City of Portland Best Business Awards
Hilton Hotel, Portland, Oregon
April 20, 2001
First, my congratulations to the well-deserving winners of Portland’s Best Business Awards. It is a great honor for me to be present here to join in saluting you all: CNF, Inc.; Consolidated Metco; Albertson’s, Inc.; Norm Thompson Outfitters; 200 Market Associates and Progressive Investment Management. My warm congratulations to you all.
It is over 20 years ago that I published Politics of the Solar Age. I fearlessly predicted that once economics quantified social and environmental costs and accountants internalized them on company balance sheets, then the great transition from fossil-fueled industrialism to the energy-efficient, sustainable Age of Light would accelerate. (See Figure 1)
Today, we see the contours of the new sustainable economies more clearly: the marriage of new knowledge, technologies and materials with greater understanding of eco-systems and humanity’s place within Nature. Paradigm shifts of this magnitude generally take a generation or more. Yet, the past twenty years has brought amazing progress – despite perverse subsidies to waste and unsustainability, less-than-full-cost pricing, uncomprehending media and politicians. Terms like demand-side management, eco-efficiency, life-cycle costing and even sustainability, are entering the language.I remember when I used to visit Oregon in the 1970s and 80s – to meet with Governor Tom McCall, the editors of RAIN magazine or teach in Eugene at the University – we often felt like the shift to sustainability would take a hundred years. So it’s a thrill to be back today and see Oregon still leading the nation, and Portland honoring its most exemplary Best Businesses who are showing others the way.The model of development that I have advocated goes way beyond economics and the usual GNP measures of growth, which ignores social and environmental costs, while adding (rather than subtracting) expenditures on pollution control and cleanup as more useful production. (See Figure 2, GNP Problems). Similarly, development models are in disarray. My own model sees development as the evolution of human societies’ understanding of three basic resources: matter, energy and information and the substitution patterns toward greater thermodynamic (not economic) efficiency. (See Figure 3, Models of Resource Use) Thus, societies’ key resource is information and the extent to which its culture educates and nurtures its human and social capital, and applies its knowledge base to managing its material and energy resources. An example is the evolution of fossil-fuel technologies since 1850 from solids and liquids to gases. (See Figure 4, The Shape of Things to Come).Yet, the energy deregulation mess in California and the energy policies coming out of Washington, portray a so-called “national energy crisis.” These policy errors indicate that the new post-industrial paradigm is still obscured by “rearview mirror” views and many special interests in the unsustainable status quo. Even the hotshot venture capitalists that threw all that money at the dot.coms didn’t get it – nor did the banks that threw billions at telecoms. They, like the young “New Economy” entrepreneurs, forgot that their communications and computers were gobbling ever more electricity. A “virtual” gallon of gasoline won’t run your car! In fact, some analyses now suggest that the much-vaunted US productivity increases of the late 1990s were mostly the effect of cheap, $10 a barrel oil. Even today, only a few venture capital firms understand that the Sustainability Sector – renewable energy, demand-side management, microgeneration, fuel cells, wind, solar, better batteries, flywheels, hydrogen and co-generation – IS the next big thing!Today, the link is clear between the information economy, better computerized controls and maintaining an efficient, reliable and sustainable energy sector. Beyond all the “pure plays” in the renewables sector, the 99.999% electric supply reliability criteria and efficient building architecture are all even wider opportunities. They include systems approaches to more efficient urban design, infrastructure planning, transportation and land-use – all of which can deliver multi-billions of dollars in efficiency improvements. And the esthetics of these systemic designs improves real estate values too. Recycling and re-use are booming – particularly in Europe where “take-back” laws have pushed companies into greater profitability via reconditioning and resale of scores of once-throwaway products. And barter – the ultimate in sustainability – is now high tech and electronic, from global to local. Barter improves the lives of millions of poor people in communities and informal sectors where banks and even microcredit do not reach. Countries that lack foreign exchange, now can trade their commodities with each other directly – as some OPEC members are doing.Yet most economies and tax regimes still encourage waste, sloppy manufacturing, ill-designed products and subsidize supply-side over demand-side solutions. For example, many of the corporations who contributed to President George W. Bush’s campaign, see him on the wrong side of the energy issue, including Ford, General Motors, Enron, BPAmoco, Shell, Alcoa, Toyota, Georgia-Pacific, Dow and Eastman Chemical, to name a few. Bush’s energy plan is fossilized from an earlier time – pushing “clean coal,” “safe nuclear plants” and other oxymorons – while jawboning OPEC and pushing to open up the Arctic National Wildlife Refuge to oil drilling. Never mind that most of these proposals will take many years to result in new supplies. And OPEC – back under the smart Venezuelan leadership that initiated the oil cartel 40 years ago – is not about to experience another ruinous glut that led to $10 a barrel oil. OPEC has learned that lesson and will stick to its price band of $22-$28 per barrel (still less in constant dollar terms than their quadrupled price in 1973). In fact, OPEC, following the strategies of BP and Shell, is currently debating its own energy transition to renewables while assessing emissions trading, environmental impacts and climate change. Whether or not the USA is involved, I see the Kyoto Agreements going forward – since emissions-trading has already caught on in a big way. Billions of dollars of carbon credits have already been traded and new trading facilities are online. Big players like Enron, are trying to re-educate George W. Bush, Dick Cheney and all of the other petroleum-friendly members of his administration. Now is also the time for all the companies and trade associations representing the Sustainability Sector to help the Bush Administration to shape a 21st century energy policy. First, let’s repeal the subsidies on coal, oil, nuclear and energy-waste in every sector. Then let’s restore the cuts proposed in renewables, research and better design, while tightening up the energy and fuel-efficiency standards for cars, trucks, SUVs, as well as household appliances, machinery and buildings. Energy analysts must continue teaching economists about thermodynamic efficiency.Now is the time when energy-efficient houses, stores, public buildings and sub-divisions will yield huge cost savings – since overall energy prices are not going down in the foreseeable future. I am betting on a more costly energy future – because energy has been under-priced for decades. Indeed, high energy prices, while painful, will be beneficial to our economy, as they will accelerate investments in efficiency, renewables and sustainability. I’ve also put my money where my mouth is. My personal investments are weighted in the Sustainability Sector: from solar, wind, microgeneration and eco-efficiency to fuel cells and electronic barter. I look forward to a hydrogen economy for my grandson – with natural gas providing a cleaner bridge to this kind of future.I hope this Age of Light will also be a new Age of Enlightenment – as we learn more about our precious planet. We are already aware that a growing GNP produces goods – but also “bads”, and “illth” along with the wealth. We know that wealth doesn’t equate with money. That’s why I have worked for 20 years to create better scorecards of progress beyond GNP. For many years I have served on the Advisory Council of the Calvert Social Investment family of mutual funds. Now, Calvert and I, after 5 years of research, have jointly created the Calvert-Henderson Quality of Life Indicators – a new tool for assessing our country’s progress. (See figure 5) Our 12 Indicators: Education, Employment, Energy, Environment, Health, Human Rights, Income, Infrastructure, National Security, Public Safety, Re-Creation and Shelter, are un-bundled for full transparency and democratic participation and each uses metrics appropriate to that field. Some Indicators are measured in money – others are not – because we don’t believe that all the diverse aspects of quality of life can be expressed or weighted together in money terms. As economies, both local and national, move toward such broader scorecards of progress and fuller accounting of social and environmental costs and benefits – I expect that Sustainability Sectors will grow as they help underpin more efficient, healthier, more prosperous economies.
Again, my congratulations to you all and my thanks to the City of Portland for its continued leadership.