l. Hunter Lovins

l. Hunter Lovins

The Economic Case
for Climate Protection

Climate change represents a unique challenge for economics: it is the
greatest and widest-ranging market failure ever seen.

—Sir Nicholas Stern1

Creating the low-carbon economy will lead to the greatest economic
boom in the U.S. since we mobilized for World War II.

—Former President Bill Clinton2

Sir Nicholas Stern and Bill Clinton both have it right. Global climate change has
been our greatest market failure. Now it is our greatest market opportunity. Market
mechanisms are enormously powerful tools to apply to such challenges as climate
cambiar.

Solving the climate crisis is urgent. Perhaps more important, addressing it
intelligently will unleash enormous economic opportunity. Mitigating greenhouse
gas emissions will require a crash program to use energy more efficiently and to
use renewable energy sources. Doing this will cut costs and drive competitiveness,
spread the use of clean energy technologies that already are cost competitive and
disponible, and deploy next-generation technologies in virtually every sector of the
economía.

Capturing these opportunities will require investment, management attention,
and determination. The fact that these resources are scarce goes a long way to
explain why energy opportunities remain to be captured: without leadership and
lacking a widespread recognition of the urgency, resources have been deployed
elsewhere. Energy is typically a relatively small part of most organization’s budg-
ets, so investing time and money in cutting energy use has been a relatively low pri-
ority for a typical manager. Until the issue is elevated to the level of CEO concern,

l. Hunter Lovins is the president and founder of Natural Capitalism Inc. and cocre-
ator of the Natural Capitalism concept. En 1982 she cofounded the Rocky Mountain
Institute and led that organization as its CEO for Strategy until 2002. Under her lead-
ership, RMI grew into an internationally recognized research center widely celebrated
for its innovative thinking in energy and resource issues.

© 2009 l. Hunter Lovins
innovaciones / caer 2009

245

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

l. Hunter Lovins

Cifra 1. A Cost Curve for Greenhouse Gas Reduction

Fuente: Enkvist, Per-Anders, Naucler, Tomas, Rosander, Jerker, “A Cost Curve for Greenhouse Gas
Reduction,” The McKinsey Quarterly, No. 1 (2007).© McKinsey & Co.

it will be hard to get action in corporations or governments. Además, como
descrito abajo, there are myriad barriers to reducing energy use, even though
doing so will save money quickly. Colectivamente, these hurdles have created a hassle
factor that for most executives has just not been worth surmounting—yet.

CAPTURING THE OPPORTUNITIES

The entrepreneurial opportunities in implementing a new energy economy will be
unprecedented. Far from the crushing cost that some have called the price of cli-
mate protection, investments in using energy more productively and in unleashing
the new energy economy will deliver impressive returns.

In the past, the United States led the world in the development of green tech-
nológico. Solar electric cells and wind turbines were first developed in America.
Hoy, due to intelligent government policies, countries such as Japan, Porcelana,
Germany and Denmark have taken the lead in solar and wind power. Renewables
now create more new jobs in Germany than any other industry.3 Denmark aims to
conseguir 60 percent of its energy from renewables by 2010. Japan was first to market
with hybrid vehicles. Toyota, which this year surpassed General Motors as the

246

innovaciones / caer 2009

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

The Economic Case for Climate Protection

world’s largest car company, expects hybrid vehicles to rise from 6 percent of its
A NOSOTROS. vehicle sales in 2005 a 20 percent by 2012.4 It is time again for the United
States to become the world leader in developing the goods and services needed for
low-carbon economic development worldwide.

The good news is that the transformation of the U.S. economy already is
underway, and there is a strong business case for acting even more aggressively to
protect the climate. Leading companies and communities are cutting their costs,
creating jobs, increasing profits, and strengthening shareholder value by doing just
este. 5

The McKinsey study profiled in Figure 1 is one of a growing number of stud-
ies that are finding that the challenge can be met with little or even negative cost.
McKinsey found that greenhouse gas emissions could be stabilized at current lev-
els and reduced on the scale that scientists say will be necessary to protect the cli-
mate at a cost less than the world spends on defense or insurance, and with around
a third of the estimated impact of recent oil price rises.6 Although individual num-
bers can be questioned (the study uses historic nuclear costs, not the marginal
costs of building new plants, and almost no one expects that carbon capture and
sequestration of carbon emissions from new coal plants can be brought on with-
out doubling the cost of coal), the shape of the graph is roughly right: most of the
energy efficiency that by some estimates can cut energy use by at least half comes
on at a dramatic savings, and the measures needed to keep carbon emissions under
450 parts per million (the highest range that scientists believe the world can safely
manage) are well within the range of acceptable investments.

“This is a hugely important message to policy makers everywhere, not least
those in the United States Congress,” the New York Times editorialized in May 2007.
“Many of them have been paralyzed by fears … that a full-scale attack on climate
change could cripple the economy.”7

Many companies and communities aren’t waiting. DuPont, GE, Alcoa,
Caterpillar, Pacific Gas & Electric (PG&mi), y otros, acting as members of the
A NOSOTROS. Climate Action Partnership, or USCAP,8 have called for national legislation to
cap carbon emissions, stating, “In our view, the climate change challenge will cre-
ate more economic opportunities than risks for the U.S. economy.”9 PG&mi, Exelon,
Public Service of New Mexico, Nike, and Apple have all resigned from the U.S.
Chamber of Commerce in disagreement with the Chamber’s opposition to the
Environmental Protection Agency limiting carbon emissions.10

Al mismo tiempo, farsighted leaders of cities, estados, campuses, and others are
implementing climate protection efforts, cutting their costs, creating jobs, y
enhancing their economies by reducing their carbon footprint. As of October 2007
almost 750 American mayors had pledged that their cities would meet the goals set
forth in the Kyoto Protocol or reduce their emissions of greenhouse gasses by at
el menos 7 percent by 2012. Some have already met even more aggressive targets or set
goals ranging from a 20 percent reduction by Portland, Oregón, to a 42 por ciento
reduction over the same time frame by Sebastopol, California.11

innovaciones / caer 2009

247

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

l. Hunter Lovins

Cifra 2. California versus U.S. Energy Demand

Fuente: Arthur Rosenfeld, California Energy Commission.

California, the world’s sixth largest economy provides an example. Desde 1974,
Californians have held their energy consumption to zero growth while national per
capita energy consumption grew 50 por ciento. The state’s per-capita carbon emis-
sions have dropped 30 por ciento desde 1975. (See case narrative by Arthur Rosenfeld
in this issue of Innovations.)

By one estimate, the average family in California is paying about $800 less for energy each year than it would have had the state not actively pursued energy effi- ciency.12 In 2004, California ranked 12th in the nation in energy prices, but only 45th in energy costs per person.13 Communities and companies that are implementing climate protection pro- grams are finding that smart, comprehensive approaches to climate planning make them more competitive and put hundreds of billions of dollars back into the econ- omy through savings. A city commissioner from Portland, Oregón, stated, “We’ve found that our climate change policies have been the best economic development strategy we’ve ever had. Not only are we saving billions of dollars on energy, we are also generating hundreds of new sustainable enterprises as a result.” Programs to ensure that buildings use less energy and to encourage the use of efficient cars, appliances, and machines generate immediate energy savings, but they also encourage economic development in cities and states. They create new manufacturing companies, building retrofits, decentralized energy systems, farm income, etc., and spur the creation of a dynamic, transformative, clean energy economy that saves money, generates jobs, and confers economic opportunity. 248 innovaciones / caer 2009 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 The Economic Case for Climate Protection Figure 3. California and U.S. CO2 Intensity Source: Arthur Rosenfeld, California Energy Commission. THE BUSINESS CASE FOR CLIMATE PROTECTION American businesses were among the earliest actors to undertake aggressive cli- mate protection programs. Gains for the environment realized through increased efficiency are free—or better than free (see text boxes on following pages). And they exist throughout American businesses. Even where achieving the energy savings that will protect the climate costs money, it is one of the best investments a company can make. Johnson Diversey projects a 160 percent return on their investment in reducing their carbon footprint by saving energy.14 Given the many available examples of thoughtless waste, it should come as lit- tle surprise that American businesses use twice as much energy to produce a unit of GNP as do our competitors around the world.15 But then, all of the other nations in the world have signed the Kyoto Protocol, which obliges them to save energy in order to cut carbon emissions. They are innovating to do this, saving money in the process and enhancing their competitiveness. These companies realize that cutting carbon emissions and other GHGs is a “no regrets” strategy. Using energy more efficiently not only reduces carbon emis- siones, it saves money. Businesses can also profit from using and investing in carbon free renewable energy, now the hottest investment target in the economy. Venture capitalist John Doerr recently stated that such green technology could match information tech- nology and biotechnology as a significant money-making opportunity. He called innovations / caer 2009 249 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 l. Hunter Lovins The Business Case for Climate Protection: Some Examples • Researchers at Lawrence Berkeley National Laboratory estimate that an invest- ment of more than $300 billion will be needed worldwide over the next 20
years to provide low-carbon electric power and equipment to one billion peo-
ple who now do not yet have access to electricity.1 The World Bank estimates
that an investment of up to $40 billion annually will be needed worldwide to adapt to climate change. This may sound like a lot, but the investment will do more to create jobs and stimulate the economy than any other options. Investments in renewable energy create 10 times the number of jobs that a similar amount invested in conventional power stations would.2 Clean tech- nology has become the fastest growing sector in venture capital and private equity investment, con un 2005 market valuation of $50 billion. The amount
of global energy sector investment into renewables reached 10%. A 2005 sur-
vey of 19 venture capitalists investing in 57 European clean tech firms showed
average annual returns since 1999 of almost 87%.3

• New low-carbon fuels are needed to replace the 85 million barrels of petrole-
um the world consumes each day and the 385 million gallons of gasoline
burned daily in the United States4 and the much higher fuel consumption pro-
jected for the future. Production of biofuels grew globally by 95% entre
2000 y 2005 and should account for 5% of transport fuels by 2020. Por 2015,
this should create more than 200,000 new U.S jobs in ethanol production
alone.5 In contrast, current high oil prices represent one of the biggest trans-
fers of wealth in history, redistributing 1% of world GDP each year. Oil con-
sumers now pay $5 billion more for oil every day than they did five years ago. En 2007, $2 trillion will flow from customers to the oil companies and oil-pro-
ducing nations.6

• There were 700 million “light-duty vehicles” worldwide in 2000. That number
is expected to increase to 1.3 billion in 2030 and to more than 2 billion by

climate change “one of the most pressing global challenges” and said that the
resulting demand for innovation would create the “mother of all markets.”16 One
study estimated that investment in renewable energy projects could skyrocket to
cerca de $50 billion by 2011, with double-digit annual growth rates.17 In a separate report, the United Nations described “a gold rush of new investment into renew- able power over the past 18 meses,” which led the authors to conclude that clean energy could provide almost a quarter of the world’s electricity by 2030. It report- ed that more than $70bn was injected into wind and solar power and biofuels in
2006, 43 percent more than the preceding year. Sustainable energy accounts for
solo 2 percent of the world’s total, pero 18 percent of all power plants under con-
struction are in this sector.18

The European Union has established a goal of meeting 20 percent of its ener-
gy supply from renewable energy by 2020.19 Delivering the capacity to do this is

250

innovaciones / caer 2009

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

The Economic Case for Climate Protection

2050.7 New applications of urban design, mass transit, and vehicle efficiency
are needed to prevent massive increases in transportation-related carbon
emissions. Creating this infrastructure will revitalize aging downtowns and
generate jobs.

• In December 2006, New York mayor Michael Bloomberg announced a remark-
able plan—PLANYC 2030—to create affordable and sustainable homes for
nearly one million more New Yorkers, ensure that all residents live within a 10-
minute walk of a park, add public transit capacity for millions more com-
muters, upgrade energy infrastructure, and achieve “the cleanest air of any big
city in America”—all while reducing the city’s greenhouse gas emissions by
30%.

1. “Sustainable, efficient electricity service for one billion people,” Fulkerson, Levin, Sinton and
Gadgil, Energy for Sustainable Development 9, No. 2 (Junio 2005), páginas. 26-34. The International
Energy Agency estimates that 1.6 billion people worldwide now have no access to electric serv-
ice.

2. Daniel Kammen, “Putting Renewables to Work: How Many Jobs Can the Clean Energy
Industry Generate?” http://www.berkeley.edu/news/media/releases/2004/04/13_kamm.shtml;
and Sanders, Roberto, “Investment in Renewable Energy Better for Jobs as Well as Environment”,
Abril 13 2004, http://www.berkeley.edu/news/media/releases/2004/04/13_kamm.shtml

3. In the Black, Report by the Climate Group, Agosto 2007,

http://theclimategroup.org/index.php/resources/

4. A NOSOTROS. Energy Information Administration

http://www.eia.doe.gov/neic/quickfacts/quickoil.html

5. In the Black, Climate Group
6. Mufson, Steven, “Oil Price Rise Causes Global Shift in Wealth,” The Washington Post, Noviembre

10 2007, http://www.washingtonpost.com/wp-dyn/content/article/2007/11/09/
AR2007110902573.html?hpid=topnews.
Americans use about 22 million barrels/day, veces (decir) $130/bbl. This results in around $3 bil-
lion per day spent. Based on the same usage rate, or about 7 a 8 billion barrels/year, en $130, Americans are spending about $1 trillion.

7. See http://www.wbcsd.org/web/publications/mobility/overview.pdf

expected to provide up to 2.8 million jobs and create up to 1.1 percent of the GDP.
The E.U. energy commissioner, Andris Piebalgs, stated, “This shows that benefits
of renewables in terms of security of supply and fighting climate change can go
hand in hand with economic benefits.” Asia should do no less.

Vishal Shah, an investment analyst for Barclays Capital, has put it this way:
As global economies take action to mitigate climate change, we expect an
era of fundamental reshaping of the global energy infrastructure to cre-
ate a prominent role for the renewable energy sector. Renewable electric-
ity represented 2.5 percent of worldwide electricity generation in 2008
and we believe it could represent more than 20 percent of worldwide
electricity generation, as policies to promote renewable energy are imple-
mented globally over the next 20 años. . . . Solar currently represents less

innovaciones / caer 2009

251

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

l. Hunter Lovins

Interface Inc.

