Thursday, June 30, 2011

How the Disaster May Help Japan's Brand

The March 11 earthquake, tsunami, and resulting nuclear accident have led some to question the health of Japan's "brand." Japanese products, services, and business partnerships in recent years have enjoyed a halo effect emanating from Japan's reputation as a land of safety, efficiency, and trustworthiness. As renowned Japanese columnist Yoichi Funabashi put it this week, "Instead of viewing Japan as a haven of immunity from danger and inconvenience, many around the world now perceive the country as fraught with peril and discomfort." The impact of the recent disasters on Japan's reputation or brand has been one of the focal points of experts who worry that the disaster would damage the prospects of Japan's strategic growth industries such as cuisine, tourism, and services. But this is not the whole story.

Rather it is the perseverance and calm that Japanese society demonstrated during the crisis that remains the enduring image of Japan in the minds of many people. This positive story was featured widely in the U.S. media immediately after the earthquake and remains relevant today. A case in point today is in Vietnam, a country I visited last month to conduct research on attitudes toward Japan and the United States. Every Vietnamese expert I spoke with told me that their impression of Japan had been further enhanced since the March 11 earthquake. In Vietnam, Japan's reputation was already positive in part due to Japan's vital role in Vietnamese economic development, for example as the largest contributor of foreign aid after the World Bank.

But more interestingly, many Vietnamese admired Japanese discipline, order, and perseverance during the recent crisis. Some Vietnamese want their society to resemble that of Japan as a leading Asian Confucian society, described in T.R. Reid's classic book Confucius Lives Next Door.

Vietnam is no outlier on this view. According to a survey conducted May 9-18 by the AIP-Hakuhodo Earthquake Recovery Project on the "Image of Japanese Products Internationally," positive attitudes of those surveyed toward Japan and Japanese products outnumbered negative ones. A total of 2,700 people were surveyed in China, Korea, Thailand, India, Indonesia, Russia, the United Kingdom, the United States, and Brazil. Most people were aware of the earthquake and nuclear accident but wanted to see Japan recover quickly (62.8 percent) and felt sympathy for Japanese people (56.8 percent). As for products, more people responded that their desire to purchase Japanese goods had increased compared with one year ago than those who said it had decreased.

These positive attitudes stand in stark contrast to those in Vietnam toward China. Vietnam's relationship with China reached a "critical mass" in 2008 and has deteriorated since then, reverting to the previous unfriendly relationship that prevailed for the past millennium. Vietnam's brief friendship with China in the 1990s was seen as naive by many of the experts I spoke with. I was in Hanoi during which China's maritime aggression was on display in the South China Sea, when one of its ships cut the underwater cables of a Vietnamese gas survey ship. These episodes have pushed Vietnam closer to the United States and Japan.

China's approach in other areas also has resulted in bringing Vietnam closer to Japan and the United States. Delays in the construction of power plants by Chinese contractors and Vietnam's reliance in its territorially-sensitive northern provinces on China for hydroelectric power have also had this effect. Meanwhile, the appetite for nuclear power and cooperation with Japan in this area remains strong in Vietnam despite the Fukushima crisis. The immediate need in Vietnam is for reliable, affordable electricity, and nuclear power will be a major source in providing that electricity.

Another area is the export of rare earth supplies, which China has restricted, sending prices skyrocketing recently. These strategic metals are used in the production of batteries and high-tech electronics. Demand for rare earths in Japan will increase as its economy recovers in the short-term and as it explores alternatives to nuclear power in the longer-term. China began restricting exports of rare earths to Japan in September 2010 in response to the detainment of a Chinese fishing boat captain by the Japanese coast guard.

Chinese manipulation of the rare earths market again has pushed Japan closer to its neighbors. It has led the Japanese government and companies to promote exploration of rare earths projects in Vietnam and other countries. But one Vietnamese expert told me that he believes that China will begin dumping rare earths on the global market once other countries attain the capacity to produce the metals. This perception that China plays a zero-sum game is common in Southeast Asia and has convinced many that Japan represents a more trustworthy partner that values a positive-sum business ethic.

Many Japan watchers have called the March 11 earthquake a pivot point for Japan's future trajectory. Japan could very well seize this moment to promote innovation, for example in the areas of clean energy and efficiency, and build stronger relationships with its neighbors. But it is a step too far to say that if Japan fails to take advantage of this situation fully, the other path is ruin. It is rather more likely that Japan will face more of the same, with its long-term problems persisting. As one of the most coherent nation-states on Earth, Japan isn't going anywhere. Even if its government fails to come up with a winning strategy, Japan will remain one of the world's most influential economies for years to come.

It is certain, though, that the disaster and the country's response have humanized Japan and shattered stereotypes, making it a country that is more accessible and closer to the rest of the world.

Also published in the Huffington Post.

Photo by Marc Veraart.

Wednesday, June 22, 2011

Iceland Writes an Information Age Constitution

Few things are as exciting and periodically necessary for a democracy as writing a new constitution. Iceland is in the process of doing just that, and they are doing it with a social media twist.

