Introducing: More Like This

Policy Innovations is pleased to announce the debut of "More Like This," a new article series by our friend John Haffner. John will be profiling clean energy leaders and other green innovators in China over the next several months.

As you can read in his introduction to the series, the motivation is triple: 1. Give these pioneers some of the recognition they deserve; 2. Convey the flavor of life in contemporary China; and 3. Inspire similar leadership in others.

The first article is a frank discussion with Kongjian Yu, an award-winning landscape architect whose designs strive to incorporate energy efficiency and natural beauty.

Yu feels that China's rapid urbanization suffers from what he calls the "'little feet' aesthetic"—showcase buildings built on shaky conceptual foundations. "These ornamental buildings can't carry their own weight. We have little feet but a jumbo body of consumption and GDP growth. Chinese have this dream of being urbanized. But the buildings aren't green."

Also of note on U.S.-China relations is our coverage of "Rare Earths Diplomacy" by Sean Daly. He looks at what we should expect in the rare minerals market and how it could impact production of the wind turbines and hybrid cars we associate with a clean technology economy.

Enjoy, and have a great Thanksgiving.

Local Carbon Taxes Are an Innovative Band-Aid

I must say, I'm pretty proud of the county where I grew up: Montgomery County, Maryland. It just passed the first county-level carbon tax in America. It also increased the energy consumption levy on homeowners and businesses by 85 percent. This comes as only mildly surprising for an area that has long been a fairly progressive suburb of Washington, D.C.

Combined these two new sources of revenue should generate $15 million and $112 million respectively. The sad news is that the money is needed to bridge a budget deficit, and the taxes will sunset in two years. The carbon tax applies to all sources generating more than 1 million tons of CO2 in a given year, charging them $5 per ton. Ironically, only one facility makes the cut: the Dickerson Generating Plant, a coal power station. Some of the money is set to be reinvested in an energy efficiency program for local homeowners.

The tragedy here is that local legislation has become necessary in the fight against climate change precisely because of the failure to pass national and international laws. This failure produces the sort of regulatory patchwork many large businesses say they hope to avoid in their operations across multiple districts. Of course, many of those same large corporations have also lobbied against any action whatsoever.

So while I applaud the first-movers in Maryland, let's hope they also hop the Metro to Washington to put some pressure on Congress to pass a clean energy bill this year so that the Obama administration can negotiate in better faith this winter in Mexico. Meanwhile, China is set to impose a carbon tax on its industries starting in 2012.

[PHOTO CREDIT: Power lines in Dickerson, Md. by Andrew Bossi (CC).]

U.S.-China Clean Energy Announcements

Today the U.S. Department of Energy released the following announcement, which details several U.S.-China energy initiatives very much consistent with the recommendations of our recent Carnegie Council working group. The announcement is below.

Beijing, China - Today, President Barack Obama and President Hu Jintao announced a far-reaching package of measures to strengthen cooperation between the United States and China on clean energy.

1. U.S.-China Clean Energy Research Center. The two Presidents announced the establishment of the U.S.-China Clean Energy Research Center. The Center will facilitate joint research and development of clean energy technologies by teams of scientists and engineers from the United States and China, as well as serve as a clearinghouse to help researchers in each country. The Center will be supported by public and private funding of at least $150 million over five years, split evenly between the two countries. Initial research priorities will be building energy efficiency, clean coal including carbon capture and storage, and clean vehicles. The Protocol formally establishing the Center was signed in Beijing by U.S. Energy Secretary Steven Chu, Chinese Minister of Science and Technology Wan Gang, and Chinese National Energy Agency Acting Administrator Zhang Guobao.

2. U.S.-China Electric Vehicles Initiative. The two Presidents announced the launch of the U.S.-China Electric Vehicles Initiative. Building on the first-ever US-China Electric Vehicle Forum in September 2009, the initiative will include joint standards development, demonstration projects in more than a dozen cities, technical roadmapping and public education projects. The two leaders emphasized their countries’ strong shared interest in accelerating the deployment of electric vehicles in order to reduce oil dependence, cut greenhouse gas emissions and promote economic growth.

