economy

Snow on the San Gabriel Mountains (photo by Jerry Thompson1, CC 2.0 license)

On December 30 of last year (six days ago), my wife and I were in Pasadena, CA visiting the Greene and Greene exhibit at the Huntington Library. It was one of those glorious and rare smog-free days in the LA basin. The air sparkled, you could see for miles in every direction, and mountain range after mountain range was visible - all the way out to the snow-covered San Gabriels. Nowadays, the air is only ever this clear around the Christmas holiday, when the freeway traffic is substantially reduced and a lot of factories shut down for the week. It got me thinking about how the future - say ten to twenty years hence - may be unrecognizable in both dramatic and mundane ways. For example, smog-free days may no longer be rare in LA, once the economy has shifted off fossil fuels. (I suspect the traffic will remain, unfortunately!)

Like LA’s typical skies, the energy future is murky in the short term - this year and 2010 - and I’ll leave those predictions to others. But the big trends - sustainability, carbon fighting, and technological breakthroughs - enable us to make better sense of the mid- and long-term. Therefore, In the spirit of the New Year, the incoming administration, and the tipping point that the world has come to about climate change and sustainability, here are ten things I believe are very likely to happen in the next ten years.

1. Residential solar PV will be cost effective in most U.S. locations (via a combination of price reduction, new design thinking, much more efficient homes, and a carbon tax on fossil fuels).
2. Home energy storage - via batteries, hydrogen reforming, fuel cells, or other technology - will be available and installed in 10% of new homes in California, for when the sun don’t shine.
3. More than 10% of new homes in California will be zero-net energy.
4. 50% of new residential construction in California will be zero-net energy “ready.”
5. The current LEED standards will be considered obsolete.
6. More than 20% of peak grid electricity will come from excess capacity from residential solar PV.
7. There will be general consensus that efficiency and frugality alone will not provide enough CO2 mitigation to prevent major climate change - we will need a technological solution to actually reducing atmospheric CO2 or artificially cooling the earth.
8. There will be a mid-priced carbon fiber, plugin hybrid passenger car in production that gets more than 75 miles per gallon. The company making it will be the “next GM.”
9. 10% of the cars on the road will be powered by 100% renewable energy and will be essentially non-polluting.
10. New technologies for capturing carbon from the atmosphere will be available, powered by excess solar capacity.

What do you think? Am I off base here? Too optimistic? Too pessimistic? Let me know in the comments. I’d love to hear your thoughts, challenges, and predictions for 2018.

Zero-net Energy Series Coming Up

Over the next few weeks, I will be publishing a series on “zero-net energy” residences (related to predictions 1-6 above). This area is about to explode. We already have all the technology, and some people have the experience, to build “zero-net energy ready” houses cost effectively. And although there’s currently a premium to get to zero-net energy, over the next ten years this premium will go to zero, and probably it will be cost-effective to get to positive-net energy - where the house is generating more energy than it needs! Talk about a world-changing situation - it really is possible to have energy too cheap to meter, but it’s going to come off our roofs, not from a nuclear plant or one of those imaginary fusion reactors.

Beatiful kale,not from a factory farm (photo by terren in Virginia, CC 2.0 licensed)

Nicholas Kristof in his NY Times op-ed today urges Obama to appoint a Secretary of Food:

A Department of Agriculture made sense 100 years ago when 35 percent of Americans engaged in farming. But today, fewer than 2 percent are farmers. In contrast, 100 percent of Americans eat.

The interests of big agriculture - the “factory farmers” - are really opposed to the interests of people. The “food” they raise wastes energy, causes huge environment damage, makes us unhealthy, and even leads to antibiotic resistant diseases.

On the other hand, real family farmers, who grow non-factory food on relatively small farms, are good for us, good for the environment, and good for our health.

If you feel this is a good cause, check out the online petition at www.fooddemocracynow.org, which calls for a reformist pick for agriculture secretary — and names six terrific candidates, including Chuck Hassebrook, a reformer in Nebraska and Fred Kirschenmann, an organic farmer and researcher in Pocantico Hills, NY.

For more on food policy and its relation to health, environment, and policy, check out Michael Pollan’s “Open Letter To The Next Farmer In Chief” in the October 12 New York Times Magazine. Eye-opening and inspiring, like all of his work.