The Icelandic Stjórnlagaráð or Constitutional Council has solicited public feedback from citizens and is adjusting its drafts accordingly. The Council explains its method and rationale as follows:
The Constitutional Council is eager to make sure the public can be up to date while the work is in progress. It's possible to see the developments in the text of a prospective proposition and make comments. Furthermore, the Constitutional Council has made it possible for the public to send messages and already numerous messages have been sent to the Council. All messages are published on the Council's website under the sender’s name (anonymous messages are not accepted) and the public can read and comment on each of them which has already created a lively discussion on the website.

In this way the Constitutional Council emphasises an open communication with the Icelandic nation and has given the people an opportunity to participate in the formation of a new Constitution of the Republic of Iceland. The Council's work can also be seen on the major communicative media such as Facebook, YouTube and Flickr. Every day short interviews with delegates are put on YouTube and Facebook. On Thursdays at 13:00 there is live broadcast from the Constitutional Council meetings on the webpage and on Facebook. There are also schedules for all meetings, all minutes from meetings of groups, the Board and the Council as well as the Council's work procedures. The webpage also has regular news from the Council's work as well as a weekly newsletter. Advertisements are published in the media encouraging the public to keep track of what is going on and to make comments.

That Iceland chose the digital route should come as no suprise—the country has one of the highest internet penetration rates in the world, and its voter participation rates are roughly double what is common in the United States. Still, it's an impressive maneuver for a country whose legislature, the Althingi, dates back to 930, making it the oldest existing parliament.

Should we expect any substantive surprises from this process? Perhaps it is too soon to tell, with the drafts still shifting wiki-style, but already some interesting ideas have emerged. (The current official English version is machine translated, so some of the following quotations may be awkward.)


The statement on transparency couldn't be clearer: "Governance must be transparent." The new constitution also requires that all "matters and documents held by government … be publicly accessible," which includes complaints made to the government as well as procedures for their redress. That Iceland would uphold press freedom and freedom of information—"anyone is free to gather and disseminate information"—is in keeping with the strong laws they passed last year to protect journalists and anonymous sources, with implications for WikiLeaks and other whistleblowers.


Education is a high priority, and the opening section has a passage on academic freedom: "It should be ensured by law the freedom of science, education, arts and education." There is also a guarantee that everyone will receive a public education, free of charge at the primary level. The spirit animating the education section falls in line with the tradition of civic humanism: "Education shall aim at the full development of each individual, critical thinking and awareness of rights and duties."


By far the most interesting language so far comes in the sections on ownership and natural resources. The overall sense of property rights is that "ownership is inviolable," while "exercise of ownership should not go against the public interest." At the same time, the "natural resources of Iceland are common and perpetual property of the nation. They should be utilized in a sustainable manner for the benefit of all citizens. No one can get them for permanent ownership or use." These clauses are driven by a belief that "Icelandic nature is inviolable. Each person must respect and protect. The utilization of common resources of the nation must act so that they are not diminished in the long term and the right of future generations is observed."

It would definitely be nice to see the "right to healthy environment, fresh water and unspoiled natural land, air and sea" enshrined in a new U.S. Constitution. As it stands, the current crop of Republican candidates has staked out a bizarre stance against environmental protection, despite the fact that the American public consistently supports clean air, clean water, and more renewable energy.

So the new Icelandic constitution may not be as radical as Bolivia granting rights to Mother Earth, but with its procedural innovations and a focus on sustainability and civic humanism, Iceland is certainly showing the world what twenty-first century democracy looks like:

[PHOTO CREDITS: Althingi by vovchychko (CC); Stjórnlagaráð by Stjórnlagaráð (CC).]

Wednesday, June 15, 2011

WindMade Public Comment Period Opens

I recently biked 300 miles over five days from New York City to Washington, D.C. as part of the Climate Ride, a semiannual charity event that raises money for bicycle and environmental organizations. My primary motivation in riding all the way to Capitol Hill (with 120 bright people from the sustainability sector) was the opportunity to meet with legislators to discuss climate change, clean energy, and transportation policy.

Vested interests in the coal, oil, and gas industry would likely characterize such a voyage as quixotic, and they would be correct in one sense: I saw some windmills along the way, each one representing a different phase in America's energy history—Past, Future, and Present.

Windmill 1: The first type of windmill I encountered was actually a windpump. The old beast was motionless and looked something like this:

Alexis Madrigal of The Atlantic has a great chapter in his book, Powering the Dream: The History and Promise of Green Technology, on how innovative businesses and American DIY culture combined to dot the Great Plains with these pumps, making settlement and agriculture possible in arid regions. The technology is still incredibly useful, but it symbolizes the Past.

Windmill 2: The second creature I spied was perched on an Amish rooftop, spinning madly, and looked a bit like this sleek species:

As Kevin Kelly notes in his tome What Technology Wants, the Amish are not adverse to technology as long as it doesn't distort their cultural ethics. They even have social procedures for testing and evaluating new devices, and abandoning them if they are deemed inappropriate. Small modern wind turbines thus symbolize a possible energy Future where innovation is encouraged.