3. U.S.-China Energy Efficiency Action Plan. The two Presidents announced the launch of a new U.S.-China Energy Efficiency Action Plan. Under the new plan, the two countries will work together to improve the energy efficiency of buildings, industrial facilities, and consumer appliances. U.S. and Chinese officials will work together and with the private sector to develop energy efficient building codes and rating systems, benchmark industrial energy efficiency, train building inspectors and energy efficiency auditors for industrial facilities, harmonize test procedures and performance metrics for energy efficient consumer products, exchange best practices in energy efficient labeling systems, and convene a new U.S.-China Energy Efficiency Forum to be held annually, rotating between the two countries.

4. U.S.-China Renewable Energy Partnership. The two Presidents announced the launch of a new U.S.-China Renewable Energy Partnership. Under the Partnership, the two countries will develop roadmaps for wide-spread renewable energy deployment in both countries. The Partnership will also provide technical and analytical resources to states and regions in both countries to support renewable energy deployment and will facilitate state-to-state and region-to-region partnerships to share experience and best practices. A new Advanced Grid Working Group will bring together U.S. and Chinese policymakers, regulators, industry leaders, and civil society to develop strategies for grid modernization in both countries. A new U.S.-China Renewable Energy Forum will be held annually, rotating between the two countries.

5. 21st Century Coal. The two Presidents pledged to promote cooperation on cleaner uses of coal, including large-scale carbon capture and storage (CCS) demonstration projects. Through the new U.S.-China Clean Energy Research Center, the two countries are launching a program of technical cooperation to bring teams of U.S. and Chinese scientists and engineers together in developing clean coal and CCS technologies. The two governments are also actively engaging industry, academia, and civil society in advancing clean coal and CCS solutions. The Presidents welcomed: (i) a grant from the U.S. Trade and Development Agency to the China Power Engineering and Consulting Group Corporation to support a feasibility study for an integrated gasification combined cycle (IGCC) power plant in China using American technology, (ii) an agreement by Missouri-based Peabody Energy to participate in GreenGen, a project of several major Chinese energy companies to develop a near-zero emissions coal-fired power plant, (iii) an agreement between GE and Shenhua Corporation to collaborate on the development and deployment of IGCC and other clean coal technologies; and (iv) an agreement between AES and Songzao Coal and Electric Company to use methane captured from a coal mine in Chongqing, China, to generate electricity and reduce greenhouse gas emissions.

6. Shale Gas Initiative. The two Presidents announced the launch of a new U.S.-China Shale Gas Resource Initiative. Under the Initiative, the U.S. and China will use experience gained in the United States to assess China’s shale gas potential, promote environmentally-sustainable development of shale gas resources, conduct joint technical studies to accelerate development of shale gas resources in China, and promote shale gas investment in China through the U.S.-China Oil and Gas Industry Forum, study tours, and workshops.
U.S.-China Fact Sheet on Shale Gas Initiative

7. U.S.-China Energy Cooperation Program. The two Presidents announced the establishment of the U.S.-China Energy Cooperation Program. The program will leverage private sector resources for project development work in China across a broad array of clean energy projects, to the benefit of both nations. More than 22 companies are founding members of the program. The ECP will include collaborative projects on renewable energy, smart grid, clean transportation, green building, clean coal, combined heat and power, and energy efficiency.

Media contact(s):
(202) 586-4940

Stimulus, Justice, and Business in Greening the Developing World

I attended a business leaders luncheon last week organized by the United Nations Association around the idea of Greening the Developing World: Tech's Leading Role (Siemens and TIME co-sponsored). Among the themes one stood out: "Experiment on us!" This came from Minister Modest Mero of Tanzania. He indicated that Africa is an investment opportunity where clean energy pilot projects can take root because they don't have to fight the inertia of creative destruction common in rich countries.

But what is the policy and political landscape for greening development? Robert Orr, the Assistant Secretary-General for Strategic Planning and Policy Coordination, explained the relevance and success of the Clean Development Mechanism in this area. About half of new energy demand and development will be in poorer countries, he said, where 2 billion people live without modern energy access or technology. About one-third of CDM projects to date have involved technology dissemination to these countries.

Orr also made the point that it might be more useful to speak generally of "technology dissemination" instead of "technology transfer." He described the latter as too much of a 1960s–70s term. Recasting the process in this light would help account for co-development, PPPs, and other projects. (While I understand his pragmatic bent here, it does seem to gloss over the justice questions at stake in climate change.)