When Ray Anderson, CEO of the global carpet company, Interface Inc., looked
critically at his carpet operations and sustainability, he concluded that “nothing
about our business was sustainable.”1 Anderson challenged himself, his employ-
ees, colegas, and competitors to shift to sustainable operations. Innovating to cut
waste and to redesign his products, Interface found that its commitment to sus-
tainability enhanced every aspect of shareholder value. The savings accumulat-
ed from eco-efficiency measures paid for the entire sustainability commitment
and enabled the company to remain profitable through economic downturns,
gain market share, and become the dominant player in its industry.2

Anderson’s goals were:

• Take from the Earth only what can be rapidly renewed by the Earth naturally
• Take no oil from the ground for production and send nothing to landfill
• Create no harm to the biosphere, y
• Goal: “Mission Zero”—0 impact, 0 footprint

The company’s measured progress to date includes:
• Net GHG emissions are down 82% in absolute tonnage
• Sales increased by 2/3
• Profits have doubled
• Fossil fuel usage is down 60%; Water usage is down 75%
• Renewables and recycled materials are up 25%
• Renewable energy use is up 27%
• Interface diverted 74,000 tons of used carpet from landfills
• The company innovated the first certified carbon-neutral products, y
• Interface sold 85 million square yards of climate-neutral carpet since 2004

Interface is half way to its goal today. It anticipates meeting its goal of hav-
ing zero impact and zero footprint in 2020. Ray Anderson, now chair of the com-
compañía, reports that Interface’s sustainability quest has been the best thing he has
ever done for the business.

Costs are down $4.5 million per year. The program has elicited unprecedent- ed customer loyalty that saw the company through the last economic downturn. The savings from eliminating waste paid for all of the costs for transformation of Interface.3 1. Anderson Ray, Midcourse Correction, Chelsea Green Press, 1999, ISBN-13: 978-0964595354. 2. Personal communication, Ray Anderson, Wingspread meeting, Julio 16 2008. 3. See http://www.ted.com/talks/ray_anderson_on_the_business_logic_of_sustainability.html. 252 innovaciones / caer 2009 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 The Economic Case for Climate Protection than 0.5 percent of global electricity generation. Sin embargo, as renewable electricity gains importance in the $1 trillion global electricity market, nosotros
forecast solar photovoltaic shipments to rise at a compound annual
growth rate of 50 percent for the next four years.20

Renewable energy generation is being implemented across Asia. The government
of India has announced plans to invest $20 billion to build a solar market and an Indian solar photovoltaic industry.21 The plans include constructing 20 gigawatts (GW) of solar energy by 2020, with a total of 200 GW of solar generation by 2050. Actualmente, India has little solar generation, pero por 2012 it expects to have 1 GW of solar power installed on the rooftops of public-sector buildings and in local solar manufacturing parks. China is also investing heavily in solar and wind power, reportedly investing $440 a $660 billion22 in clean-energy industries over the next 10 años. Already one of the global leaders in wind power generation, con 100 billion yuan ($14.6 bil-
lion) committed to wind power generation by 2010,23 China plans to increase wind
generation from 12,000 megawatts (MW) a 30,000 MW. Shi Lishan, deputy direc-
tor of renewable energy at the National Energy Administration, dicho, “Wind power
is ‘vital’ as it is the cheapest form of renewable energy.”

Japan is investing to achieve a 20-fold expansion of installed solar energy by
2020,24 while South Korea is devoting $85 billion, o 2 percent of its GDP, to green industries and technologies over five years.25 In contrast the U.S. is projected to invest only $10 billion annually in a clean energy economy, assuming that the
American Clean Energy and Security legislation now languishing in Congress
actually passes. Solo $1.2 billion would be spent on research into low-carbon tech- nologies.26 Various observers believe that this is an opportunity for Asia to take the lead in creating a more sustainable energy future.27 Energy supply is not the only aspect of a clean energy industry. China plans to produce half a million hybrid vehicles per year by 2011. Toyota projects 30,000 in Japan by 2012. A diferencia de, the Ford Motor Company estimates that it will have produced only 120,000 por 2020. Unless America acts, Asia will seize the center of the conversation in clean technologies.28 Enhancing the Integrated Bottom Line Businesses that reduce their carbon emissions strengthen every aspect of share- holder value. The validity of this management approach is borne out by the recent report from Goldman Sachs, which found that companies that are leaders in envi- ronmental, social, and good governance policies have been outperforming the MSCI world index of stocks by 25 por ciento desde 2005. Seventy-two percent of the companies on the list outperformed industry peers.29 Even in the economic collapse, companies that make a commitment to behave more sustainably fared better than their peers in the same industry. De 2006 a través de 2007 companies on the Dow Jones Sustainability World Index performed 10 points above the S&PAG 500.30 innovaciones / caer 2009 253 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 l. Hunter Lovins Figure 4. Performance of sustainability-focused companies. Fuente: Mahler, Daniel, Jeremy Barker, Louis Besland, and Otto Schulz. “Green Winners,” online article for A.T. Kearney, 2009, http://www.atkearney.com/shared_res/pdf/Green_Winners.pdf. En 2009, A.T. Kearney released the findings of their report, “Green Winners,” comparing the economic performance of companies with a commitment to sus- tainability to that of companies in the same industry without such a commitment. The report tracked the stock price performance of 99 firms on the Dow Jones Sustainability Index and the Goldman Sachs list of green companies over the six months prior to November 2008. En 16 fuera de 18 industries evaluated, busi- nesses deemed “sustainability focused” outperformed industry peers and were “well protected from value erosion.” In the study period of three months the dif- ferential between the companies with and without a commitment to sustainabili- ty was 10 percent and over six months the differential was 15 por ciento. “This per- formance differential,” the report stated, “translates to an average of $650 millón
in market capitalization per company.”31

As shown below in Figure 2.13 from a 2009 study of European companies (el
ATOS study) “there is a strong business case for environmental excellence.
Companies with more mature sustainability programs enjoy higher profit.”32

Corporate managers are increasingly realizing that value returned to the own-
ers, the real metric of success, derives from more than just attention to next quar-
ter’s profits—indeed the Financial Accounting Standards Board (FASB) has recent-
ly announced that it will revise its definition of “profit” in recognition of this real-
ity.33

Shareholder value is enhanced when a company grows top-line sales, cuts its
costos, manages its risks effectively, enhances labor productivity, drives innovation,
better manages its supply chains, etc.. These elements of what is now known as “the
Integrated Bottom Line”34 are all strengthened when companies save energy and
reduce greenhouse gas emissions. Companies that implement climate protection

254

innovaciones / caer 2009

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

The Economic Case for Climate Protection

programs enhance financial performance from energy and materials cost savings
in industrial processes, facilities design and management, and fleet management.
Such programs enhance core business value through sector performance leader-
ship and first-mover advantage, create greater access to capital, improve corporate
governance, strengthen the ability to drive innovation, and improve government
relaciones. They also help a company to retain competitive advantage, enhance its
reputation and brand equity, increase its ability to capture market share, and dif-
ferentiate its product. Finalmente, these programs increase a company’s ability to
attract and retain the best talent, increase employee productivity and health,
improve communication, creativity, and morale in the workplace, as enhance
stakeholder relations.

Regardless of how severe the impact of climate change proves to be, y
regardless of how drastically and how soon GHG come to be regulated at the fed-
eral level, companies who institute such programs will be in a leadership position
because by taking early action to deal responsibly with GHGs, they cut their costs
and got ahead of their competitors.

Cost Reduction: The Walmart Experience
As DuPont showed, using less fossil fuel by using energy more efficiently saves
dinero, because it costs less to implement the energy savings measures than it does
to buy and burn the fuel. En 1999, the company estimated that every ton of carbon
it displaced saved it $6. Walmart realized that changing the incandescent bulbs in its ceiling fan dis- plays throughout its 3,230 historias (10 models of ceiling fans on display, each with four bulbs, or forty bulbs per store) could save the company $6 million a year. Said
Chuck Kerby, the Walmart employee who did the math, “That, for me, was an ‘I got
it’ moment.”35

En 2005, Lee Scott, then CEO of Walmart, committed the company to work
with its more than 60,000 suppliers to deliver “affordable sustainability” to
Walmart’s 176 million customers in 14 countries. Walmart pledged:
• To be supplied 100 percent by renewable energy
• To create zero waste
• To sell products that sustain resources and the environment

Scott announced that Walmart was “helping thousands of suppliers, millions
of associates, and tens of millions of customers make billions of individual deci-
sions that sustain themselves, their communities and, Sucesivamente, the Earth.”

Scott announced goals to reduce energy use at Walmart stores by 30 por ciento
over three years to double the efficiency of its vehicle fleet, and to build hybrid-
electric long-haul trucks.36 Walmart, which if it were a country would be the 20th
largest in the world, is not making such pronouncements out of the goodness of
its heart. In the two years after Walmart began its sustainability program, savings
were significant. Reducing unnecessary packaging by just five percent saved the
company $11 billion worldwide.37 innovations / caer 2009 255 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 l. Hunter Lovins Walmart’s challenge, like that of many retailers, is that it does not own or oper- ate factories. “For instance,” Lee Scott stated, “we were buying from a candy facto- ry in Brazil that just did not have a good system in place for processing, recycling, and disposing waste. So our auditors sat down with the factory’s management, explained that sustainability can be profitable, and made recommendations. These managers were skeptical, but they took on the challenge. The next time we visited the factory, we saw a new waste management program. And you know what? The factory managers proudly reported that their new program was generating $6,500
per year in new profits.”

In October 2008, Walmart, which would be China’s sixth or seventh largest
trading partner if it were a country, called its 1,000 largest Chinese suppliers to a
meeting with representatives of the Chinese government, ONG, and others.
Walmart executives described the aggressive goals the company has established to
build a more environmentally and socially responsible global supply chain.38

Their criteria required that the top 200 factories from which Walmart’s sources
its materials achieve a 20 percent improvement in energy efficiency by 2012. El
company stated that by that date it would source 95 percent of its production from
the factories with the highest ratings in audits for environmental and social prac-
tices. It further revealed that Walmart China will design and open a new store pro-
totype that uses 40 percent less energy.

To increase transparency and encourage sustainable development across its
entire supply chain of 60,000 a 90,000 suppliers, Walmart asked the Carbon
Disclosure Project (CDP) to survey suppliers in China to determine the carbon
footprint39 of factories, and to assess programs to reduce carbon emissions.40 The
CDP, que representa 315 global institutional investors with assets of $55 trillion, receives annual corporate carbon footprint reports from almost 80 percent of the Financial Times 500, the largest companies in the world. Institutional investors use the CDP database to make investment decisions based a company’s greenhouse gas emissions, emission-reduction goals, and strategies to combat climate change.41 Companies that do not responsibly manage their carbon footprint are deemed not worthy of investment. Walmart was one of only two companies in the Dow Jones Industrial Average whose stock price rose in 2008—by 18 percent—and its sustainability efforts were credited in part with this performance.42 When he announced the sustainability initiative, Walmart CEO Lee Scott observed that a corporate focus on reducing greenhouse gases as quickly as possible was just a good business strategy, stating, “It will save money for our customers, make us a more efficient business, and help position us to compete effectively in a carbon-constrained world.”43 In 2009, Reuters quoted the company’s new CEO Mike Duke as saying that he wants to accelerate the sustainability efforts: “I am very serious about it. This is not option- Alabama. It’s not something of the past. This is all about the future.”44 In July 2009, Walmart rolled the comprehensive environmental and social pro- gram out to its several thousand largest suppliers, asking them to complete an environmental scorecard relating to product packaging and waste reduction in 256 innovaciones / caer 2009 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 The Economic Case for Climate Protection Figure 5. Evolution of economic costs, insured costs of natural disasters world- wide Source: © 2003 GeoRisikoForschung, Müncheneruck. order to improve product design and delivery.45 The first two questions asked sup- pliers whether they had measured their carbon footprint, and whether they report it through the Carbon Disclosure Project. Walmart is not the only company now requiring its supply chain to document more environmentally responsible practices. Hundreds of major European and American companies are establishing supplier codes of conduct and hiring third- party verifiers to audit their factories to ensure compliance with social and envi- ronmental standards. As such companies recognize that their survival depends on behaving in more sustainable ways, they are changing how the world does busi- ness. Risk Management Failing to reduce energy use and tolerating carbon emissions is a high-risk strate- gy for a business. Volatility of energy supply and increasing prices, overall volatili- ty in the geopolitical and geostrategic environment, threats to business from extreme weather events, a growing risk of liability claims for failing to act, and a host of other reasons make aggressive reduction of carbon emissions simply good business (ver figura 5). Corporate behavior that ignores such threats is coming to be seen as irrespon- sible. A 2003 Columbia Journal of Environmental Law article demonstrated the innovations / caer 2009 257 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 l. Hunter Lovins legal viability of lawsuits holding companies accountable for climate change. In July 2004, eight state attorneys general and New York City led the first-ever cli- mate-change lawsuit against five of the nation’s largest electric power generating companies to require them to reduce their CO2 emissions. Though the effects of such litigation on companies’ market value and shareholder value remain to be seen, the first such suits have already been filed.46 The Environmental Protection Bureau of the New York Attorney General’s office has studied whether polluters can be sued along the lines of the successful tobacco litigation by states in the 1990s.47 Climate change will have an impact on the value of investments, and could cost U.S. public companies billions of dollars from decreased earnings due to cleanup costs and fines following the violation of environmental laws, increased operating costs due to changes in environmental regulations, and higher management costs due to understated or undisclosed liabilities. En cambio, an aggressive business posture to reduce greenhouse gas emissions is becoming a proxy for competent corporate governance. Climate protection pro- grams can deliver better access to insurance, cost containment, legal compliance, ability to manage the increased carbon regulations, reduced shareholder activism, and reduced risks of exposure to higher carbon prices. The FTSE Index, the British equivalent of Dow Jones, estados, “The impact of climate change is likely to have an increasing influence on the economic value of companies, both directly, and through new regulatory frameworks. Investors, gobierno- ernments and society in general expect companies to identify and reduce their cli- mate change risks and impacts, and also to identify and develop related business opportunities.”48 As described more fully below, the business and investment network CERES is working with institutional investors to require American companies to reveal the extent to which they may be more liable for lawsuits and other risks than their European counterparts because of their emissions of climate-changing gasses. The New York Times stated, “Dozens of U.S. businesses in various climate-vulnerable sectors . . . are still largely dismissing the issue or failing to articulate clear strate- gies to meet the challenge. Companies that disclose the amount of emissions of heat-trapping gases they produce and take steps to limit them cut their risks, including potential lawsuits from investors.49 In 2006, the United Nations Environment Programme (UNEP), working with CERES, announced a new Climate Risk Disclosure Initiative to create a global standard for disclosing climate emissions.50 UNEP is developing Principles of Responsible Investment to align the long-term goals of sustainable development with the obligations of institutional investors. CERES and UNEP are also establish- ing a new international forum for collaboration and information sharing by insti- tutional investors on climate risk. 258 innovaciones / caer 2009 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 The Economic Case for Climate Protection Insurance In 2003 the Wall Street Journal reported, “With all the talk of potential sharehold- er lawsuits against industrial emitters of greenhouse gases, the second largest re- insurance firm, Swiss Re, has announced that it is considering denying coverage, starting with directors and officers liability policies, to companies it decides aren’t doing enough to reduce their output of greenhouse gases.”51 The following years showed the prescience of this statement: insurance companies are already being battered by losses from the increase in the violence of storms. The year 2005 was the costliest on record for weather related damage, costing insurers over $65 bil-
lion. Claims from weather-related disasters are now rising twice as fast as those
from all other mishaps.52

In the Fortune magazine article “Cloudy with a Chance of Chaos,”53 author

Eugene Linden reported:

Already the pain of weather-related insurance risks is being felt by own-
ers of highly vulnerable properties such as offshore oil platforms, para
which some rates have risen 400 percent in one year. That may be an
omen for many businesses. Three years ago John Dutton, dean emeritus
of Penn State’s College of Earth and Mineral Sciences, estimated that $2.7 trillion of the $10-trillion-a-year U.S. economy is susceptible to weather-
related loss of revenue, implying that an enormous number of companies
have off-balance-sheet risks related to weather—even without the cata-
clysms a flickering climate might bring.

