Category Archives: Green Events

Creating Climate Wealth ~ A Dispatch From SXSWECO

climate_wealthMost of us usually don’t use wealth and climate change in the same sentence. Jigar Shah and the Carbon War Room’s Ann Davlin were at SXSWECO yesterday to convince us things are changing. Their session,”Creating Climate Wealth,” showcased how individuals and businesses can capitalize on the climate chaos.

Davlin, who worked with Al Gore and at The Pentagon, started the discussion by reminding the audience that our society, even business, has had climate opportunities teed up before.

“This really isn’t all uncharted territory,” said Davlin. “A lot of today’s climate wealth environment was established by the success of the Carter administration.”

Most of us can associate the administration with solar panels on the White House, but Davlin highlighted the other policy and infrastructure decisions which helped set up many of the standards still used today.

“Everything from energy efficiency and vehicle emissions to power purchase agreements (PPAs) and the adoption of the Renewable Portfolio Standard (RPS), has some connectivity to the efforts of lawmakers decades ago,” said Davlin.

“All the pieces are coming together, and we’re at a point where we can move forward. Carter won bi-partisan support for favorable policies and it lead to job creation and clean energy momentum.”

Davlin cited the residential PACE market, aimed at funding energy improvements, as another engine of growth and carbon reduction. She urged the group to think about the balance between an economic and ecologic argument.

“The capital is there, it’s more about how do we go in and approach a particular investor segment,” said Davlin. “We need to think about describing the impact in either financial terms or climate terms,” she added.

Shah opened up with a dig at our obsession with technology, questioning the value of the next new app.

“We have this weird fascination about technology,” said Shah. “The reality is that new technology is not fascinating in our industry.”

Instead, it’s about “infrastructure.” Shah noted that even with a seemingly unending technology cycle, energy costs for the average American family have increased about $4000 per year per family.

“Nobody tells they’re mom that I work in infrastructure,” he joked. But it’s easier to understand the notion of infrastructure when he describes it in the context of how the solar industry built out its own processes and practices. He mentioned how early power purchase agreements (PPAs) drove demand and led to more stable and innovative financing models that have continued to spur along the solar industry.

The conversation also addressed the opportunities in the electric vehicle (EV) industry and more broadly, the transportation industry.

“So what’s the climate wealth strategy for getting people in EVs,” asked Shah.

He mentioned recent data from Triple AAA that shows U.S car owners spend about $900 per month to own a vehicle. Besides more predictable maintenance costs for EVs, Shah thinks transportation companies and manufacturers will continue to move towards a cost per mile model.

“What you’ll see is an increase in “cost-per-mile” entrepreneurs as more time transfers to that model,” he said. “Then the question is what do you do with all the wasted space, like unused parking spots and emptier garages.”

The parking spot problem is in the industry’s headlights, sometimes referred to as one of the last mile problems in transportation. He was asked about what cities can do address it and some of the other planning challenges.

“Basically, 1000 entrepreneurs need to be knocking on doors and getting contracts, and then those need to get financed” he said.

Once autonomous vehicles are factored in, things get more interesting. Both panelists said the insurance industry is already adapting to that, preparing for the increasing loads of data from vehicle-based systems. They imagined a scenario that’s not so different from what healthcare providers might glean from health trackers to adjust our premiums.

Davlin also mentioned how microgrids, small-scale stations that can operate independently, are getting pushback from municipalities. Drawing from her pitches to Wall Street and private equity firms, Davlin reinforced how assumptions can’t be made that stakeholders understand the bigger picture. She described some scenarios where energy efficiency funding had to be reframed around a more resilient and risk-based approach.

Shah was then asked about the value proposition for solar, and how it plays into more climate opportunities.

“Solar is now an $80 billion a year industry with rooftop systems being added about every three to four minutes,” said Shah. “The industry needs to take responsibility for creating the next model for utilities.”

The panelists were also asked what city officials could do to spark more business-driven climate strategies.

Shah singled out transportation and waste management as two of the biggest pieces looming for cities. To magnify the cost reduction opportunity, he said the the average U.S. city transports its waste roughly 350 miles for disposal.

He also used the recent food waste ban in Massachusetts to show how waste reduction can create growth. Because of that policy, says Shah, 1200 anaerobic digesters will be built over the next five years, which will create jobs and reduce transportation costs..

Waste water management is also a part of the portfolio, especially with many treatment facilities across the U.S. nearing capacity. Things like pre-treatment, desalination, and other filtering applications are spurring the water management sector.

“A lot of these solutions have two year payback periods,” said Shah. “At that point, you’re basically forcing people to save money.”

As the session closed, a Nike representative in the audience asked the panelists to share specifics on the top things corporations could do to impact these climate wealth strategies. Davlin cited what Nike itself was doing as a member of the Sustainable Leather Working Group.

“Nike is actually dictating how the life of an animal is managed, everything from how it is fed, to how it is slaughtered,” said Davlin.
“What that means is more job creation, and a more visible and sustainable supply chain, ” she added,

Shah jumped in on the supply chain piece, saying the “greening of supply chains” is the toughest challenge for multinational corporations.