The CDM for all its faults [PDF] is not an insignificant pool of resources, and lessons have been learned from early implementation efforts. In 2006 some $25 billion was dedicated to projects in the CDM pipeline, $5.7 billion of which went to renewable energy and energy efficiency. But it should have come as no surprise for the UN to learn that money has flowed to the biggest, most profitable projects. As Orr acknowledged, about 80 percent of the projects have occurred in just five countries: Brazil, India, China, Mexico, and the Republic of Korea. Forty-nine other countries account for only 1.5 percent of CDM projects, showing a great need for equity and capacity-building. Orr explained that the UN role should be to help harness the power of the market in a formula that ensures full participation for access to energy.

On the topic of climate ethics, Ambassador Hardeep Singh Puri of India was asked to explain why the West should help countries like India that are its industrial competitors. He answered that you can't solve global climate change without them! He also offered a somewhat rhetorical question of his own: Should the West give to the poorest countries but not to India? Puri estimated that there are more people living in India at the poverty level of the Least Developed Countries than there are total people living in those LDCs.

He said that countries like India offer potential not only as laboratories for new clean energy projects, but also as new markets for green technologies. He stressed that these investments should occur within the existing intellectual property regime (a point also expressed in Sen. John Kerry's Clean Energy Jobs and American Power Act [PDF]). "Accessing technologies" would mean paying for patents, but at affordable rates to promote dissemination of clean technologies. Relying on philanthropy and altruism will go nowhere, he said.

Puri cited renewables and even nuclear as the green technology needs of India, since India still relies heavily on fossil fuels. Biofuels are a non-starter for India in the short and medium term because of land and water shortages, concerns about food security, and commodity price volatility. Puri instead would like to see an increase in public-funded R&D projects that can lead to technology dissemination that also maximizes the common good.

Glenn Prickett of Conservation International broke implementation goals down into three priorities: Efficiency, Forest conservation, and Renewable energy. He cited a McKinsey study [PDF] showing that progress in those areas could account for 75 percent of the global emissions reductions needed by 2020, at a net savings of $14 billion! Of course, this would entail a 50 percent reduction in tropical deforestation, and one roadblock is that public investment in forestry, agriculture, and land-use policies has been dropping.

Energy efficiency solutions, according to Prickett, can be driven by effective standards backed by institutions for enforcement. He pointed out that one of the best ways an "awakening" private sector can contribute is through supply-chain analysis and waste reduction. On a related note, the Kerry climate bill also calls for a voluntary "national product carbon disclosure program," to be based on a review of existing and planned standards such as Carbon Trust's Publicly Available Specification 2050, standards to be developed by the World Resources Institute and the World Business Council for Sustainable Development, and those of the International Standards Organization.

A question was posed to the panel about why the interaction of climate change and land-use issues has been neglected relative to renewables and other investments. Orr responded that food security must be tackled in tandem with climate change, and that technology transfer for adaptation projects that deal with land use could yield huge advances at low cost. Ambassador Puri turned to the case of India, where he said 60 percent of the country lives in rural areas but only 20 percent of the country's GDP comes from agricultural investments. Why the underinvestment? Subsidies in the rich countries! Puri indicated that it's impossible to disentangle climate solutions from the inequities and stagnation of other negotiations such as the WTO Doha Round.

Indeed it is these systemic complexities and inequities that most plague the path to agreement in Copenhagen. But there is nonetheless climate solidarity that transcends national barriers, as evidenced by the massive global call to action organized by 350.org on October 24. As I wrote recently, solving climate change has great potential to serve as an organizing principle for Green Diplomacy, in a way that solves geostrategic, security, and development concerns. But it also has the potential to be a Global Green Stimulus, at a time when developing countries have been further battered by the financial failures of rich nations. Administering much of this stimulus in the form of mitigation grants or an adaptation fund is key to answering the major questions of global environmental justice.

[Photo credit: 350.org action on the beach of Dar es Salaam, Tanzania (CC).]

America Shouldn't Blow an Opportunity for Green Diplomacy

Among all the talk about soft power and smart power something big and obvious has been missing: wind power. By not being a global leader on climate change over the past decade America has blown a major opportunity to engage in Green Diplomacy—the strategic use of clean energy projects to boost development and security in poor countries. Going forward, the Obama Administration should articulate and carry out a plan to align several of our national priorities: innovation, emissions reduction, development, diplomacy, and security.