En 2004, Swiss Reinsurance, a $29 billion financial giant, sent a question- naire to companies that had purchased its directors-and-officers cover- edad, inquiring about their corporate strategies for dealing with climate change regulations. D&O insurance, as it is called, insulates executives and board members from the costs of lawsuits resulting from their com- panies’ actions; Swiss Re is a major player in D&O reinsurance. What Swiss Re is after, says Christopher Walker, who heads its Greenhouse Gas Risk Solutions unit, is reassurance that customers will not make themselves vulnerable to global-warming-related lawsuits. He cites as an example Exxon Mobil: The oil giant, which accounts for roughly 1 percent of global carbon emissions, has lobbied aggressively against efforts to reduce greenhouse gases. If Swiss Re judges that a com- pany is exposing itself to lawsuits, says Walker, “we might then go to them and say, ‘Since you don’t think climate change is a problem, and you’re betting your stockholders’ assets on that, we’re sure you won’t mind if we exclude climate-related lawsuits and penalties from your D&O insur- ance.’” Swiss Re’s customers may be put to the test soon in California, where Governor Arnold Schwarzenegger is pushing to restrict carbon emissions, says Walker. A customer that ignores the likelihood of such laws and, por ejemplo, builds a coal-fired power plant that soon proves a innovations / caer 2009 259 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 l. Hunter Lovins terrible bet could face shareholder suits that Swiss Re might not want to insure against. A single catastrophic event can cause insolvency or a precipitous drop in earnings, liquidation of assets to meet cash needs, or a downgrade in the market ratings used to evaluate the soundness of companies in the insurance industry.54 Weather-relat- ed insurance losses in the United States are growing 10 times faster than premi- ums, la población, or economic growth, and many smaller events have not yet been included in official totals.55 As the 2007 firestorms in Southern California showed, the convergence of climate change with rapid growth in population in some of the nation’s most disaster-prone areas—and the accompanying real estate development and increasing real estate values—is leaving the nation exposed to higher insured losses. Hurricane losses are borne by private insurers and by two federal insurance programs established by Congress to provide coverage where voluntary markets do not exist: the National Flood Insurance Program (NFIP), which insures properties against flooding,56 and the Federal Crop Insurance Corporation (FCIC), which insures crops against drought or other weather disas- ters.57 Increasingly, private companies are taking steps to limit their catastrophic risk exposure, transferring some of the risk to policyholders58 and to the public sec- colina. Federal insurers may see losses grow by many billions of dollars in coming decades. Property owners are suffering price shocks, as well as reduced availability of coverage. Highly vulnerable properties such as offshore oil platforms have seen insurance rates rise 400 percent in one year.59 Homeowner premiums have risen 20 a 40 percent in many areas, y 10- to 20-fold in isolated cases.60 Insurers have withdrawn coverage for hundreds of thousands of homeowners in Florida, Luisiana, Mississippi, Nueva York, Massachusetts, Rhode Island, and South Carolina.61 The exodus of private insurers from hurricane-prone areas is, Sucesivamente, creating enormous financial exposure for state-operated insurance pools—intended to be “insurers of last resort”—that provide coverage for losses caused by weather-relat- ed events.62 Federal, estado, and local governments also are compelled to address events for which there is no insurance at all by way of disaster preparedness and recovery operations. NFIP and FCIC data indicate the federal government already is more exposed to weather-related losses regardless of the cause. A General Accounting Office (GAO) study of weather-related losses between 1980 y 2005 notes that the number of NFIP policyholders has more than doubled since 1980, de 1.9 million policies to more than 4.6 millón. Its exposure has quadrupled in the same period, nearing $1 trillion in 2005, and program expansion increased
FCIC’s exposure 26-fold to $44 billion.63 In spite of the growing risks, climate change also offers substantial opportuni- ties to the insurance industry. A 2006 CERES64 report notes: “As the world’s largest industry . . . with core competencies in risk management and loss prevention, the insurance industry is uniquely positioned to further society’s understanding of cli- 260 innovaciones / caer 2009 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 The Economic Case for Climate Protection mate change and advance forward-thinking solutions to minimize its impacts.”65 Indeed, a “vanguard of insurers” has begun to take concrete actions that generate profits while maintaining insurability and protecting their customers from extreme weather-related losses, in addition to reducing greenhouse gas emissions (see examples in Appendix A). Calling these examples an “encouraging start,” the CERES report calls for far greater efforts from insurance companies and regulators to get more of these creative programs into the public arena. In April 2007, the chief research officer of Risk Management Solutions, an industry risk forecaster, announced that climate change is already increasing “financial losses from extreme weather catastrophes.” A. METRO. Best, the historical voice of insurance, began a series in the August edition of Best’s Review on the risks, regulatory issues, and economic impact of climate change. In September 2007 the Washington Post reported, “Nervous investors have begun asking insurers to disclose their strategies for dealing with global warming. At a meeting of the National Association of Insurance Commissioners, Andrew Logan, insurance director of the investor coalition, representing $4 trillion in mar-
ket capital, warned that ‘insurance as we know it is threatened by a perfect storm
of rising weather losses, rising global temperatures and more Americans living in
harm’s way.’ CERES cites estimates that losses related to catastrophic weather have
increased 15-fold in the U.S. property casualty industry in the past three decades.”66

Access to Capital

As investors evaluate corporations on the basis of their preparedness for the asso-
ciated risks and opportunities of climate change they are increasingly recognizing
that companies that do not adapt to a carbon-constrained world will be forced to
compete with forward-thinking competitors ready to leverage new business mod-
els and capitalize on emerging markets in renewable energy and clean technolo-
gies. Large institutional investors are leading the way and have successfully waged
shareholder campaigns urging companies to disclose climate risk and implement
mitigation programs.67

The Investor Network on Climate Risk,68 Por ejemplo, includes more than 50
institutional investors that collectively manage more than $3 trillion in assets. Another group of 28 leading institutional investors from the United States and Europe,69 who also manage over $3 trillion in assets, announced a 10-point action
plan in 2005 that calls on investors, leading financial institutions, negocios, y
governments to address climate risk and seize investment opportunities.69 The plan
calls on U.S. companies, Wall Street firms, and the Securities and Exchange
Commission (SEC) to intensify efforts to provide investors with comprehensive
analysis and disclosure about the financial risks presented by climate change. El
group also pledged to invest $1 billion in prudent business opportunities emerg- ing from the drive to reduce GHG emissions. In October 2007, 18 leading investors, including the $250 billion California
Public Employees Retirement System, filed a petition the SEC, asking it to require

innovaciones / caer 2009

261

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

l. Hunter Lovins

companies to assess and disclose “material” financial risks from climate change.
Such risks would include the financial impact of emerging carbon-reducing regu-
laciones, extreme weather and other climate-related physical events, or growing
global demand for low-carbon technologies and products.70

The petitioners included $1.5 trillion of investor assets, including pension funds in California, Florida, New Jersey, Nueva York, North Carolina and Rhode Island. The petition requests that the commission issue interpretive guidance clar- ifying that material climate-related information must be included in corporate dis- closures under existing law. Dr Russell Read, then chief investment officer of CalPERS stated, “CalPERS is interested in the sustainability of companies that may be threatened by climate change as well as those that can find new opportunities in a carbon-constrained market…. We want portfolio companies that are well positioned to avoid the financial risks associated with climate change and that can capitalize on new opportunities emerging from the regulation of greenhouse gases, including alternative energy technologies.”71 In the United States, the Sarbanes-Oxley Act72 makes it a criminal offense for the board of directors of a company to fail to disclose information, including such environmental liabilities as GHG emissions, that could alter a reasonable investor’s view of the organization. In France, The Netherlands, Alemania,73 and Norway, companies are already required to publicly report their GHG emissions. Even as early as 2005, such investor intervention and persuasion contributed to large companies (Anadarko Petroleum, Apache, decisions by a number of Chevron, Cinergy, DTE Energy, Duke Energy, First Energy, Ford Motor Company, General Electric, JP Morgan Chase, and Progress Energy) to make new commit- ments such as supporting mandatory limits on GHGs, voluntarily reducing their emissions, or disclosing climate risk information to investors.74 Since 2002, a British NGO, the Carbon Disclosure Project (CDP) has surveyed the Financial Times 500. Initially, tal vez 10 percent of the recipients bothered to answer. En 2005, 60 percent answered. En 2006, 70 percent participated, and in 2007, 77 percent answered the survey. Ford Motor Company produced a major report detailing its emissions. Why the change? The threat of Sarbanes-Oxley lia- bility clearly played a role. But perhaps more significantly, the Carbon Disclosure Project represents institutional investors with assets of over $31.5 trillion, up more
than $10 trillion since 2006 and now representing almost a third of all global insti- tutional investor assets. en septiembre 2007, the CDP released its fifth annual report. It found that the world’s major companies are increasingly focused on climate change and that many see it as an opportunity for profit. The report noted, sin embargo, that U.S. firms tend to view climate change as a risk to their bottom line. In the latest survey of a sample of members in the Financial Times 500 índice, 77 percent responded, up from 72 percent a year earlier. Nearly 80 percent of respondents around the world considered climate change a commercial risk, citing extreme weather events and tightening government reg- ulaciones. Alguno 82 percent said they recognized commercial opportunities for 262 innovaciones / caer 2009 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 The Economic Case for Climate Protection existing or new products, such as investments in renewable energy. En general, 76 por- cent said they had instituted targets and plans to reduce emissions, a jump from last year’s 48 por ciento. Solo 29 percent of U.S. respondents had implemented greenhouse gas reduction programs with timelines and specific targets. The banking industry is also reducing its carbon footprint. En 2006, HSBC won the Financial Times’ first Sustainable Banking Award as the first bank to become carbon neutral. It not only provided financing for renewable energy companies, it purchased renewable energy to cover its operations.75 In 2007, JP Morgan Chase and the socially responsible investment advisors Innovest announced the creation of the JPMorgan Environmental Index—Carbon Beta (JENI-Carbon Beta), the first high-grade corporate bond index designed to address the risks of global warming by tracking the carbon footprint of companies. “Taking into account environmental and social issues isn’t just about good corporate citizenship, its becoming an essential part of risk management for investors.”76 In addition to reducing its own carbon emissions, the firm raised $1.5 billion of equity for the
wind power market in 2006, making investments in renewable energy totaling $1 billion. The firm was also the lead sponsor of the C40 Large Cities Climate Summit in New York, in which mayors of the world’s largest cities committed to move aggressively to reduce GHG emissions.77 Citigroup Inc., Deutsche Bank AG, JPMorgan Chase, UBS AG, and ABN Amro have committed $1 billion to finance
the energy savings measures in municipal buildings in 16 cities: Nueva York,
chicago, houston, toronto, Mexico City, Londres, Berlina, Tokio, Roma, Nuevo
Delhi, Karachi, Seoul, Bangkok, Melbourne, São Paulo, and Johannesburg.78

En 2006, Goldman Sachs, the first Wall Street bank to issue an environmental
política, put $1 billion into clean energy investments. It has also pledged to purchase more products locally.79 Credit Suisse followed by forming a renewable energy banking group that has done more than 40 deals, including the first capital mar- kets financings in the biofuel, wind, and solar power industries. Lehman Brothers (now famously defunct, for unrelated reasons) combined its natural resources and power banking groups into “renewables vertical”.80 Then, en 2007, Citigroup com- mitted $50 billion to an Alternative Energy Task Force to provide financing for
solar, wind, biomass, ethanol, and other renewable industries.81 “Wall Street is wak-
ing up to climate change risks and opportunities,” said Carbon Disclosure Project
chair James Cameron. “Considerably more of the world’s largest corporations are
getting a handle on what climate change means for their business and what they
need to do to capture opportunities and mitigate risks. This all points to a contin-
ued elevation of climate change as a critical shareholder value issue for investors.”82
en septiembre 2007, Lehman Brothers published a climate change report that
set forth its predictions of the likely future of climate change policies. Dr. John
Llewellyn, Lehman Brothers’ senior economic policy advisor at the time, dicho,
“Climate change policy will have to place the price mechanism at its core. Sucesivamente,
investors and businesses that predict correctly the course of climate change policy
should be able to anticipate the direction of asset prices.”83

innovaciones / caer 2009

263

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

l. Hunter Lovins

Managing Supply Chains

In a global marketplace, the threat of more frequent and more violent storms is a
threat to companies that depend on products shipped from around the world. En
Septiembre 2007, Walmart announced that it would begin to measure the amount
of energy that it takes various suppliers to make and transport the products sold
in its stores. Walmart will work with suppliers of such products as DVDs, tooth-
paste, soap, milk, beer, vacuum cleaners, and soda to enable these suppliers to
reduce their carbon footprint.84 As described above, Walmart hired the Carbon
Disclosure Project to survey factories in China that are manufacturing products
for the company. “This is an opportunity to spur innovation and efficiency
throughout our supply chain that will not only help protect the environment but
save people money at the same time,” said Walmart’s chief merchandising officer
John Fleming at a press conference at Merrill Lynch & Co.’s headquarters in New
york. “We don’t believe a person should have to choose between an environmen-
tally friendly product and one they can afford to buy,” he said. “We want our mer-
chandise to be both affordable and sustainable.”85