Soyuz rocket (Photo by James Duncan, CC 2.0 license)

Following up on my post yesterday about the Detroit bailout, today I wanted to mention Tom Friedman’s op-ed in Sunday’s New York Times “The Real Generation X.” It is primarily about how Obama’s stimulus package should focus on preparing us, especially our young people, for the future, not saving old dinosaur industries like Detroit:

We not only need to bail out industries of the past but to build up industries of the future — to offer the kind of big thinking and risk-taking that transforms enormous challenges into world-changing opportunities.

But what I thought was both charming and an important call to action was specifically about the auto industry bailout - an audacious challenge to Obama and Detroit:

You want my tax dollars? Then I want to see the precise production plans and timetables for the hybridization of all your cars and trucks within 36 months. I want every bailed-out car company to move to hybrid electric drive trains, because nothing would both improve mileage and emissions more — and also stimulate a whole new 21st-century, job-creating industry: batteries.

I love the audacity of this idea. It’s a big idea, and breaks the commonly held “20 year” rule that says it takes 20 years for a laboratory discovery to make it into industrial production. But we’ve overcome that rule occasionally before, in moments of great crisis, haven’t we? The Manhattan Project and the conversion of U.S. industry to war production during World War II, and the Apollo program both accelerated the 20 year rule significantly.

Do you have other audacious suggestions for Obama, or examples of technologies that broke the 20-year rule? I’d love to hear about them in the comments section!

The best pieces I’ve read on the auto industry bailout/failure/bankruptcy are Bob Sutton’s giant flame, “Thoughts About Why GM Executives Are Clueless And Their Destructive ‘No We Can’t’ Mindset” and Umair Haque’s “Detroit’s 6 Mistakes and How Not to Make Them.”

While neither of these articles are about green energy or hybrid cars or sustainability per se, they both get at some of the big issues that industry and finance worldwide have to overcome for the the world to change as it must.

Sutton is a measured and careful writer, whose primary beat as a teacher (at Stanford School of Engineering, B School, and D School), business consultant, and writer, is using effective techniques for creating innovation, and using evidence to understand whether the decisions you make are taking you in the right direction. His post, in a measured and careful way, excoriates GM for decades of practices that go against those precepts:

I could list hundreds of management, cultural, and operational reasons why I believe that GM is such a flawed organization, but to me, a pair of root causes standout: Most of the senior executives — and many of the managers — are (1) clueless about what matters most and (2) suffer from a “no we can’t” mindset.

Haque, on the other hand, looks to the good future of what he calls “the new rules of 21st century business,” using Detroit as the example of the old rules.

Old rule: Choose evil. Industrial era business is unrepentantly and almost sociopathically evil: shifting costs onto others, while striving to internalize benefits. Detroit chose lobbying, marketing wars, and low-cost hardball - to always and everywhere try to socialize costs and privatize benefits. Never was this truer than Detroit’s lobbying against public transport throughout the 20th century. Why does public transport in the States suck? Because Detroit’s lobbying machine doesn’t.

New rule? Choose good. In the 21st century, every moral imperative is also a strategic imperative: doing good - for customers, employees, suppliers, or society - is a radical strategic choice that unlocks new pathways to innovation and growth. The opportunity cost of defending evil for Detroit was never learning how to choose good - and that’s a crucial mistake other auto players didn’t make. Tata chose to make a car that was accessible to the world’s poor. Porsche and BMW chose to invest in talent, people, and imagination. Honda and Toyota chose to invest in renewables and partnerships with the public sector. All opened new avenues to growth for an industry at the brink of extinction.

Tomorrow I’ll be posting again about the auto industry, focusing on Obama’s pledge on Saturday for “public works on a massive scale” and Tom Friedman’s Sunday op-ed, in which he suggests we tie any bailout to a commitment by the car makers to having their entire fleets running on hybrid power plants in 36 months.

In an October article Will Demand for Solar Homes Pick Up? Business Week reporter Adam Aston discovers that houses with built in solar energy collectors are bucking the general downward trend in the market.

Consumers recognize that green homes “save money month in, month out,” says Rick Andreen, president of Shea Homes Active Lifestyles Communities in Scottsdale, Ariz.

The combination of the renewal of the investment tax credits for solar installations, the ascendance of “green” lifestyles, and to some degree the target demographic of these homes, the number of solar houses in the U.S. is set to spike from 40,000 units. Several of the big home builders in Arizona, California, and other states are ramping up their plans for solar houses. Especially after the experience of Standard Pacific Homes in their Whitney Ranch, a development south of Sacramento. Sales had been soft, but when Standard Pacific put solar systems on a group of new models in the development, they sold out. Now they’re putting solar panels on all 304 of the homes.