When it comes to linking climate change and security it is common practice to trot out the specter of mass hordes of climate refugees inundating rich countries as their own coastal homelands disappear into the ocean. Likely this fear suffers from a case of xenophobic exaggeration. But an already-porous migration policy does motivate the United States to focus on the development of climate-resilient countries in its own hemisphere first. Fortunately a demonstration project exists in the region: Costa Rica, where reforestation and renewable energy combine in a national commitment to becoming carbon neutral.

One can envision the United States helping clean energy best practices radiate out from there, facilitated by domestic and international regulation. Thus it is heartening to see funding and institutional priorities coalescing around these goals in Sen. John Kerry's recently submitted Clean Energy Jobs and American Power Act [PDF]. The bill calls for establishment of a Strategic Interagency Board on International Climate Investment, to be composed of the secretaries of State, Energy, Treasury, Commerce, and Agriculture, the administrators of USAID and the Environmental Protection Agency, and any other relevant officials the president sees fit.

The SIBICI's task would be "to provide United States assistance to developing countries to develop, implement and improve nationally appropriate greenhouse gas mitigation policies," including preparation for participation in "markets for international offset credits for reduced emissions from deforestation." The bill also calls for the State Department to establish an International Clean Energy Deployment Program that would distribute funding either as bilateral assistance, to multilateral funds or institutions formed pursuant to the UNFCCC, or some combination of both. Similar funding would also be distributed under the International Climate Change Adaptation and Global Security Program to "provide assistance to the most vulnerable developing countries... in a way that protects and promotes interests of the United States."

The bill goes on to specify the details for emissions allowances and international offset credits, but much is also left open-ended to ensure that the executive branch has enough latitude to create and carry out these new programs. This bodes well for putting Green Diplomacy in the American power toolbox.

[Photo credit: Volcan Arenal, by Arturo Sotillo (CC).]

Resilient Cities

I just attended a hopeful presentation by Australian urbanist Peter Newman on his concept of Resilient Cities. We're at the toxic intersection of several trends: peak oil, global warming, and scattered, car-dependent residential growth fueled lately by subprime mortgages. According to data he presented from the UK Industry Taskforce on Peak Oil and Energy (Nov. 2008), "the underlying trend in the price of oil is 6 percent growth per year." Combine this with the IEA's recent World Energy Outlook that says the "natural annual rate of [oil output] decline is 9.1 percent from 2009" and it becomes pretty obvious that massive changes in our energy and transportation infrastructure and technology are around the bend.

Newman lists four courses the modern city may take:

Collapse: It's happened before and could happen again. Newman cited the ancient examples of Ephesus and Babylon, and while total abandonment seems less likely in today's world, a tour through Rust Belt American cities such as Gary, Indiana, should suffice as a warning of potential decay.

Ruralization: Food production moves to the cities somewhat, as happened in Havana when the Soviet Union cut off energy supplies. Total ruralization with every apartment complex growing its own food seems unlikely because it would disrupt the whole logic of the city as an opportunity factory.

Division: Wealthy eco-enclaves will coexist with and be surrounded by Mad Max suburbs. This is a highly probable outcome if market forces play out sans smart urban and regional planning. This pattern is already prominent in the developing world where gated communities abut slums.

Resilience: Combining all the dream elements of renewable energy, distributed systems, smart grids, carbon neutrality, and sustainable transport, resilient cities are basically environmental utopias--only impossible if viewed as overnight projects. Alone among these four types, resilient cities are founded on hope not fear, though division, ruralization, and collapsing neighborhoods may all accompany the transition to resilience.

Newman focused today on the fact that land use follows transport, thus illustrating the importance of public transit-oriented development. His sense is that the stimulus and transportation initiatives of the Obama era must move dollars from freeway construction to sustainable options. Spending $100 million per mile on a freeway, as Houston did, seems like Stone Age economics at this point.

I suggested to him that transition to high gas mileage electric vehicles (100+ mpg) might forestall investment in public transit, but he seemed optimistic that, given the bigger picture of climate change pressuring the economy, plug-in cars and vehicle-to-grid technologies will prove a win-win situation. Let's hope he's right.

Economy vs. the environment?

Last week I wrote a briefing on the upcoming carbon credit auction, Northeast Puts on the Carbon Cap. In the article I identified a few kinks in the system that might make the Regional Greenhouse Gas Initiative less than successful in the long run. A more immediate threat, however, may be the effect the credit crisis is having on markets in general.