Labor Productivity

A suite of energy efficiency measures that can be implemented in buildings have
been shown to increase worker productivity by six to 16 por ciento. 86 Even if energy
savings are not sufficient to attract scarce management attention, labor costs,
which are typically 100 times as high as energy costs, debería. Even a one percent
increase in labor productivity will dwarf the energy savings, but it was the atten-
tion to better energy efficiency that produced the labor saving.87

Por ejemplo, when Lockheed commissioned Building 157 in Sunnyvale,
California, the designers had to battle value engineers who sought to delete the
atrium around which they wrapped the building, calling it an expensive worker
amenity. Declaring that the lighting feature, a “Literium,” was structural, el
designers preserved the daylighting features that enabled the building to use half
the energy consumption of a comparable standard building. The extra $2 million to achieve this (good green features, if implemented by an experienced team, now add nothing extra and can actually reduce costs), was paid back in four years. The features achieved a 75 percent reduction in lighting energy, saving $500,000 a year
in energy costs. Such metrics were predicted. What came as a surprise, sin embargo,
was that the better lighting and the other green features led to a drop in employee
absenteeism of 15 por ciento, and an increase in productivity of the same amount.
This enabled the company to win a contract, the profits of which paid for the cost
of the entire building.

Boeing implemented a lighting retrofit that cut lighting energy costs by 90 por-
centavo. This investment returned itself with a less than two-year payback, pero
because the workers could see better, the error rate went down by 20 percent—very
good news for everyone who flies around on airplanes. It also avoided rework,
improved on-time delivery, and increased customer satisfaction.

264

innovaciones / caer 2009

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

The Economic Case for Climate Protection

In the United States alone, roughly six billion square feet of buildings are con-
structed each year.88 Buildings are the No. 1 cause of greenhouse gas emissions in
Estados Unidos. and must be made carbon neutral as quickly as possible. This investment
will cut healthcare costs and increase labor productivity. The current estimated
decrease in productivity from “sick-building syndrome,” around 2 percent nation-
wide, result in an annual cost to the United States of approximately $60 billion.89 Better indoor air quality, a frequent result of more energy-efficient building tech- nología, has been shown to improve worker productivity by 0.5 por ciento a 5 por- centavo, with estimated savings of $20 billion to $200 billion.90 Disproportionate Risks and Potential Benefits for Small Business Small businesses are the economic engine of the country, generating more than half of nonfarm private gross domestic product. They represent 99.7 percent of all employer firms, employing nearly 60 million workers, about half of all private employees. For the past decade they have generated 60 por ciento a 80 percent of net new jobs each year. A June 2006 article in Business Week91 pointed out that the 25 million small businesses in the United States stand to be among the hardest-hit victims of cli- mate change. According to the Institute for Business and Home Safety, al menos uno- fourth of the small businesses closed by natural disasters never reopen.92 It is also likely that small businesses will face increased government regulation if a manda- tory program to reduce greenhouse gas emissions is implemented. Small businesses consume half the electricity in the country, but only about a third have invested in energy efficiency. Less than half of the small business own- ers are aware that the EPA’s Energy Star program can help them lower their ener- gy usage. The EPA expends just $1 million and two staff positions on its programs
to get information to small businesses.93

A number of programs show small businesses how to achieve the same sorts of
savings that big companies like Walmart are enjoying. Natural Capitalism offers a
web-based learning tool, Solutions at the Speed of Business, that shows small com-
panies how they can benefit from programs to reduce carbon emissions. They can
cut their own costs, and increase sales to others who are implementing emissions-
reduction programs.94 There is rapidly growing consumer demand by consumers
for environmentally sustainable choices in every line of consumer item, incluido
foods, clothing, household, and recreational items.95 As Business Week noted,
“Reducing energy waste in U.S. homes, shops, offices, and other buildings must, de
necessity, rely on tens of thousands of small concerns that design, make, sell,
install, and service energy-efficient appliances, lighting products, heating, air-con-
ditioning, and other equipment. Small businesses can also save as much as 20-30
percent on their own energy bills by making their own workplace more energy-
efficient.”96

Energy efficiency and renewable energy can enable small businesses to become
energy self-sufficient. On August 14, 2003, a tree branch fell across a power line in

innovaciones / caer 2009

265

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

l. Hunter Lovins

Ohio, setting off a cascading failure that blacked out the Northeast for up to 30
horas. The Wall Street Journal estimated the cost to the region at $6 billion. Two- thirds of businesses surveyed said that they lost at least a day of operation, with a quarter losing more than $50,000 an hour.

Harbec Plastics, a small Upstate New York injection-molding company, had
recently completed a comprehensive energy-efficiency program, including a light-
ing retrofit and more efficient motors. The company had constructed a LEED-cer-
tified green building to add to its existing facilities, and added renewable energy
including a wind turbine and photovoltaics. The company had improved its ener-
gy efficiency by installing a combined heat and power system to cut its soaring
energy bill, which at 15¢ per kilowatt-hour was among the highest in the nation.
The company was also tired of coping with the periodic power surges and outages
to which it had been subjected.

Even before the blackout, Harbec had been pleased with its new energy effi-
ciencia, green building features, and power supply. They cut costs and dramatically
reduced temperatures on the shop floor, improving working conditions. When its
systems enabled Harbec to continue operation all throughout the blackout the
company was thrilled.

Every year, American businesses lose billions of dollars when blackouts, fuerza
surges and other interruptions force companies to shut down. Not having to shut
down paid off the capital cost of Harbec’s energy program. The company has since
begun producing its own biodiesel and bought fuel-efficient vehicles.

Harbec worried especially about outages as they forced lost production time,
wasted materials, and made it unable to meet customers’ needs, which risked send-
ing its larger customers to suppliers overseas. Company president Bob Bechtold
estados, “I may be the only injection-molder in New York State who can go to his
customers and talk about energy costs going down, in an industry where energy
represents a significant portion of the cost of doing business.” By reducing his
energy costs, the leading reason that businesses are fleeing New York, Harbec has
preserved jobs in an economic downturn and created new business opportuni-
ties.97

Similar opportunities exist in rural America. The Straus organic dairy outside
of San Francisco powers its operation from the methane from the manure pro-
duced by its 270-cow dairy herd. Its utility, Pacific Gas and Electric, allows the
dairy to run its meter backwards, selling renewable energy to the grid and signifi-
cantly reducing the emissions of methane gas, an even more powerful greenhouse
gas than carbon dioxide. The methane digester, which cost the dairy $280,000, is the fifth in the state, pero 13 more are under construction, thanks in part to a state program that pays half the cost. The plant returns $6,000 a month in saved energy
costos, giving Straus a two-year payback. The digester will strip 80 por ciento a 99 por-
cent of organic pollutants from the wastewater generated from the farm. Heat
from the generator will warm thousands of gallons of water used to clean the milk-
ing parlor. The resulting wastewater fertilizes the fields.98

266

innovaciones / caer 2009

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

The Economic Case for Climate Protection

American workers would benefit from building a new energy economy,
according to the Apollo Alliance,99 a coalition of labor unions, environmental
organizaciones, social-justice and faith-based groups, negocios, and foundations.
Industries improving the performance of the existing energy system, retrofitting
buildings or installing new systems for energy efficiency, developing renewable
energy sources, or building, improving, or maintaining transit systems will create
large numbers of new high-wage jobs with good benefits crossing a wide spectrum
of industry sectors, from skilled craftsmen to designers and engineers, from pub-
lic employees to laborers.100

“Renewable Energy and Energy Efficiency: Economic Drivers for the 21st
Century,” a 2007 report from the American Solar Energy Society, found that the
renewable energy and energy-efficiency industries currently generate about 8.5
million green collar jobs and almost $1 trillion in revenue. The number could increase to 40 million jobs and $4.5 trillion in revenues “with the appropriate pub-
lic policy, including a renewable portfolio standard, renewable energy incentives,
public education and research and development,” the report found. As many as
one in four workers could work in these fields by 2030. In the week that the report
was released, General Electric Power Generation announced it would invest $39 million and hire 500 workers for a renewable energy division expansion in upstate New York.101 THE COMMUNITY CASE FOR CLIMATE PROTECTION IN THE U.S. Business innovators are now being joined by thousands of large and small commu- niidades, counties, estados, universidades, and communities of faith in cutting their emis- siones, and thus their energy bills. States With the federal government abdicating responsibility on climate protection, states have taken up the challenge. The seven Northeastern states acted first, approving the Regional Greenhouse Gas Initiative, a mandatory regulatory scheme. Under Governor Bill Richardson, the state of New Mexico joined the Chicago Climate Exchange, offsetting the carbon emissions of the state. Encima 20 states have either passed or proposed legislation on CO2 emissions, or have developed carbon registries. En 2006, California became the first state to impose mandatory GHG emission limits, requiring a 25 percent cut by 2020, affecting a wide range of companies including automakers and other manufactur- ers. The state is the 12th largest carbon emitter in the world, despite leading the nation in energy-efficiency standards. En 2007, Arnold Schwarzenegger, the Republican governor of California stated, “The debate is over. The science is in. The time to act is now. Global warming is a serious issue facing the world. We can protect our environment and leave California a better place without harming our economy.”102 innovations / caer 2009 267 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 l. Hunter Lovins The governor is right. A 2008 study by the University of California found that California’s programs to reduce energy dependence and increase energy produc- tivity three decades ago directed a greater percentage of its consumption to in- estado, employment-intensive goods and services, whose supply chains largely reside within the state. This created a strong “multiplier” effect of job creation, generat- En g 1.5 million FTE jobs with a total payroll of over $45 billion, saving California
consumers over $56 billion in energy costs. Going forward, achieving 100 percent of the greenhouse gas emission reduction targets mandated by AB 32, the legisla- tion that Schwartzenegger championed to reduce carbon emissions 80 percent by 2050, would increase the Gross State Product by $76 billion, increase real house-
hold incomes by $48 millón, and create as many as 403,000 new efficiency and cli- mate action jobs.103 Florida, one of the coastal states that could suffer from rising ocean levels as a result of global warming, has been hit hard by hurricanes, tornadoes, drought, and wildfires. In his first State of the State address early in 2007, Republican governor Charlie Crist, remarking on the extreme weather and skyrocketing insurance rates in his state, dicho, “I am persuaded that global climate change is one of the most important issues that we will face this century.” He told the legislature, “Yet, we have done little to understand and address the root causes of this problem, or frankly, even acknowledged that the problem exists. No longer.”104 Governor Crist commissioned a Republican task force to study what it would cost the state to implement measures to cut greenhouse gas emissions. Under even the most opti- mistic projections of climate change, much of Florida will be vulnerable both to flooding and to extreme weather events of increased frequency and intensity. The governor was surprised to find that implementing aggressive measures to reduce Florida’s carbon footprint would add $28 billion to the state economy between
now and 2025.

In November 2007, Illinois, Iowa, Kansas, Michigan, Minnesota, y
Wisconsin—a region that, if it were its own country, would be the globe’s fifth-
biggest producer of greenhouse gas emissions trailing only the U.S., Russia, Porcelana,
and India—signed a joint agreement setting greenhouse gas reduction goals and
allowing companies to buy and sell pollution credits to meet the targets. A separate
agreement commits all states in the region to promote the use of renewable ener-
gy. The governors agreed that wind power, agua, and other renewable sources will
eventually provide up to 30 percent of the region’s electricity. The region could
“become the Saudi Arabia of renewable energy,” stated Wisconsin governor Jim
Doyle. Iowa governor Chet Culver called the move “a great opportunity for our
country to come together and put partisan politics aside, and become an interna-
tional leader on this issue.” 105

With this pact, nearly half of Americans will now live in areas covered by cli-

mate protection agreements mandating carbon emissions limits.

268

innovaciones / caer 2009

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

The Economic Case for Climate Protection

Counties

King County, Washington, the county surrounding Seattle, has undertaken to
reduce its carbon footprint 80 percent below its current levels by 2050. Calling
global warming the defining issue of the 21st Century, King County executive Ron
Sims committed to make county communities resilient to expected loss in the sup-
ply of drinking water, more frequent floods, and other impacts of climate change.
Sims stated, “Communities that thrive in this new century will be the ones that
take action now in response to the growing body of scientific evidence about glob-
al warming and its cause. The best way to protect the people, economy and envi-
ronment of the region is to take specific actions to reduce greenhouse gases and
invest the money needed to adapt to less snow in the mountains and more frequent
more damaging floods.”106 Among many actions, the county implemented a broad
scale citizens’ education program, bought land throughout the County to serve as
a “food-shed” in the event of global disruptions to the food supply, encouraged
public and private sector leaders to join the effort by setting their own climate sta-
bilization goals, and joined the Chicago Climate Exchange (CCX). Miami-Dade
and Sacramento counties have also joined CCX.

On Earth Day, 2005, Alameda county California commissioned a 2.3-
megawatt solar power plant, spread on roofs located throughout the county. El
local utility paid for half of it, and the array will save the county $700,000 a year. Such use of distributed generation follows on the successful example of California’s capital. En 1989, Sacramento shut down its 1,000-megawatt nuclear plant. Rather than invest in any conventional centralized fossil-fuel plant, the local utility met its citizens’ needs through energy efficiency and such renewable supply technologies as wind, solar, biofuels, and distributed technologies, like cogenera- ción, fuel cells, etc.. En 2000, an econometric study showed that the program had increased the regional economic health by over $180 millón, compared to just
running the existing nuclear plant. The utility was able to hold rates level for a
decade, retaining 2,000 jobs in factories that would have been lost under the 80
percent increase in rates that operating the power plant would have caused. El
program generated 880 new jobs and enabled the utility to pay off all of its debt.