Windmill 3: Finally, I encountered this monster in Morgantown, PA:

I didn't go rooting through the restaurant's trash to find its electricity bill, but the probability is high that this decorative windmill is powered mostly by dirty coal, as Pennsylvania represents 5.3 percent of America's annual coal consumption. This windmill symbolizes the profligate Present.

I bring this up because a consortium of partners has just launched an innovative initiative to label organizations and products as "WindMade." It is a new chapter in what my colleague Michael Conroy calls the certification revolution, one of the primary forces driving branded companies to improve their environmental, social, and governance indicators. It also builds on the legacy of other "trustmarks" such as Fair Trade, Organic, Forest Stewardship, and Marine Stewardship.

In order to qualify for WindMade certification an organization will have to prove that it is getting at least 25 percent of its electricity from wind power. This can be accomplished via on-site turbines, long-term power purchase agreements, and renewable energy credits. The WindMade standard will roll out later this year, starting with certification of whole organizations and specific locations such as factories, while phase two will expand the process to include product certification.

In an innovative crowd-sourcing move, WindMade has opened up its technical standard for a 60-day public comment period to solicit feedback and advice on how it can be improved.

The primary sponsor of this project is the Danish wind company Vestas, the world's leading turbine manufacturer. Vestas has agreed to fund WindMade as an independent nonprofit for its first three years, and going forward support is expected from all partners as well as the participating companies. When asked at a press briefing whether compliance costs would discourage adoption, Vestas representative Bragi Fjalldal indicated that the expense would be "negligible," especially for carbon-conscious companies that are already monitoring emissions.

Bloomberg is the data partner in this endeavor, providing market research, and Curtis Ravenel of their sustainability group estimated that some 100 companies would already qualify at the 25 percent level.

Clearly Vestas has a business interest in promoting wind power through a labeling system, but they also recognize that wind will never provide all of the world's energy needs. For this reason an alternate WindMade label will be available to companies that want to express the mix of energy they receive from wind, hydro, solar, and geothermal sources.

Another key stakeholder and participant in the WindMade process is WWF. According to Stephan Singer of their global energy policy division, climate change is the single gravest threat to species worldwide, which is why WWF has made the case that it is possible and necessary to achieve 100 percent renewable energy by 2050.

Another positive aspect of the WindMade project is that it intends to aid renewable energy deployment in the developing world. The exact details have yet to be determined, but Angelika Pullen of the Global Wind Energy Council said the following:
WindMade is a global initiative and will reach out to companies in other significant markets such as India, China, and Brazil in the public consultation process to determine how emerging markets and developing countries can best be included in the program. Overall, WindMade strives to make an impact beyond countries where wind energy is well established. It is our intention to raise funds to catalyze wind power projects in countries with less developed renewable energy infrastructure. This is a longer-term goal, however, so the details of how this will be operationalized are still under development.

Complaints about wind being an intermittent power source always strike me as odd, as if that's somehow a fundamentally worse problem than global warming or gyrations in the oil market. The greatest inconsistency I see has been in U.S. policy, which periodically allows wind investment incentives to lapse.

Whether climate change is to blame or not, the world is getting windier, and perhaps this will accelerate construction of offshore installations, which should be competitive with natural gas within the decade. Solar, too, is approaching or has reached grid parity in the sunniest locations.

With its potential to incentivize the growth of renewable energy—which is far from certain at this early stage, given the somewhat "mythical" nature of the ethical consumer—the WindMade label is an innovation that deserves the old "Amish" test run, and early adopters will likely reap a reputational benefit. The success of the program depends upon a strong and transparent technical standard immune from greenwash, which is what makes the public comment period so important. If you have your two cents, now is the time to deposit them.

Tuesday, June 14, 2011

Solar Policy Innovation in New York

The New York solar industry could soon get a big boost if the state legislature passes the Solar Industry Development and Jobs Act (they must be very excited about it, as the bill is typed in ALL CAPS). The video above explains the basic financing and Solar Renewable Energy Credit mechanism quite clearly.

The bill's goal is 5 GW of solar capacity by 2025, with participation from residential, commercial, and utility producers. The incentives and requirements would ramp up and be adjusted over the years to match a growing market and falling costs. Advocates predict that the bill will add some 22,000 new jobs and $20 billion of economic activity to the state, with the primary benefits being cleaner power, long-term reduction of peak power costs, grid reliability, and local generation to supplant the importation of fossil fuels.

This bill is a step in the right direction, but it's hard not to scratch one's head at the lack of ambition here. The target of 2.5 percent by 2025 looks paltry when compared to peer nations like Germany, which installed 7 GW in 2010 alone due to its feed-in tariff system, and that was a slow year! Energy and environment writer David Roberts notes that "German electrical ratepayers fund the program through a small fee that amounts to about 15 percent of their electrical bills," whereas one of the selling points of the New York bill is that it will add only $0.39
to the average residential electric bill. You get what you pay for.