When I spoke with RGGI Inc. spokesman Jonathan Schrag a week before the auction, I asked whether the organization was concerned about there being too many credits for sale – the total allowance easily exceeded current emissions. Though unable to disclose just who would be taking part, Schrag was convinced that, with over 100 registered bidders, the “broad participation” would ensure success.

One week and a few collapsed banks later, that participation was no longer a given; concerns about the credit-crunch fallout on Wall Street affecting the RGGI auction seem to have borne themselves out. Although the emissions allowances sold for $3.07 – higher than the $1.86 floor price set before the auction, the prices did not reach the levels anticipated on the futures markets.

Is lackluster interest from the financials to blame? According to today’s press release 59 entities submitted bids, with “compliance entities,” the utilities that will be bound by the emissions cap, purchasing most of the credits. This differs greatly from the European emissions market, where financial companies play an active role. There, carbon trading is big business, and companies seek out creative ways of reducing or abating their emissions so they can sell their allowances for a profit. The well-functioning (since last year's reforms) market ensures emissions reductions come at the best price and with the lowest economic penalty.

The recent turmoil in the financial sector may thus have claimed yet another victim – one few have even noticed. As everyone is focused on the astronomical bailout, the falling house and stock prices, and the economic slowdown, global warming concerns are taking a back seat. Could this be yet another example of pocketbook issues trumping the environment?

Photo by Taras Kalapun (cc)

Policy Innovations on the Road

Policy Innovations staff is traveling this month on a couple projects related to climate change.

GPI Director Devin Stewart is leading a Carnegie Council delegation to Beijing to lay groundwork for China-Japan-U.S. dialogues on ethics, energy, climate change, and faculty development.

Devin will be accompanied by Joshua Eisenman, an Asia Studies Fellow at the American Foreign Policy Council and Ph.D. candidate at UCLA; Jonathan Gage, a Carnegie Council trustee and principal of Booz & Company, where he also publishes its magazine strategy+business; Harry Harding, University Professor of International Affairs at the George Washington University; and Alex Westlake, managing director of ClearWorld Energy (based in Beijing).

Stewart and Eisenman are coordinating the itinerary with the China Reform Forum in Beijing. Institutions to be visited include Peking University, Renmin University, Chinese Academy of Social Sciences, and the China Institutes of Contemporary International Relations. The trip was made possible by generous support from ClearWorld Energy.

Meanwhile, Policy Innovations Managing Editor Evan O'Neil is literally hitting the road. He's biking in a peloton of 120 riders from New York to D.C. to meet with Congressional staff to discuss transportation and climate policy. To learn more about the story behind Evan's Climate Ride, take a look at the sponsorship page our web designer Graham Slick put together for him, or at Evan's new blog Inside Climate.

[Beijing Bicycles photo by Keith Marshall (CC).]

Japan as Efficiency Superpower

The New York Times today covered an issue that has interested me for a while now. The article is titled "Japan Sees a Chance to Promote Its Energy-Frugal Ways." I have argued in a chapter in Gal Luft's forthcoming book on energy security that Japan should aim to be an efficiency superpower, promoting its unique ethic of conservation or "mottainai." In other words, Japan can offer moral leadership by acting as a technological model and a departure point for global cooperation. Here are excepts of my chapter, which I presented in February of this year to the Tokyo-Reischauer Group, sponsored by Johns Hopkins SAIS and Tokyo Foundation:

Energy security concerns are nothing new in Japan. The oil embargo during World War II and the 1970s oil shocks shaped much of Japan’s recent history. Long the technology leader in Asia, Japan finds itself preparing for a future in which its energy policy must weigh increased global energy demand, emerging resource nationalism, and stagnating upstream development. Japanese energy policy is built upon an understanding that resources are finite. By putting efficiency at the center of its policies, the country is shaping the definition of energy security for the 21st century.

In the international context, Japanese energy security depends on the U.S. military’s protection of sea lanes for the transport of oil. But its overall policy mix has relied on global market mechanisms and domestic regulation. Japan’s homegrown efforts to achieve energy security revolve around efficiency and diversification. Since 1973, Japan’s energy intensity has improved by 37% and its oil dependency has dropped by 30 points, making Japan one of the largest, most-energy efficient economies in the world.

