filed a lawsuit against the company in 1974, charging that it was violating antitrust laws by
restricting access to its local telephone network [emphasis added]."
Microgrid operators likely have similar rights to the local electricity networks, through colocation at the sub-station.
When and who will claim them?
Further, during the trial, MCI had presented numerous AT&T documents that revealed a long-standing policy to
destroy any long-distance competition. This prompted the U.S. Department of Justice to file its own lawsuit against
AT&T. To avoid a trial, AT&T negotiated a settlement in 1984, agreeing to divest its local "Baby Bell" companies
and give up control of the local telephone networks [emphasis added]. And thus began competition in the
telephone industry.
The history of electricity is no less dramatic, except for the present interregnum of about 50 some years. This relative
calm in the electricity business parallels what happened in telecommunications, which was also once regarded as
utilities, though few now would. With solar developments, such as distributed generation, electric utilities are at an
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inflection point, ripe for a new generation of McGowans.
In charting a new industry trajectory, all talk of sustainability, and dare one say it, climate change, is a distraction. Not
because it is unimportant but because the lesson has been learned the climate change message has been
absorbed. The focus now ought to be on the core of sustainability, which is energy in general, and first, electricity.
Lead image: Power plant via Shutterstock
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