“You have to change the contracts and configure them to reward your best suppliers,” he said.  Part of the challenge is that adjustments to supplier agreements can impact short-term profits. But Shah urged companies to look past contracts and get more creative to drive growth, saying a company’s strategic partners can be rewarded in many ways.

“There’s still constraints to being driven through the Chief Sustainability Officer (CSO). But you have to make some financial commitments before any long-term strategy can really materialize,”said Shah

“The question becomes, how do we it home runs?” he told the group.climate_wealth

 

 

SXSWECO Session: Startups And Corporations: Bringing Clean Technology To Market

Cleantech Group’s Greg Neichin Moderating

Cleantech Group‘s Greg Neichin opened up Wednesday’s panel “Startups and Corporations: Bringing Clean Technology to Market” with an important observation.  The cleantech market, and certainly the broader energy energy space, is a bit different when it comes to getting big companies in the same room with startups.

“For the most part, they tend to get along,” he told a packed session.

The session assembled a good mix of panelists, from a startup and venture capital firm to sustainability executives from Nike and Intel.

Nike’s Dan Cherian described its approach to working with startups, and dispelled the notion that its startup relationships are purely investment-oriented.

“We don’t just do investments, we’re involved in things like licensing, joint development agreements and strategic alliances, ” Cherian explained. “Not all of our innovation happens inside the company, we think of it as strategic partnering and investing,” he added.  As Cherian summarized Nike’s view, it was clear the company sees sustainability as as a growth opportunity, with Cherian saying Nike is “heavily invested” in  helping the company grow through sustainable business.

Intel’s Lorie Wigle and Rockport Capital’s Dhiraj Malkani

Intel’s Lorie Wigle, the company’s GM of Eco-Tech, said much of its startup work is focused on energy efficiency. Specifically, her team looks at the application of technology  and how to grow revenue. Wigle mentioned a joint project with KLG Systal that tackled water management. Through KLG and other partners, Intel was able to see their technology implemented in different ways, underscoring the importance of tightening up your partner network before approaching larger corporations.

On that note, Streetline‘s CEO Zia Yusuf brought some street-level (not intended)  levity to the big company pitch discussion.

“Many startups make the  mistake of thinking ‘we got the meeting’ and the ”number of meetings’ are a good metric for progress,” said Yusuf.  His assertion was those elements have nothing to do with success . “It gets down to can the corporation sell more of their product because of what you do.”

Nike’s Cherian concurred, urging young companies to make their objectives very clear. “If your objectives are clear, we (Nike) have the right people in place for you to interface with”, he explained. He says Nike has three or four areas set up  within the company to address various segments of innovation.

“Even if you talk to the business development group or venture unit, you have to realize they might not have the decision-making capability, ” he said. “When we get a message from a company, we apply that correspondence to whichever filter is the best fit.” Cherian added one other tidbit for the startup crowd: get a recommendation. He said even the slightest nod from a known partner or third-party can help startups in the early cycles with various corporate groups.

Another key discussion was the role large corporations can play in developing industry standards.

Streetline’s Yusuf mentioned their partnership with IBM, where they’ve integrated Big Blue’s Cognos platform. He stressed how important it was to understand the dynamics of the marketplace and who’s pushing open technology.

“Startups should know who leads the market and what products are innovating, ” said Yusuf.  “IBM would love to sell us a bunch of their products, but we know which pieces of their platform help us solve our customers’ problems.”

Intel’s Wigle mentioned the company’s involvement in the Smart Grid Interoperability Panel and how much intelligence it’s captured from the ecosystem as technology is commercialized.  Because Intel has some much infrastructure that startups need, the company established its own incubation program, of sorts.  Technology Days brings together startups in Intel’s portfolio and allows them to make their pitch. Not only can Intel share its R&D practices and standards work, but young companies get a purview of what’s coming down the technology pipe.

The panel bridged some of the standards discussion with a few examples of where data and technology are currently coming together for disruption. All of them agreed the “internet of things” was shaking things up the most around cleantech innovation. With smart sensors, advanced levels of automation, and the move to open data, companies like Fitbit and Nest were cited as two companies capitalizing on the standards push.

If startups should come away with anything, it’s take the time to get your ship in order before approaching the big guys. If you’re focused, have the right partners, and understand protocol, they’re listening.

Austin’s Clean Energy Venture Summit Is Next Week. Here’s A Few Reasons To Get Excited.

When a reminder about the upcoming Clean Energy Summit hit my inbox, I jumped at the chance to make the case for why Austin should be excited about this event. And while I’d be the first to advocate the benefits of a clean energy community, this isn’t a rah-rah session. Let’s look at what’s happening in clean energy to see why this year’s gathering should accelerate Austin’s clean energy future.

The Economic Climate

Clearly this isn’t the best of times for the economy. Unemployment is unfortunately unwavering, wages are stagnant, and now there’s even a potential poster child for clean energy failure with Solyndra’s collapse.