Given Japan’s oil dependence during this period, few countries were as affected as Japan was by the OPEC oil embargo of 1973. The resulting changes in the industrial landscape, the economic slowdown that followed, and dramatic increases in energy prices helped to mobilize the Japanese population in support of energy efficient policies. By the second oil shock six years later, Japan was in a position not only to weather the storm better than most developed countries, but also to capitalize on the world’s newfound desire for energy conservation by exporting fuel-efficient cars and other technology.

The mid-1970s saw a wave of energy-related legislation in Japan. Enacted in December 1973, the Emergency Law for the Stabilization of National Life gave the government the ability to set prices for everyday products during times of severe inflation.

Energy consumption in Japan’s industrial sector remained flat and conservation efforts plateaued in the 1990s, as Japanese manufacturers reached the upper limit of efficiency gains through the turnover of capital stock to more efficient machinery. An economic downturn and historically-low energy prices weakened the pressure to conserve, refocusing government efforts on energy concerns.

In 2005, the Japanese government introduced the “Cool Biz” campaign, which aimed to lower energy consumption and greenhouse gas emissions by encouraging businessmen to wear lighter clothes and forgo wearing a tie in order to encourage a reduction in air-conditioning use. The campaign was introduced with a fashion show featuring captains of Japanese industry, based on the belief that in Japan’s hierarchical business culture the participation of upper management would increase the effectiveness of the campaign. The Environmental Ministry said the campaign led to a 1.4 million ton emissions reduction during the summer of 2007.

Another initiative that aims to increase energy efficiency by influencing consumption choices is the “Warm Biz” campaign, which encourages companies to set their heaters to 20 degrees Celsius (68 degrees Fahrenheit) in the winter.

Is Japan model transferable to foreign countries? Japan boasts top class technology for nuclear power and energy efficiency/conservation, with economic growth during times of rising energy costs. It has been cooperating with China on energy efficiency technology. On the other hand, some Japanese interviewees said though technology or regulations may be transferable, the Japanese spirit of “mottainai” (“don’t waste”) would be hard to transfer, or at least only mature societies with the willingness to pay for green power could do so. Nevertheless, some studies show that the Japanese willingness to pay for clean energy is about the same as it is in other countries.

Jimmy Carter might have been prescient about the risks to the environment but American culture did not take to the notion of conservation. Meanwhile, in Japan, the country underwent a conservation revolution. Many have argued that an incremental approach to energy and environmental problems would be insufficient. Given recent factors, such as increased demand and lack of infrastructure, driving up energy prices and the broader consensus on climate change, a national project for energy efficiency would be timely.

The current international order is witnessing the emergence of layers of power. I believe that thinking about the system in terms of "poles" is unhelpful. (Harry Harding recently argued that we might think of the system as two political parties: an elitist reform party led by the United States and a conservative populist party led by China and Russia.) A number of factors, such as the 1997 Asian financial crisis, the 9/11 terrorist attacks, and the recent changes in the energy markets have opened a window of opportunity for new power centers--the Middle East's financial power, Russia's influence over Europe, China's new role in East Asia, etc.

(I would like to thank Chris Janiec and Warren Wilczewski for their research assistance on this project.)

Photo by El Fotopakismo

Cambodia's Future: Norway or Nigeria?

I am in Cambodia this week researching the expected offshore oil and gas boom. The big question is: Will one of Asia’s poorest and most corrupt countries use its newfound wealth to invest in infrastructure and education or will it simply shore up its corrupt practices? Will Cambodia become a Norway or a Nigeria?

Yesterday I met a foreign energy businessman with years of experience in Cambodia. His prognosis for Cambodia’s future was optimistic. He sees Cambodia as becoming a hub for a rapidly growing region, potentially taking advantage of its central location. In terms of governance, he has witnessed several years of improvement and sees things as only getting better.

China’s recent mining disaster is clearly on the minds of businesspeople here. Not only is China's mining sector the world's most dangerous, it is also extremely corrupt. The businessman said many people, including Cambodians, are reluctant to make deals with Chinese investors and partners. He listed several risks: opacity of contracts; hidden stipulations in contracts; lack of employment opportunities for local workers (Chinese use their own contractors); corrupt practices; and outdated equipment. Although Chinese technology will improve within a decade or so, he wasn’t so sure about the other practices.

Corruption is a rotten disease that many businesses are trying to fight. This businessman’s company is partnered with an American company, meaning it must follow the Foreign Corrupt Practices Act. He said it is a lot of work to comply with these rigorous standards, but he sees corrupt practices as antithetical to profitable business for several reasons: first, it is a waste of money that is thrown away without accountability; second, bribes seem to compound and send signals that a company is willing to play a dirty game; finally, good practices are central to ethical business and a calm soul. “I am able to sleep at night,” he said.