Cities

Cities are home to half of the world’s population and consume 75 por ciento de la
world’s energy.107 Cities are even more aggressive in implementing climate mitiga-
tion programs. Although municipal budgets are strapped, encima 730 cities have
joined the call by Seattle mayor Greg Nickels to commit their communities to
aggressive climate protection campaigns.108 For example, Kansas City in the “Show
Me State” published a website stating, “Cities that have taken action to reduce glob-
al warming pollution are saving millions of taxpayer dollars while boosting real
estate values, attracting new jobs and businesses, and improving community liv-
capacidad. Investments in mass transit; commitment to clean, renewable energy;
improved public health from cleaner air; and new partnerships with the private

innovaciones / caer 2009

269

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

l. Hunter Lovins

sector all result in greater economic prosperity for citizens. They also make a city
a cleaner, safer and more desirable place to live.”109

The benefits Kansas City identified from its climate protection plan included:

• Reduced energy costs to households, recognized by a certified rating system,
and increased property values. Reduced energy costs also strengthen one of
Kansas City’s calling cards—low cost of living.

• Reduced energy cost to businesses would have a similar effect and lower the
hurdle for ongoing economic development efforts to bring new business to
Kansas City.

• Reduced economic dependence on oil, natural gas, and coal and reduced vul-

nerability to market fluctuations.

• Economic benefits from the production and use of regional renewable fuels.
• Lower maintenance costs of alternative technologies, such as efficient fluores-

cent lights, compared with conventional products.

• Increased worker productivity from improved indoor air quality and efficient

lighting.

• Less traffic congestion and the associated inefficiencies of time delays, plus

lower costs for infrastructure maintenance.

• Job creation through the development and deployment of new technologies.
• Increased success in attracting business to Kansas City’s overall low cost of

operation and clean environment.110

Some cities are implementing and succeeding at even more aggressive pro-
gramos. Salt Lake City’s mayor Rocky Anderson stated in a letter to the Seattle
mayor:

In Salt Lake City we have been working diligently since 2002 to meet the
greenhouse gas emissions reduction goal set forth in the Kyoto Protocol.
If every local and state government entity, every business, and every indi-
vidual takes available, effective measures to significantly reduce green-
house gas emissions, we can reverse the trend toward global warming. Si
we do not, the consequences will be devastating.

Salt Lake set a goal to reduce GHG emissions by 3 percent per year for the next 10
years and to reduce emissions in city operations by 21 percent from its 2001 base-
line by 2012. Its long-term goal is to reduce emissions 70 percent by 2040. Por 2007,
the city had achieved a 31-percent reduction in carbon dioxide emissions in its
municipal operations over the 2001 base, surpassing its goal to meet the Kyoto
Protocol standard by 148 por ciento, and did so seven years early. To achieve this, el
city reduced its vehicle fleet, purchased alternative fueled vehicles, aggressively
encouraged alternative modes of transit, and offset the carbon emissions of city
employees’ air travel. Salt Lake required LEED silver for all new city buildings, pur-
chased wind power, and implemented a comprehensive community education
campaign. It increased recycling in the city by 85 por ciento, reduced water use by city
residents 20 por ciento, replaced incandescent bulbs with compact fluorescent lamps,

270

innovaciones / caer 2009

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

The Economic Case for Climate Protection

purchased open space, captured methane from land fills and sewage operations,
and changed out all city traffic lights to LEDs. These last three measures alone are
saving the city $248,000 a year in energy costs.111 St. Pablo, Minnesota, saved $59 million in annual energy costs through meas-
ures such as energy retrofits in municipal buildings, recycling and waste reduction,
and equipment and lighting upgrades. These actions reduced St. Paul’s carbon
emissions by 8 percent from 1988 levels by 2004. Toledo, Ohio saved $710,208 in the first year after retrofitting 20 city buildings with energy-efficient lighting and replacing old HVAC units with new, digitally controlled boilers and chillers. These efforts cut electricity use by nearly 6 million kWh and eliminated 5,250 tons of CO2.112 San Francisco mayor Gavin Newsome introduced the city’s Climate Action Plan, saying that the city can reduce the pollution that causes global warming by using currently available technologies that also enhance economic development. The Plan can promote energy efficiency, renewable energy, alternatives to automo- bile transportation, and recycling, which will help save money and create jobs that strengthen the local economy and increase the livability of San Francisco’s neigh- borhoods. To achieve this, the city has implemented renewable energy programs that promote power production from solar, wind, biomass, ocean wave, and bay tidal current sources. These will eliminate an estimated 550,000 tons of CO2. The city fleet has more than 700 clean-air vehicles, one of the largest municipal alter- native fuel vehicle fleets in the nation, and by the end of 2007 all municipal trucks will run on biodiesel. Its mass transit fleet has 57 percent zero-emission vehicles and a goal of a completely zero-emission fleet by 2020. Installing LED traffic sig- nals across the city will reduce electricity use by an estimated 7.7 million kilowatt/hours and save the city $1.2 million per year. An expanded recycling pro-
gram, combined with methane capture at city-operated landfills, will reduce emis-
sions by about 300,000 tons of CO2. The programs have already saved the city
money and energy. Por ejemplo: six megawatts of electricity were saved by retro-
fitting lighting systems in over 4,000 small businesses, thanks to the Power Savers
Program. The city’s Peak Energy Program saved 12 megawatts by retrofitting resi-
dential and commercial buildings. Peak demand was reduced by 18 megawatts
through successful programs operated by the city’s Environment Department.113

En 1974, the Municipal Utility in Osage, Iowa, faced the need to build a new
power plant to meet growing demand. Its general manager, Wes Birdsall, realized
that building the plant would increase everyone’s rates. He also understood that
what his customers wanted was not more raw kilowatt-hours but energy “servic-
es”—shaft-power in factories, illumination and comfort in homes, cold beer, y
so much more. If people can get the same or improved service more cheaply using
energy more efficiently or from a different source, they will jump at it. By meeting
customers’ desires for energy services at lower cost, Birdsall began one of the most
remarkable economic development stories in rural America.

innovaciones / caer 2009

271

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

l. Hunter Lovins

The Osage energy-efficiency program saved over a million dollars a year in this
town of 3,800 people and generated over 100 new jobs. A report on the program
found that “industries are expanding and choosing to remain in Osage because
they can make money through employees who are highly productive and through
utility rates that are considerably lower than neighboring cities.”114 Birdsall was able
to reduce electric bills to half that of the state average and unemployment to half
that of the national average, because with the lower rates new factories came to
town. That increased demand and necessitated more efficiency. But in this way,
Birdsall held electric growth level until 1984. The program was profiled in the Wall
Street Journal, and replicated by other utilities. According to a USDA study of
Osage, “The local business people calculated that every $1 spent on ordinary con- sumer goods in local stores generated $1.90 of economic activity in the town’s
economía. By comparison, petroleum products generated a multiplier of $1.51; utility services, $1.66; and energy efficiency, $2.23. Además, the town was able to attract desirable industries because of the reduced energy operating costs resulting from efficiency measures put in place. Energy efficiency has a long and successful track record in Osage as a key economic development strategy.”115 A 2007 report by the Energy Trust of Oregon showed that per megawatt saved, economic output increases by over $2 millón, wages increase by over $648,000, business income increases by over $125,000, y 22 jobs are created.116

Universities

The University of Colorado Student Union (UCSU) became the first student gov-
ernment in the nation to require that its student-run buildings become carbon
neutral. En 2007, UCSU approved a $500,000 Energy and Climate Revolving Fund (ECRF) to pay for energy efficiency and other measures to reduce greenhouse gas emissions. The Fund adds to the existing $115,000-$125,000 Energy Efficiency Fund (EEF), which has already prevented the release of 125 tons of emissions, and reduced energy costs by over $30,000 per year.117

The university’s chancellor, GRAMO. PAG. “Bud” Peterson, became one of the first 100
university presidents to sign the American College and University Presidents
Climate Commitment. Now signed by over 300 university presidents, it commits
the university to integrate sustainability into its curriculum, support American
energy independence, and develop a campus plan to achieve carbon neutrality.118
The university responded by developing a “Blueprint for a Green Campus,” laying
out the university’s plan to achieve “zero climate impact” by 2025.119

Middlebury College in Vermont adopted a goal of carbon neutrality by 2016.
The dean of environmental affairs, Nan Jenks-Jay, estados, “Students were telling us,
‘You’re not doing enough.’” Following the lead of the University of Colorado,
undergrads at dozens of schools are voting for increases activities fees to finance
green initiatives. At St. Mary’s College of Maryland, Por ejemplo, 93 percent of stu-
dents voted last spring for a $25 annual increase in fees, which will raise approxi- mately $45,000 a year for the purchase of renewable energy.

272

innovaciones / caer 2009

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

The Economic Case for Climate Protection

Colleges are realizing that a commitment to climate protection enhances their
recruiting efforts. “What message does a conventional campus send?” asks David
Orr, director of the Environmental Studies Program at Oberlin. “It sends the mes-
sage that energy is cheap and plentiful.” Orr sent a very different message by
involving his students in the creation of the Adam Lewis Center for Environmental
Estudios. Powered entirely by photovoltaics, which deliver 30 percent more energy
than the building consumes, the building treats its own wastewater in an Eco
Machine, an artificial wetland that looks like a greenhouse but costs less and works
mejor. “You’d have no clue it’s a wastewater system,” says Orr. He credits the build-
ing with having helped to inspire hundreds of Oberlin students to choose profes-
sions in ecodesign, architecture and related fields. One such student, Sadhu
Johnston, is now director of environment for the City of Chicago.120

Communities of Faith

Hundreds of churches, synagogues, mosques, and other houses of worship are
reducing their energy bills and their carbon footprints as a sacred duty.
Spearheaded by the Regeneration Project, such communities see their task as deep-
ening the connection between ecology and faith. The Project’s Interfaith Power
and Light (IPL) campaign, representing over 1,000 congregation members in 18
estados, encourages a religious response to global warming in congregations through
promotion of renewable energy, energy efficiency, and conservation. IPL showed
Al Gore’s film An Inconvenient Truth to over half a million people of faith in 4,000
congregations in all 50 estados.

The Michigan chapter of IPL helped St. Elizabeth’s Catholic Church conduct
an energy audit and implement the suggested changes. The church invested
$150,000 in a new boiler, energy efficient lighting and appliances, window insula- ción, and a solar thermal hot water heater. Their annual savings are $20,000 a year,
a 50 percent reduction in their annual energy budget.

Connecticut IPL organized green building projects or conservation upgrades
para 22 organizaciones, including a kosher food store, 20 congregations, and the asso-
ciation of non-profit building managers in the state. Their Lighten-Up CFL light-
bulb sale involving 30 congregations sold approximately 3,400 bulbs. Actualmente,
Connecticut IPL has 25 churches and synagogues, that have purchased clean ener-
gy, including nine that have conducted programs to encourage their congregants
to become residential customers for clean energy. Two of the congregations have
one or more congregants who have installed photovoltaics on their roofs. A third
congregation is looking into this for their community’s building. 121

The Reverend Sally Bingham, executive director of the Regeneration Project,
estados, “Global warming is one of the biggest threats facing humanity today. El
very existence of life—life that religious people are called to protect—is jeopard-
ized by our continued dependency on fossil fuels for energy. Every mainstream
religion has a mandate to care for creation. We were given natural resources to sus-

innovaciones / caer 2009

273

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

l. Hunter Lovins

tain us, but we were also given the responsibility to act as good stewards and pre-
serve life for future generations.”122

Major changes in the economy—and even the introduction of significant new
products—displace old technologies and the workers, negocios, and communi-
ties that depend upon them. Personal computers replaced typewriters; vinyl
records were replaced by tapes, which have been replaced by DVDs; horses were
replaced by cars; wood was replaced with fossil fuels. Some households, negocio,
and communities will be less able to cope with the shift to a new energy econo-
my—and some will be less able to cope with the effects of climate change. National
policy must help.

ADVANTAGES OF ENERGY EFFICIENCY

Competent analyses have shown consistently that efficiency costs far less than new
supply. This conclusion was recently reaffirmed by a recent report by researchers
from the U.S. Department of Energy, Oak Ridge National Laboratory, y
Lawrence Berkeley National Laboratory. The study analyzed results from four
recent engineering-economic studies of the potential for energy technologies to
reduce greenhouse gas emissions, including a sector-by-sector assessment of spe-
cific technology opportunities and their costs, as estimated by the Five National
Laboratorios, the Tellus Institute, the National Academy of Sciences, and the Office
of Technology Assessment.

It found that large carbon reductions are possible at marginal costs that are
lower than the value of the energy saved. The report concluded that energy effi-
ciency remains underused in every sector of the economy and is by far the cheap-
est option. New renewable supply, it found, has a net cost, but when combined
with efficiency can deliver climate protection at a profit. “In combination,” the
study concluded, “large carbon reductions are possible at incremental costs that
are less than the value of the energy saved.” It called for an aggressive national com-
mitment, stating, “Some combination of targeted tax incentives, emissions trading,
and non-price policies is needed to exploit these carbon reduction opportuni-
ties.”123

Good efficiency programs, such as retrofitting light-bulbs, cost about 1-2¢ per
kilowatt hour (kWh) saved, much less than the 4-6¢ it costs to generate a kWh in
a coal plant. Building wind turbines in good sites can cost as low as 3¢, competi-
tive with just the running cost of coal. Running an existing gas plant typically costs
5-6¢. The average price of electricity from the grid is at least 9¢ per kWh, y
building a new nuclear plant can cost as much as 20¢. These numbers do not count
the cost from coal or gas plants of emitting carbon, mercury, other air pollutants
and threatening the climate.