Even so, Cascadia Capital showed cleantech investments totaled $1.42 billion over 113 deals during Q2 2011. While that’s down 10 percent from Q2 2010, one thing to note was the shift to the “capital-efficient energy sector,” displacing investments in biomaterials and biofuels.

Big Fish Getting Involved A Good Sign.

A good barometer for clean energy is to also look at what established companies are doing to get a seat at the negotiating table. Fortune 500 companies are often a cleantech company’s first customer. And if they’re not a paying client, they often provide needed infrastructure or partnerships in key markets.

As an example, GE is aggressively investing in energy startups, telling the Wall Street Journal its deal flow for 2011 is already at 20, easily eclipsing its 2007 figure of 11.

That’s also consistent with data provided by UMASS economics Professor Nancy Folbre, who points out private venture capital has quietly moved towards the clean sector, rising to 16 percent in 2010 from 2 percent in 1995.

The other footnote to GE’s activity, and one startups should pay attention to, is its approach to cultivating its clean energy portfolio. Besides obvious industry partnerships, it created the Ecomagination program, aimed at spurring ideas to help the environment. And while there’s a PR veneer to it, GE is no doubt getting a leg up on what’s happening in the trenches, an innovation-driven sneak-peek if you will.

 

Where Are The Opportunities? How Is Austin Positioned?

Austin’s tech lineage is strong, particularly in software and semiconductors. A good start would be bridging that expertise. If we look at comparisons to the rise of information technology in the United States, the picture is clearer.

BrookingsMark Muro at Brookings Institution sized up how things might play out for clean technologies, making just such comparisons.

“The aggregate green economy, which includes jobs in the public sector and waste management, is just under half the size of the IT producing industry, but measured by jobs, “cleantech” is similar in size today as the computer manufacturing industry (162,000) and roughly half the size of the semiconductor industry (370,000).”

Those numbers are compelling for a few reasons. One, it shows cleantech isn’t as far behind as some pundits would have us believe. Not to mention the computer industry isn’t exactly tearing it up these days. Can you say Tablets? Heck, the most exciting innovation I’ve seen lately is proof that our computers are doubling their energy efficiency every 18 months. I’d also bet those semiconductor numbers decrease as processors increasingly move to smaller, more mobile devices. Unfortunately for some that might correlate to less manufacturing and fewer jobs.

Mr.Muro capped of his post with another important observation.

“..many solar producers are classified in the IT-sector as semi-conductor manufactures; smart-grid technologies are also heavily IT-based. It’s therefore not unimaginable that, with a few strong years of growth and innovation, cleantech could be large enough to fuel considerable increases in aggregate economic growth.”

One of the takeaways here is the breadth and potential depth of clean ecosystem and markets. Famously, many Silicon Valley companies have ‘pivoted’ to capitalize on other markets. The point is, Austin’s clean energy companies have plenty of ways to innovate in a sector that’s tied to so many converging forces. Today’s motherboard producer might be tomorrow’s solar fabricator.

Cities, Infrastructure Provide Opportunities

Getting more hyperlocal, there’s other reasons to pay attention to clean economy activity, not the least of which is better paying jobs. Here’s a few charts I pulled from the Brookings’ clean economy report. The first one is self-explanatory. There’s growth in our own backyard.

clean_economy_job_growth_Austin

In the second image, you’ll notice that Austin ranks 36th when you compare the largest 100 metropolitan areas. But look at the growth. The growth metric moved Austin up a number of notches and also shows clean jobs grew more than 5% each year. Not too shabby.

And before you scoff at the annual wages, we’re looking at you Mrs. software engineer, it’s important to keep it in perspective. Wages are higher compared to all other Austin jobs Brookings analyzed.

Austins_Clean_Economy

One other notable piece in the Brookings report was the huge emphasis on energy efficiency. It was the largest category analyzed by Brookings, capturing 13 out of the 39 distinct segments. That’s called bulletin board material if you’re keeping score. (Sorry for the sports cliche, but it is football season)

It shouldn’t be that surprising. Old buildings, old schools, all of them could use some sort of energy upgrade. Couple that with new commercial and residential activity and it’s no wonder ABI Research projects cities will spend $39.5 billion by 2016 to become smarter. The other data point I like to point out is research from the University of Massachusetts that estimated roughly 15 jobs are created for every $1 million invested in energy efficiency.

City Mayors Get Behind Clean Energy And Efficiency

US_Conference_Mayors
Another positive sign for CEVS is having the eyes and ears of local government. That was echoed in the form a recent letter to Washington from U.S. Mayors, entitled a “Common-Sense Jobs Agenda.” Local officials analyzed parts of Obama’s Jobs Act, emphasizing how the clean economy can spur job growth and stoke the economic fires.

The group (Mayors) has been vocal recently, penning an earlier report (June 2011) from its national conference, in which 86 percent of the 396 cities surveyed saw building retrofits and clean energy conversion as economic priorities.

So whether you’re a startup, an investor or you just want to see Austin continue to evolve, there’s plenty of reasons to get behind clean energy. Get out and support these companies, your grandkids will thank you.

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