Due to his company’s large profile in Cambodia, an international NGO recently investigated how it was able to secure large contracts. After its investigation, the NGO concluded that his company was clean. He wasn’t worried. I only wished that clean companies like that were showcased for their exemplary behavior. If businesspeople knew they had a choice to act ethically, I bet cleaner practices would catch on.

Bill Bradley on Foreign Policy

Former Senator Bill Bradley spoke this morning at the Carnegie Council about his new book The New American Story. This talk was the first we broadcast on multiple radio stations. We also filmed it for video clips that will be coming out later.

Bradley’s main point was that an old American story has taken root in the U.S. national conversation that is obscuring the original American story that values two things: a can-do attitude and telling the truth. As he says in his book, we have to embrace an “ethic of connectedness:” collective action and individual responsibility.

He gave numerous examples. Jody Williams, for example, got a few average Americans together to launch a global movement to ban landmines. She won the 1997 Nobel Peace Prize for her efforts.

The former Senator also suggested that the United States needs a fairer energy policy. If the United States were able to reach the fuel efficiency of cars driven in Europe, we would be able to eliminate oil imported from OPEC countries. He also recommended more accountability: people who buy fuel inefficient cars, such as Hummers, should be taxed and those who buy fuel efficient cars should get rebates. It’s not a tax on the rich. It's simply an incentive for efficiency.

The final question from the audience focused on foreign policy: How should the United States approach Iran and Russia? Bradley suggested more talk with Iran—after all talking to your enemies is the definition of diplomacy.

Russia seemed to be a topic close to the Senator’s heart. He slammed the expansion of NATO after the fall of the Soviet Union. Bradley recently spoke with Mikhail Gorbachev, who said U.S. officials had promised an expansion would not happen. Moreover, as Bradley put it, the key to diplomacy is not to kick a man when he is down. My professor at SAIS Michael Mandelbaum was a sharp critic of NATO expansion. You can read a transcript of him talking about it with Jim Lehrer in 1996 on NewsHour here. Here is an excerpt:

I think it [expansion] will re-divide Europe where Europe is now not divided. Second, it will poison our relations with the Russians, perhaps not irrevocably. The Russians are not going to refuse to speak to us. But already, the kind of close cooperation that we enjoyed during the Gulf War and made it possible for President Clinton to pick up the phone, ask President Yeltsin to remove Russian troops from the Baltic states, and have him exceed to his request, that kind of close cooperation is gone.

And that was how Bradley ended the talk: Think about the kind of mutual benefit we could be sharing with Russia given the world’s problems today: energy, climate change, oil. If there were more trust between these two big countries, the cooperation would benefit from their complementarities.

Co-operative Food Ethical Policy

In this video clip from a Guardian climate change conference, Paul Monaghan, head of ethics and sustainability for the Co-op Group, speaks on how businesses can use long-term power purchase agreements for renewable energy, help scale up microgeneration of electricity, improve energy efficiency, get involved with public policy in a positive way, and use carbon offsets.

Monaghan's passion led me to investigate the Co-op Group a little more, and I found that they are developing a new member-led ethical policy for the food they sell. "Going forward the ethical and environmental priorities that underpin our co-operative products will be in line with members' concerns," writes Guy McCracken, Chief Executive for Food Retail at Co-op. They've developed a questionnaire to figure out what those concerns are and how to prioritize them. The questionnaire covers food quality, diet and health, environmental impact, ethical trading, community retailing, animal welfare, metrics for success, and future member consultations.

I'd say meeting half of these targets would be admirable. Does the co-op as an organizing principle give them an advantage?

Rich-country Energy Policies Unsustainable

My former boss at RIETI, Nobuo Tanaka, recently became the first non-European head of the International Energy Agency (IEA) on Sept. 1. Tanaka was always good at statistics, often carrying around dozens of pages of charts and graphs to illustrate his points on the Japanese economy.

So I wasn't surprised when he used his statistical capacity to illustrate that energy policies in most rich countries are unsustainable. Check out the coverage on a recent interview with Tanaka in the International Herald Tribune's article, "New energy agency chief sees household energy use rising in industrial countries."