Obviamente, it is in everyone’s interests to pursue efficiency first, but few utility
programs achieve this outcome. Until recently, utilities have tended to pursue only
as much efficiency as regulators require them to. Various states have experimented
with regulations to encourage utilities to meet customers’ needs in the cheapest

274

innovaciones / caer 2009

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

The Economic Case for Climate Protection

way. Programs like Integrated Resource Planning, which requires utilities to com-
pare the cost of building new capacity with the cost of meeting customers’ needs
through energy efficiency, sought to level the playing field, but because utilities are
fundamentally rewarded based on how much power they sell, they have continued
to seek to build new power plants.124

Only a few jurisdictions decoupled sales of electricity from utility profits, entonces
utilities are no longer rewarded for selling more electricity nor penalized for sell-
ing less. Even better are states like Idaho that actively reward utilities for cutting
their customers’ bills through efficiency by giving the utilities a share of the savings
for their shareholders. When California implemented this plan (called the
Batinovich plan, after the public utility commissioner Robert Batinovich, who first
developed it), Pacific Gas and Electric, the country’s biggest private utility, spent
$150 million in 1991 to help make its customers more efficient. It kept 15 percent of the resulting savings, boosting its 1990 profits by $40-50 millón. Doing this
saved its customers nine times that much. The Public Utilities Commission found
that between 1990 y 1993, such efficiency measures saved customers a net pres-
ent value of almost $2 billion.125 In the early 1990 a variety of experiments were underway to help the market deliver utility customers better value. Eight states implemented programs to allow vendors to compete in an open auction for all ways to make or save electricity. Such auctions would typically ask who could make or save electricity at 1¢ per kilowatt hour. The utilities would then sign contracts for the bids received. If they needed more capacity, they would then reopen bidding for efficiency or supply at 2¢ per kWh, then 3¢. At around 2-3¢, utilities would meet all of their required capacity which was dramatically cheaper than building a new fossil fired plant. Investor-owned utilities, when rewarded for cutting bills, sold efficiency ever faster and more skillfully, despite falling electricity prices. En 1990, New England Electric System captured 90 percent of a small-commercial pilot retrofit market in two months. Pacific Gas and Electric Company captured 25 percent of its entire new commercial construction market—150 percent of the year’s target—in three months, so it raised its 1991 target … and captured all of it in the first nine days of January. Making an informed, effective, and efficient market in energy-saving devices and practices can fully substitute for a bare price signal, and indeed can influence energy-saving choices even more than can price alone. That is, people can save energy faster if they have extensive ability. During 1990-96, utility programs that gave customers information and enabled electric users in Seattle—which then had the cheapest electricity of any major U.S. city—to save electric load nearly 12 times as fast as citizens in Chicago, and electric energy more than 3,600 times as fast, even though Seattle electricity prices are about half of Chicago’s. Seattle City Light achieved measured savings of 313 gigawatt-hours per year, o 38 average megawatts—3.2 percent of 1996 ener- gy sales and average load. Seattle’s 1990-96 investments in demand-side manage- ment emphasized reducing energy use rather than peak load.126 By 1996, the near- innovaciones / caer 2009 275 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 l. Hunter Lovins ly tenfold larger Chicago utility Commonwealth Edison saved 51 peak megawatts (0.27 percent of its 19-gigawatt peak load), or an 11.8-fold smaller fraction of load. ComEd had made essentially no effort to save electrical energy, and only achieved savings of 800 megawatt-hours per year, o 0.00088 percent of its sales127—a 3,640- fold smaller fraction than in Seattle. Big customers in Seattle in 1996 paid 1.9 times less and small customers paid 2.3–2.4 times less per k-Wh than in Chicago. What this shows is that while economists would agree that in a free market energy prices should accurately signal to customers the full cost of using the resource, merely raising customers’ rates will not necessarily achieve the reductions in energy use that economic theory might suggest. Similarmente, giving people infor- formación, incentives, and opportunity to act can elicit significantly greater reduc- tions of energy use and carbon emissions than purely price-based theory might suggest. COMBINING ENERGY EFFICIENCY AND RENEWABLE ENERGY The most effective way to reduce greenhouse gas emissions is energy efficiency. But combining efficiency programs with renewable energy enables communities and companies to achieve truly large reductions. This combination is also key to unleashing the new energy economy of clean manufacturing and good jobs. 128 Encima 43,000 firms in the U.S. today are manufacturing and assembling renew- able energy technologies. If the U.S. used renewable energy to stop global warm- En g, such firms would create over 850,000 nuevo, high-tech manufacturing jobs. Because of California’s early commitment to climate protection and to develop clean energy technologies, the state will receive nearly 95,600 new jobs and $20.9
billion of investment to manufacture components to supply the growing national
development of renewables.129

Toyota’s Torrance, California, office complex, completed in 2003, combines
energy-efficiency strategies such as roof color, photovoltaic solar electricity, un
advanced building automation system, a utilities metering system, natural-gas-
fired absorption chillers for the HVAC system, an Energy Star cool roof system,
and thermally insulated, double-paned glazing. El 600,000+ square foot campus
exceeds California’s stringent energy-efficiency requirements by 24 por ciento, pero
cost the same to build as a conventional office building.130

A recent article by utility regulator S. David Freeman, once chair of the
Tennessee Valley Authority, and Jim Harding of the Washington State Energy
Office announced that the company Nanosolar is building a $100 million manu- facturing facility in the San Francisco Bay Area to produce solar cells very cheaply. Eso, they say, … would bring the cost to or below that of delivered electricity in a large fraction of the world. Backed by a powerful team of private investors, including Google’s two founders and the insurance giant Swiss Re, Nanosolar announced plans to produce 215 megawatts of solar energy 276 innovaciones / caer 2009 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 The Economic Case for Climate Protection next year, and soon thereafter capable of producing 430 megawatts of cells annually. What makes this particular news stand out? Cost, scale and financial strength… Nanosolar is scaling up rapidly from pilot production to 430 megawatts, using a technology it equates to printing newspapers … No one builds that sort of industrial production facility in the Bay Area—with expen- sive labor, real estate and electricity costs—without confidence. Thin solar films can be used in building materials, including roofing materials and glass, and built into mortgages, reducing their cost even further. Inexpensive solar electric cells are, fundamentally, a “disruptive technology,” even in Seattle, with below-average electric rates and many cloudy days. Much like cellular phones have changed the way people communicate, cheap solar cells change the way we produce and distrib- ute electric energy. The race is on. The announcements are good news for consumers worried about high energy prices and dependence on the Middle East, utility executives wor- ried about the long-term viability of their next investment in central sta- tion power plants, transmission, or distribution, and for all of us who worry about climate change … Mientras tanto, the prospect of this technology creates a conundrum for the electric utility industry and Wall Street. Can—or should—any utility, or investor, count on the long-term viability of a coal, nuclear or gas invest- mento? The answer is no.131 Renewable options are now the fastest growing form of energy supply around the world, and in many cases are cheaper than conventional supply. Solar thermal is outpacing all conventional energy supply technology around the world. Modern wind machines come second, delivering over 15 gigawatts (GW) of new capacity a year, or three times what nuclear power did at the peak of its popularity. En 2007, Estados Unidos. will add 4,000 GW of new wind to its grid, more cheaply than just the run- ning cost of existing coal or nuclear plants.132 The next fastest growing energy sup- ply technology is solar electric, even at current prices.133 The governor of Pennsylvania recently announced the opening of a factory to make wind machines. Creating 1,000 new jobs over the next five years, it is the biggest economic development measure for Johnstown, Pensilvania, in recent memory. California announced that it would spend over $8 million installing solar
en 2006. The state created a $1.5 billion investment fund to help environmentally responsible companies that are developing cutting-edge clean energy technologies. An analysis sponsored by the American Council on Renewable Energy found that in addition to eliminating the need for new coal or nuclear power plants over the next 20 años, renewable energy technologies could create $700 billion of eco-

innovaciones / caer 2009

277

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

l. Hunter Lovins

nomic activity and five million high-quality jobs by 2025.134 The Apollo Project, a
coalition of environmental, negocio, and labor organizations, contends that an
investment of $300 billion in federal funding for low-carbon energy, infrastruc- tura, and urban development practices would add more than 3.3 million jobs to the economy, stimulate $1.4 trillion in new GDP, save $284 billion in net energy costs, and repay taxpayers in 10 years.135 REGAINING THE LEAD IN THE INTERNATIONAL MARKETPLACE The United States was once the international leader in technologies to meet the world’s need for energy and products in ways that don’t cause catastrophic climate change. Almost all of the solar electric and wind power technologies were invent- ed in the U.S. But in the 1980s perverse federal policies prohibiting investment in commercialization of renewables let the progress of these technologies lapse in the U.S. Europeans and Asians picked up the opportunity and now lead in manufac- turing. The European Commission has projected that meeting its targeted energy cuts and renewable energy increases would save 60 billion Euros, create millions of new jobs, increase European competitiveness, and reduce Europe’s carbon emissions by a third.136 American businesses are already losing ground as their European com- petitors innovate to meet these goals. These renewables are the cheapest way to provide power to those around the world who don’t have it, because these tech- nologies don’t require fuel or investments in large central generating plants, trans- mission lines, and other conventional electric infrastructure. As gasoline prices have become volatile and public consciousness about green- house gas emissions has grown, it is the Japanese rather than U.S. automakers that were first to market with hybrid vehicle technology—just as in the 1970s the Japanese beat Detroit to the punch with compact cars that better served consumers seeking relief from high gas prices. Hoy, Australia, Japón, the European Union, Canada, and China all have auto-efficiency standards higher than those in the U.S. A confluence of rapidly developing factors is creating a worldwide opportuni- ty for products, tecnologías, designs, and practices that reduce greenhouse gas emissions. They include: • Developments in various American states and internationally to place a price on carbon—whether through taxes or market mechanisms. Since the Kyoto Protocol came into force in February 2005, 141 nations have committed to lim- iting the amount of carbon that they emit. En noviembre 2007, the Australian government fell, with the new government pledging to sign Kyoto, leaving the U.S. as the world’s only major government, so far, to refuse to ratify the treaty. As carbon is reflected in the price of energy and consumer products, low-car- bon alternatives will become more competitive in the marketplace. Mientras tanto, the growing international carbon market enables companies that make deeper reductions than required to sell their unused emissions capacity to companies unable to meet the limits. It is creating a de facto carbon currency. Hay 278 innovaciones / caer 2009 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 The Economic Case for Climate Protection two ways to obtain a commodity/currency: buy the credits or create them. Just as one can buy gold or mine it, one can create a carbon currency by reducing emissions. In such a market, companies will be invested in the new carbon cur- rency, at best to forge wider margins on the rising costs of carbon fuels and at least to hedge their own exposure to the risks posed by the enactment of future legislation. Portfolios (corporate, institutional, and personal) of the future with carbon currency exposure can then be better positioned to mitigate the volatil- ity of the new economy. • The exploding demand for consumer products and energy technologies in rap- idly developing nations such as China and India. Lester Brown of the Earth Policy Institute points out that if China continues to grow at its current rate and uses resources as efficiently as the U.S. (it is now four-fold less efficient), por 2030 it will want more oil than the world now lifts and likely can ever lift. It will also want more cotton, carros, concreto, and coal than the world now pro- duces. And India is right behind. Both countries will be hard hit by climate change, with the melting of the Himalayan glaciers threatening water supplies throughout the region, the shifting of the monsoon patterns threatening agri- cultura, and the increased number and ferocity of cyclones already killing thousands of people each year. En 2007, China passed the U.S, as the world’s biggest emitter of carbon. En respuesta, China has pledged to reduce energy intensity by 4 percent a year through the rest of the decade, and has set a target to reduce energy consumption per unit GDP by 20 percent during the 2006- 2010 period.137 In 2007, the Chinese announced the creation of over a billion dollars of funds to encourage energy efficiency and renewables.138 The country is promoting biogas use and investing in wind solar and other low-carbon energy supplies. The world’s first green billionaire now exists. He is a Chinese solar entrepreneur. • The as yet unfulfilled aspirations of the billions of people in underdeveloped nations who need and deserve decent standards of living. An estimated 1.6 bil- lion of the world’s people lack convenient access to electricity. About the same number lack potable water. As the economies of these nations expand, pres- sures on the climate will become unmanageable without low-carbon technolo- gies. Actualmente, one-quarter of all development capital around the world is spent on carbon-intensive power plants, whose electricity is unaffordable to the poorest but whose economies are then taxed to pay for them. The only way that the half of the world’s people who now live on less than $2 a day can
afford to develop is to leapfrog to world best practice in sustainable ways to
meet their needs for energy services, agua, sanitation, transportation, housing,
etc.. These technologies can deliver genuine development more reliably and
affordably than can the carbon-intensive practices of the last century. Uno de
the best ways to ensure that the world ramps its emissions down below the
danger level at which we are now is to enable the whole world to unleash this
new energy economy of efficiency and renewables.139

innovaciones / caer 2009

279

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

l. Hunter Lovins

Cifra 6. Waves of Innovation

Fuente: Technological “long waves” were long-ago described by Russian economist Nikolai
Kondratiev. The version of long waves represented in this figure appeared first in The Economist.
The image is courtesy of The Natural Edge Project, Australia, http://www.naturaledgeproject.net/,
30 Octubre 2006.

• The growing world population. If present trends continue, the world popula-
tion will grow from more than six billion today to more than nine billion
before mid-century.

Business success in a time of technological transformation demands innova-
ción. Since the Industrial Revolution, there have been at least six waves of innova-
ción, each shifting the technologies underpinning economic prosperity. In the late
1700s, textiles, iron mongering, water power, and mechanization enabled modern
commerce to develop.

The second wave saw the introduction of steam power, trains, and steel. En
both of these waves, Britain led the innovation and rose to world prominence
because of it, ruling both the waves and the global economy.

In the 1900s, oil, electricidad, chemicals and cars began to dominate, habilitando
the production of cars and appliances. America led in this innovation, and by the
middle of the century was the dominant world power, continuing to innovate with
petrochemicals and the space race, along with electronics. The most recent wave of
innovation saw the introduction of computers and the rise of the digital or infor-
mation age.