The most important point is perhaps the ethical question of whether the United States, Australia, Canada, and Europe have the credibility to wag their fingers at China and India about their energy consumption. Tanaka suggests that these countries don't have the moral credibility to do so:

"The leading industrial countries are not on a path to sustainable energy future," said Tanaka, a Japanese economist and diplomat who became the IEA's executive director Sept. 1. "There was a big effort to increase efficiency during the 1980s because of the oil price shocks," he said. "But these efforts subsided over the 1990s."

How can we ask China to be a responsible stakeholder when our responsibility is in question?

Another interesting point is that globalization--so often blamed for problems--was the factor that helped increase efficiency in the global manufacturing sector. Energy consumption and CO2 emissions have fallen in manufacturing:

"The reason is competition," Tanaka said. "With globalization, manufacturing companies have had to become more competitive if they want to survive. That means cutting back on energy costs."

What's needed? A major adjustment in the way we live.

The Ethic of Stewardship: It won't be easy being Green

In the New York Times Magazine this weekend Thomas Friedman discusses the challenges of making environmentalism profitable, strategic, patriotic, and globally equitable. Political and technological innovation will play a crucial role in this process.

One major hurdle is the energy market and its often conflicting incentives: The world needs to simultaneously reduce demand for carbon-intensive energy sources and create demand for alternatives. Robert Socolow and Stephen Pacala of Princeton's Carbon Mitigation Initiative have innovated a series of "stabilization wedges"—aspects of the energy economy and changes in behavior that can be adjusted using current technologies. Their ideas could help bridge the transition to a Green economy over the next half century.

According to Friedman, McKinsey Global Institute has forecast that "developing countries will generate nearly 80 percent of the growth in world energy demand between now and 2020, with China representing 32 percent and the Middle East 10 percent."

Despite the advanced industrial world's historical responsibility for climate pollution, the developing world is catching up, and so Friedman concludes that the Green platform "will not go down Main Street America unless it also goes down Main Street China, India and Brazil. And for green to go Main Street in these big developing countries, the prices of clean power alternatives—wind, biofuels, nuclear, solar or coal sequestration—have to fall to the “China price.” The China price is basically the price China pays for coal-fired electricity today because China is not prepared to pay a premium now, and sacrifice growth and stability, just to get rid of the CO2 that comes from burning coal."

Friedman believes that the "only way we are going to get innovations that drive energy costs down to the China price... is by mobilizing free-market capitalism." But the market will only work if there is an accurate price for carbon, if countries "force their people to pay the full climate, economic and geopolitical costs of using gasoline and dirty coal."

But Friedman realizes that "the market alone won’t work. Government’s job is to set high standards, let the market reach them and then raise the standards more. That’s how you get scale innovation at the China price."

He goes on to suggest a number of areas where government can help:

• Raise efficiency standards for buildings and appliances


• Stipulate that utilities generate a certain amount of electricity from renewables


• Raise mileage standards for cars


• Tighten the cap-and-trade system for the amount of CO2 any factory or power plant can emit


• Offer loan guarantees and fast-track licensing for anyone who wants to build a nuclear plant


• Enact a carbon tax

Government, of course, means us. The market, of course, means us. People now must roll sleeves, cinch belts, and innovate. As the unpredictable havoc of doubling atmospheric carbon gets delivered to our doorstep, the Ethic of Stewardship becomes less about intergenerational sacrifice and more about shared humanity. It won't be easy being Green, but it will be worth it.

Whose Carbon Is It?

Recognition that global warming is anthropogenic grows daily, but sweeping solutions to clean up pollution mature at a different rate. This is not surprising. We're dealing with invisible gases. When determining moral responsibility and economic motivation (or vice versa), we must ask an important question: Whose molecules are they? When the factory is in Bangalore and the corporate HQ in London, who accounts for the emissions? Christian Aid senior climate change analyst Andrew Pendleton writes that the UK has been massively underestimating its contribution to the problem. He calls for standardized and more accurate corporate reporting on emissions, reinforced by legislation.

Ban the Bulb!

Australia, like the United States, may never ratify the Kyoto Protocol, but its government just announced a bright idea for reducing carbon emissions: mandatory phase-out of incandescent light bulbs. The old bulbs will be replaced by longer-lasting compact fluorescent bulbs that are more energy efficient. The top-down, market-based legislation will "gradually restrict the sale of the old-style bulbs" (AP).