Which country will lead the next wave—the transition, described in this paper,
to renewable, low-carbon energy? As the Industrial Revolution plays out and
economies move beyond iPods, industries and countries will suffer dislocations
unless they drive innovation, implementing the array of sustainable technologies

280

innovaciones / caer 2009

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023

The Economic Case for Climate Protection

that will make up the next wave of innovation.140 New York Times editorialist Tom
Friedman warns that America is losing the race to lead this innovation. In the last
two years, he points out, Applied Materials, a U.S.-based company, has built 14
solar panel manufacturing facilities around the world, now earning Applied $1.3 billion a year. None are in America. Friedman writes, The reason that all these other countries are building solar-panel indus- tries today is because most of their governments have put in place the three prerequisites for growing a renewable energy industry: 1) any busi- ness or homeowner can generate solar energy; 2) if they decide to do so, the power utility has to connect them to the grid; y 3) the utility has to buy the power for a predictable period at a price that is a no-brainer good deal for the family or business putting the solar panels on their rooftop. Regulatory, price and connectivity certainty, that is what Germany put in place, and that explains why Germany now generates almost half the solar power in the world today and, as a by-product, is making itself the world-center for solar research, engineering, manufacturing and installa- ción. With more than 50,000 new jobs, the renewable energy industry in Germany is now second only to its auto industry. One thing that has never existed in America—with our fragmented, stop-start solar subsi- dies—is certainty of price, connectivity and regulation on a national basis. That is why, although consumer demand for solar power has incremen- tally increased here, it has not been enough for anyone to have Applied Materials—the world’s biggest solar equipment manufacturer—build them a new factory in America yet. So, right now, our federal and state subsidies for installing solar systems are largely paying for the cost of importing solar panels made in China, by Chinese workers, using hi-tech manufacturing equipment invented in America. Have a nice day.141 CONCLUSION: SEIZING THE ENTREPRENEURIAL IMPERATIVE Crafting a policy to enable America to prosper while meeting its needs for energy services with ample and affordable supplies is a challenging task. But it also offers unparalleled opportunities. Americans will balk at rules, taxes, mandates, and bureaucracy. But they will rise to an entrepreneurial opportunity. “A well-designed climate policy framework will create huge opportunities for innovative companies to flourish as new markets are created and demand shifts to more efficient, more advanced and higher-value-added products and services,” according to a report from the World Resources Institute.142 British economist Sir Nicholas Stern, in his 2006 study commissioned by the U.K. government on the economics of climate action, estimates that by mid-century, the global market for low-carbon technolo- innovaciones / caer 2009 281 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 l. Hunter Lovins gies could deliver up to $2.5 trillion a year in economic benefits. The Stern report
puts the 2010 value of the global environmental market at $700 billion.143 There has never been a greater opportunity for America’s entrepreneurs to do well by doing good, and for communities to enhance energy security, improve quality of life, and enable their citizens to join the transition to a renewable ener- gy future. This is the sort of challenge that Americans are good at. All they need is a supportive federal policy environment. The growing frequency of corporate commitments—even on the part of for- mer climate-change skeptics—is an explicit message that companies and commu- nities that are not quickly and boldly following suit will fall behind the curve as others demonstrate visionary leadership, responsible action, and the ability to cap- ture public goodwill and patronage. This is one arena in which the business and advocacy communities are working together. 144 Climate change presents an opportunity for the nation’s businesses and com- munities to reinvent themselves for the 21st century, reinvigorating America’s econ- omy and workforce, creating millions of new jobs on U.S. soil, and reasserting American leadership in knowledge, ingenuity, and technological innovation. As researchers at the University of California, Berkeley concluded, “All states of the Union stand to gain in terms of net employment from the implementation of a portfolio of clean energy policies at the federal level.”145 The challenge for policy is to design a comprehensive approach to climate planning that ensures that America will capture all of the opportunities to make our building, and car, and appliances and machines as efficient as possible, trans- form our sunset industries from using dirty technologies from the last century, and capture the opportunities to lead the innovation into renewable energy in ways that will make us more competitive, puts 100’s of billions of dollars back into the economy from savings, and put Americans back to work. America can choose to invest in the approaches that generate economic development in cities and states, generate new manufacturing businesses, and create jobs retrofitting existing build- ings. We can seize the opportunities to build and manage the new decentralized energy system, revitalize farm income with the production of biofuels and wind farms. Or we can allow our Asian and European competitors to become the new industrial leaders. Traditional economists who use straight-line projections to claim that acting to protect the climate will be costly should be challenged to show why unleashing the new energy economy will not, as President Clinton asserts, deliver the greatest economic boom since World War II. 1. “The Stern Review” on economics of climate change: http://www.hm-treasury.gov.uk/media/4/3/Executive_Summary.pdf October 2006. Sir Nicholas Stern, once the chief economist and senior vice-president of the World Bank (2000 a 2003), released a report commissioned by the U.K. gobierno, stating that that inaction on climate change will result in a depressed economy, worse than the Great Depression of the 1930s, with financial cost higher than the Depression combined with the two world wars. In human terms, the report concluded that the resulting drought and flooding will displace 200 million people from their homes, creating the largest refugee migra- 282 innovaciones / caer 2009 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 The Economic Case for Climate Protection tion in history. Up to 40 percent of world’s known species are likely to go extinct. To avert this tragedy, the report states, the world will need to spend 1 percent of global GDP each year to mitigate climate change, equal to the worldwide advertising budget. Failure to mitigate the crisis, the report stated, would commit the world to spend up to 20 percent of world GDP each year to deal with the consequences. 2. Stated in a speech to the U.S. Conference of Mayors’ Climate Protection Summit, Noviembre 2, 2007, Reuters. 3. In the Black, Climate Group, pag. 4. 4. In the Black, Climate Group, pag. 11. 5. The details of this are presented in Natural Capitalism Solutions, Climate Protection Manual for Cities, pag. 15, www.natcapsolutions.org/climateprotectionmanual.htm. 6. Ibídem. 7. “The Warming Challenge,” New York Times, Puede 5, 2007. 8. As of May 2007, USCAP members included Alcan Inc.; Alcoa; American International Group Inc. (AIG); Boston Scientific Corporation; BP America Inc.; Caterpillar Inc.; ConocoPhillips; Deere & Compañía; The Dow Chemical Company; Duke Energy; DuPont; Environmental Defense; FPL Group Inc.; General Electric; General Motors Corp.; Johnson & Johnson; Marsh Inc.; National Wildlife Federation; Natural Resources Defense Council; The Nature Conservancy; PepsiCo; Pew Center on Global Climate Change; PG&E Corporation; PNM Resources; Shell; Siemens Corporation; World Resources Institute. 9. See http://www.us-cap.org/climatereport.pdf. The report, issued in January 2007, era, en parte, an effort to relieve corporations of having to navigate the disparate regional and state-level carbon-reduction regimes now proliferating in the United States. 10. Galbraith, Kate, Apple Resigns From Chamber Over Climate, Octubre 5, 2009, http://greeninc.blogs.nytimes.com/2009/10/05/apple-resigns-from-chamber-over-climate/ 11. “U.S. Grassroots Tackle Climate Change,” BBC, July http:// 2007 http://news.bbc.co.uk/2/hi/americas/6288172.stm. 12. Greg Kats of Capital E, quoted in The Washington Post February 17, 2007. 13. A NOSOTROS. Energy Information Administration, State Energy Data 2004. 14. Sustainable Life Media, “JohnsonDiversey Expects 160 percent ROI on Climate Spending,” http://www.sus- tainablelifemedia.com/content/story/strategy/johnsondiversey_expects_160_percent_roi_on_climate_spe nding. 15. Ivanovich, Miguel, “European Energy Snobs vs. Ugly Americans,” CSE Live, http://www.csemag.com/blog/Give_and_Take/15313-European_energy_snobs_vs_ugly_Americans.php 16. LaMonica, Martín, “John Doerr: Not Nearly Enough Money Going to Green Tech," Abril 12 2008, http://news.cnet.com/8301-11128_3-9917408-54.html. 17. “New Report Projects $50 Billion in Renewable Energy Investment by 2011,” RenewableEnergyAccess.com,

Noviembre 20, 2007, http://www.renewableenergyaccess.com/rea/news/story?id=50622.

18. Macalister, Terry, “Renewable Revolution Is Here, Says UN Report,” The Guardian/UK, Junio 21, 2007

Global Trends in Sustainable Development Annual Revue,
http://www.commondreams.org/archive/2007/06/21/2016/

19. “EU 20% Renewable Energy Target Can Deliver 2.8 Million Jobs,” Environmental Leader, Junio 8 2009,
http://www.environmentalleader.com/2009/06/08/eu-20-renewable-energy-target-can-deliver-28-million-
jobs/.

20. Shah, Vishal, Solar Energy Handbook, Barclays Capital, Nueva York: Barclays Capital Research.
21. “India Details Solar Plans,” EE Times, Junio 15, 2009,

http://www.eetimes.com/news/latest/showArticle.jhtml?articleID=217801211.
22. Money Magazine, http://money.163.com/09/0526/16/5A8JM34S00252G50.html.
23. “China to Invest $14.6 Billion in Wind Power by 2010,” Bloomberg News, Junio 2, 2009. 24. Aso ,Taro, Japan’s Future Development Strategy and Growth Initiative towards Doubling the Size of Asia’s Economy, 9 Abril 2009, http://www.kantei.go.jp/foreign/asospeech/2009/04/09speech_e.html. 25. “South Korea to Spend $85 billion on Green Industries,” Reuters, Julio 6, 2009, http://www.reuters.com/arti-

cle/GCA-GreenBusiness/idUSTRE5651Y720090706?.

26. Kraemer, Susan, “China Invests $30 Billion in Renewable Energy; Economy Rebounds,” Clean Technica, Julio 24 2009, http://cleantechnica.com/2009/07/24/china-invests-30-billion-in-renewable-energy-economy- rebounds/. 27. Norris, Teryn “Will America Lose the Clean Energy Race,” Huffington Post, 27 Julio 2009, http://www.huffin- gtonpost.com/teryn-norris/will-america-lose-the-cle_b_245163.html. 28. Ibídem. 29. Alderton, Margo, “Recent Report Finds Corporations that Lead in Corporate Responsibility also Lead in the Market,” Socially Responsible Investing 07-11 17:57; also at http://www.csrwire.com/companyprofile?id=4489. innovaciones / caer 2009 283 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 l. Hunter Lovins 30. carey, Tim. “Sustainability—An Economic imperative in the Current Economy,” Environmental Leader, December 1, 2009, http://www.environmentalleader.com/2008/12/01/sustainability-an-economic-impera- tive-in-the-current-economy/. 31. Mahler, Daniel, Jeremy Barker, Louis Besland, and Otto Schulz, “Green Winners,” online article for A.T. Kearney. 2009. http://www.atkearney.com/shared_res/pdf/Green_Winners.pdf. 32. Manenti, Pierfrancesco, parker, Roberto, Micheletti, Georgio, “The Business Case for Environmental Excellence is Real,” Atos Origin, IDC, 2009, http://www.de.atosorigin.com/de-de/newsroom/press_releas- es/2009/2009_04_06_01.htm. 33. Reilly, David, “Profit as We Know It Could Be Lost With New Accounting Statements, Wall Street Journal, Puede 12, 2007, A1. 34. From the article “Sustainable Executives,” http://www.natcapsolutions.org/resources.htm#ART 35. Fishman, Charles, “How Many Lightbulbs Does It Take to Change the World? Uno. And You’re Looking At It.” Fast Company Magazine, Issue 108, Septiembre 2006, pag. 74 http://www.fastcompany.com/magazine/108/open_lightbulbs.html 36. Davidson, Lela “Walmart Meeting Focused on Sustainability,” Bizzia.com, Junio 7, 2009, http://www.bizzia.com/articles/Walmart-meeting-focused-on-sustainability/. 37. Gillintine, Amy, “Walmart Pulls Suppliers Onto Sustainability Train,” Colorado Springs Business Journal, Apr 13, 2007, http://findarticles.com/p/articles/mi_qn4190/is_20070413/ai_n19012931/. 38. Winston, Andrew, AndrewWinston.com, November19, 2009, http://www.andrewwinston.com/blog/2008/11/the_green_wave_marches_on_walm.php. 39. A carbon footprint is the sum of all greenhouse gas emissions released by an individual, a group, or an organization. 40. Mui, Ylan Q, “Walmart Aims to Enlist Suppliers In Green Mission,” The Washington Post, Septiembre 25, 2007, http://www.washingtonpost.com/wp-dyn/content/article/2007/09/24/AR2007092401435.html. 41. Carbon Disclosure Project, www.cdproject.org. 42. harrison, mi. bruce, “McDonald’s, Walmart: Lessons in Green Lift,” February 1, 2009, http://www.enviro- comm.com/comm_lessons_green_lift_020109.php. 43. Jonathan Lash and Fred Wellington, “Competitive Advantage on a Warming Planet,” Harvard Business Review, Marzo 2007. 44. Maestri, Nicole, “Walmart’s New CEO Duke Needs to Build on Momentum,” Reuters, Enero 29, 2009, http://www.reuters.com/article/reutersEdge/idUSTRE50S5LN20090129. 45. Mui, Ylan Q, “Walmart Aims to Enlist Suppliers In Green Mission,” The Washington Post, Septiembre 25, 2007, http://www.washingtonpost.com/wp-dyn/content/article/2007/09/24/AR2007092401435.html. 46. Friends of the Earth, in conjunction with Greenpeace and several western cities, filed one of the first climate change lawsuits in 2004. The suit charges two U.S. government agencies with failing to comply with National Environmental Policy Act requirements to assess the environmental impact of projects they financed over the past decade. The states of Connecticut, Massachusetts, and Maine have also filed a climate change lawsuit against another U.S. government bureau, the Environmental Protection Agency, for failing to regulate carbon dioxide emissions under the Clean Air Act. 47. Press Statement of Peter Lehner, chief of Environmental Protection Bureau, New York State Attorney General’s Office, Re: Corporate Governance and Climate Change: Making the Connection, Agosto 1, 2006, http://www.ceres.org/news/news_item.php?nid=57. 48. See http://www.ftse.com/Indices/FTSE4Good_Index_Series/Downloads/ FTSE4Good_Climate_Change_Consultation_Aug_06.pdf. 49. Marzo 22, 2006 http://www.planetark.com/dailynewsstory.cfm/newsid/35747/story.htm. 50. CERES website, http://www.ceres.org/pub/, Agosto 1, 2006. 51. Jeffrey Ball, Wall Street Journal, Puede 7, 2003. 52. Douwe Miedema, “Climate Change Means Big Business for Reinsurers,” Reuters, Noviembre 14, 2006, http://www.planetark.com/dailynewsstory.cfm/newsid/38964/story.htm. 53. Eugene Linden, “Cloudy with a Chance of Chaos”, Fortune Magazine, Martes 17 Enero 2006, http://money.cnn.com/2006/01/17/news/economy/climate_fortune/index.htm. 54. General Accounting Office (GAO), Cambio Climático: Financial Risks to Federal and Private Insurers in Coming Decades Are Potentially Significant, Report to the Committee on Homeland Security and Governmental Affairs, A NOSOTROS. Senate, Marzo 2007, páginas. 1-2, 30. http://www.gao.gov/new.items/d07285.pdf. 55. Evan Mills, Richard J. Roth, Jr., and Eugene Lecomte, Availability and Affordability of Insurance Under 2005, Climate Change: A Growing Challenge the U.S., http://www.ceres.org/pub/docs/Ceres_insure_climatechange_120105.pdf. Ceres, December for 56. NFIP provides insurance for flood damage to homeowners and commercial property owners in more than 284 innovaciones / caer 2009 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 The Economic Case for Climate Protection 20,000 communities. Homeowners with mortgages from federally regulated lenders on property in com- munities identified as being in high flood risk areas are required to purchase flood insurance on their dwellings. Optional, lower cost flood insurance is also available under the NFIP for properties in areas of lower flood risk. NFIP offers coverage for both the property and its contents, which may be purchased sep- arately. GAO, páginas. 7-8. 57. Congress established the NFIP in 1968, partly to provide an alternative to disaster assistance for flood dam- edad. Participating communities are required to adopt and enforce floodplain management regulations, thereby reducing the risks of flooding and the costs of repairing flood damage. FEMA, within the Department of Homeland Security, is responsible for, among other things, oversight and management of the NFIP. Under the program, the federal government assumes the liability for covered losses and sets rates and coverage limitations. Congress established the FCIC in 1938 to temper the economic impact of the Great Depression and the weather effects of the Dust Bowl. En 1980, Congress expanded the program to provide an alternative to disaster assistance for farmers that suffer financial losses when crops are damaged by droughts, floods, or other natural disasters. 58. Insurance companies can transfer risk to policyholders by increasing premiums and deductibles, by setting lower coverage limits for policies, and by passing along the mandatory participation costs of state-spon- sored insurance plans. GAO, Cambio Climático, pag. 33. 59. Estimate by John Dutton, dean emeritus of Penn State’s College of Earth and Mineral Sciences, in Eugene 2006, Linden, http://money.cnn.com/2006/01/17/news/economy/climate_fortune/index.htm. a Chance of Chaos,” Fortune Magazine, “Cloudy with January 17, 60. Evan Mills and Eugene Lecomte, “From Risk to Opportunity: How Insurers Can Proactively and Profitably Manage Climate Change,” August 2006, pag. 2, http://www.ceres.org/pub/docs/Ceres_Insurance_Climate_%20Report_082206.pdf. 61. Ibídem., pag. 12. 62. Ibídem., pag. 2. 63. Ibídem., páginas. 4, 27. 64. Ceres is a national network of investors, environmental organizations and other public interest groups working with companies and investors to address sustainability challenges such as global climate change. www.ceres.org 65. Evan Mills and Eugene Lecomte, “From Risk to Opportunity," pag. 1. 66. Morrison, John, and Sink, Alex, “The Climate Change Peril That Insurers See” Washington Post, Sept 27, 2007, http://www.washingtonpost.com/wp- dyn/content/article/2007/09/26/AR2007092602070.html?nav=rss_opinions/outlook?nav=slate. 67. For a comprehensive list of climate-related shareholder resolutions, see website hosted by the Investor Network on Climate Risk, at http://www.incr.com/index.php?page=ia&nid=186, Octubre 30, 2006. 68. See http://www.incr.com. 69. “Institutional Investor Summit on Climate Risk 2005: Summary,” by Investor Network on Climate Risk, web- site: http://www.incr.com/index.php?page=19, Julio 31, 2006. 70. http://www.ceres.org/news/news_item.php?nid=344. 71. Testimony by Dr Russell Read, chief investment officer, CalPERS, http://www.incr.com/NETCOMMUNI- TY/Document.Doc?id=204. 72. Francis X. Lyons, a former U.S. EPA regional administrator now with Gardner, Carton & Douglas LLP, “Sarbanes-Oxley and the Changing Face of Environmental Liability Disclosure Obligations,” Trends, 35 No. 2 (Nov/Dec 2003). Available from. www.gcd.com/db30/cgi-bin/pubs/Sarbanes2.pdf. 73. In Germany, only “heavy” industry is currently required to report greenhouse gas emissions. 74. Testimony by Dr. Russell Read, chief investment officer, CalPERS, http://www.incr.com/NETCOMMUNI- TY/Document.Doc?id=204. 75. Financial Times, Junio 13, 2006, http://news.ft.com/cms/s/c1f6fade-fafa-11da-b4d0-0000779e2340.html. 76. Brian Marchiony, JPMorgan Chase spokesperson, in an interview with Socialfunds.com, http://www.social- funds.com/news/article.cgi/2244.html. 77. http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=39261&IdSection=147&cat=147 78. Sara Kugler, Associated Press Writer, “16 Cities to Go Green Under Clinton Plan,” http://salon.com/wire/ap/archive.html?wire=D8P5FE5G0.html. 79. Marc Gunther, “The Green Machine,” Fortune Magazine, Julio 27, 2006. http://money.cnn.com/magazines/fortune/fortune_archive/2006/08/07/8382593/index.htm. 80. http://www.wbcsd.org/plugins/DocSearch/details.asp?type=DocDet&ObjectId=MjQ3MzA 81. http://www.planetark.com/dailynewsstory.cfm/newsid/41783/story.htm. 82. http://www.socialfunds.com/news/article.cgi/article1426.html. innovaciones / caer 2009 285 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 l. Hunter Lovins 83. Previously accessed at http://www.lehman.com/who/intcapital/ 84. Gogoi, Pallavi and Herbst, Moira, “Walmart: Measuring Just How Green,” Business Week, Septiembre 25, 2007, http://www.businessweek.com/bwdaily/dnflash/content/sep2007/db20070924_008782.htm? campaign_id=rss_daily. 85. Ibídem. 86. “Greening the Building and the Bottom Line,” http://www.greenerbuildings.com/tool_detail.cfm?linkad- vid=8527. 87. Ibídem. 88. Untitled study by the Alliance to Save Energy, 2007, commissioned by PCAP. 89. William J. Fisk, “Health and Productivity Gains from Better Indoor Environments” in The Role of Emerging Energy-Efficient Technology in Promoting Workplace Productivity and Health, a report by Lawrence Berkeley National Laboratory, Febrero 2002. 90. William J. Fisk, “How IEQ Affects Health, Productividad,” ASHRAE Journal, Puede 2002. 91. Byron Kennard, “Global Warming on Main Street,” Business Week, Junio 27, 2006, http://www.greenerbuild- ings.com/news_detail.cfm?NewsID=34996. 92. The Institute offers advice to small businesses on disaster prevention at http://www.ibhs.org/business_pro- tection/. 93. Burnham, Miguel, “Energy Policy: Kerry, Snowe slam agencies for work on small businesses, Environment and Energy Daily, Friday, Marzo 9, 2007 94. http://www.natcapsolutions.org 95. Anna Clark, “Practical Advice for Greening the SME [Small and Medium-sized Enterprise],” http://www.greenerbuildings.com/news_detail.cfm?NewsID=34996. 96. Ibídem. 97. http://www.cleanair-coolplanet.org/information/pdf/Harbec_case_study.pdf. 98. http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/05/14/BAGJG6LG3R15.DTL. 99. The Alliance advocates an agenda of federal leadership in four areas: increasing energy diversity, investing in the industries of the future, promoting high-performance building, and rebuilding public infrastructure. 100. Apollo Alliance, New Energy for America: The Apollo Jobs Report on Good Jobs Energy Independence, páginas. 8, 13-29, 33-34, http://www.apolloalliance.org/docUploads/ApolloReport%5F022404%5F122748%2Epdf, Puede 22, 2007. 101. Green Collar Jobs Could Top 40M by 2030: Informe, GreenBiz.com, http://www.greenbiz.com/news/news_third.cfm?NewsID=36231 http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/08/30/MNGBMKS7733.DTL. 102. http://calclimate.berkeley.edu/managing_GHGs_in_CA.html. 103. Professor David, Roland-Holst, “Energy Efficiency, Innovation and Job Creation in California, Octubre 20, 2008, http://www.next10.org/research/research_eeijc.html 104. 13 Julio 2007, Business Roundtable at which the Governor spokehttp://theclimategroup.org/index.php/news_and_events/news_and_comment/the_climate_group_c o_convenes_leadership_roundtable_for_florida_governor_ch/ 105. Rondy, John, “US Midwest Governors Sign Climate Change Accord” Reuters News Service, 19 Noviembre 2007, http://www.planetark.com/dailynewsstory.cfm/newsid/45392/story.htm 106. See http://www.metrokc.gov/exec/news/2007/0207warming.aspx 107. See http://www.theclimategroup.org/ 108. See http://www.seattle.gov/environment/climate_protection.htm 109. See http://www.kcmo.org/manager.nsf/web/cpp 110. See http://www.kcmo.org/manager/OEQ/cpr.pdf#page=18 111. See http://www.slcgreen.com/CAP/default.htm 112. See http://www.coolmayors.com/common/news/reports/detail.cfm?Classification=report&QID=3488&Client ID=11061&BrowseFlag=1&Keyword=&StartRow=1&TopicID=314 113. http://www.sfenvironment.org/downloads/library/peakenergyprogram.pdf 114. Sourced from website of Health and Energy Company, a Nebraska energy-testing company, Febrero 2005. http://healthandenergy.com/osage_energy_efficiency.htm. 115. “The Jobs Connection: Energy Use and Local Economic Development”, Tomorrow’s Energy Today, A NOSOTROS. Departamento de Energía, 1994. 116. See http://www.econw.com/reports/renewableenergy6779.pdf. 117. See http://ecenter.colorado.edu/in_the_news/press_releases/07-05-03carbonneutral.html. 118. See http://www.presidentsclimatecommitment.org/. 286 innovaciones / caer 2009 Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023 The Economic Case for Climate Protection 119. See http://ecenter.colorado.edu/blueprint06/. 120. See http://www.msnbc.msn.com/id/20216979/site/newsweek/page/0/. 121. See http://www.theregenerationproject.org/images/annual_report.pdf. 122. See http://www.theregenerationproject.org/About.htm. 123. See http://arjournals.annualreviews.org/doi/abs/10.1146/annurev.energy.23.1.287;jsessionid=oG8- m21d8Po-dHtuiH?cookieSet=1&journalCode=energy. 124. Western Area Power Administration, http://www.wapa.gov/powerm/pmirp.htm, Noviembre 30, 2006. 125. Hawken, Lovins, Natural Capitalism, Little Brown, 1999, páginas. 273-74. 126. j. Todd, personal communication, Agosto 7, 1997, documented in annual EMSD Accomplishment Reports. 127. METRO. Brandt, personal communications, Agosto 13 y 21, 1997. 128. http://www.coolmayors.com/common/news/reports/detail.cfm?Classification=report&QID=3488&Client ID=11061&BrowseFlag=1&Keyword=&StartRow=1&TopicID=314 129. See http://www.repp.org/articles/static/1/binaries/Final_California_GSEXECSUMMARY2_Long3.pdf. 130. Larry Flynn, “Driven to be Green,” Building Design and Construction Magazine, Noviembre 1, 2003, sourced from www.bdcmag.com/magazine/articles/BDC0311kToyota.asp. 131. Dave Freeman and Jim Harding, “Solar Cells Change Electricity Distribution,” The Seattle Post Intelligencer, Agosto 10, 2006, http://seattlepi.nwsource.com/opinion/280625_solarcell10.html. 132. Scheer, Roddy, “Wind Power Beats Predictions,” E Magazine, Noviembre 12, 2007. http://www.emagazine.com/view/?3969. 133. The cost of solar photovoltaics is falling rapidly. A company in California is introducing a new production process that will deliver solar electricity at prices competitive which grid electricity within two years. 134. See http://www.acore.org/pdfs/ACORE_Joint_Outlook_Report.pdf, 135. See http://www.apolloalliance.org/jobs/index.cfm. 136. See http://ec.europa.eu/energy/demand/index_en.htm. 137. “China vows to take due responsibility to curb global warming,” People’s Daily—English, Marzo 6, 2007. 138. “China Plans US$925 Million Energy Efficiency Fund,” Reuters, Agosto 28, 2007,

http://www.planetark.com/dailynewsstory.cfm/newsid/43964/story.htm.

139. Lovins, Cazador, Development as if the World Matters, World Affairs Journal, Junio 27, 2005, http://www.nat-

capsolutions.org/publications_files/WAJ_May2005.pdf.

140. For a detailed discussion of this thesis refer to K. Hargroves, and M. Herrero, The Natural Advantage of
Nations: Business Opportunities, Innovation and Governance in the 21st Century, Earthscan, 2005. Developed
by the Natural Edge Project http://www.naturaledgeproject.net, Octubre 2006.
141. Friedman, tomás, l, “Have a Nice Day” New York Times, Septiembre 16, 2009,


=cse&scp=1&pagewanted=print

142. “Scaling Up: global Technology Deployment to Stabilize Emissions,” Willington, Bradley, niños, Ridgon

and Pershing, Word Resources Institute, Abril 13, 2007, pag. 14.

143. In the Black Executive Summary, a report by the Climate Group, Agosto 2007, pag. 16.
144. Jeffrey Immelt and Jonathan Lash, “The Courage to Develop Clean Energy,” The Washington Post, Puede 21,

2005.

145. “Investment in Renewable Energy Better for Jobs as well as Environment”, Robert Sanders, UC-Berkely

news release, Abril 13, 2004.

innovaciones / caer 2009

287

Descargado de http://direct.mit.edu/itgg/article-pdf/4/4/245/705390/itgg.2009.4.4.245.pdf by guest on 07 Septiembre 2023l. Hunter Lovins image
l. Hunter Lovins image
l. Hunter Lovins image
l. Hunter Lovins image
l. Hunter Lovins image
l. Hunter Lovins image

Descargar PDF