Study: A green city needs deeper commitment

Posted on Sat, Oct. 10, 2009

 

By Diane Mastrull

Inquirer Staff Writer

 

If Philadelphia is to fully capitalize on the business-growth and employment potential of the nascent green economy, a deeper commitment is needed from government, nonprofits, and the private sector, a study released yesterday concludes.

Help is especially needed to train a workforce for these new jobs.

The Emerging Industries Project is a 93-page analysis of three areas of the green economy: sustainable manufacturing, construction and demolition waste recycling, and energy efficiency and building retrofits.

Other sectors are planned for future study, said Kate Houstoun, green-jobs coordinator at the Sustainable Business Network of Greater Philadelphia. It directed the study, along with the Green Economy Task Force, to help guide funding that has begun to pour from Washington and Harrisburg to grow sustainable businesses and create jobs.

“Hundreds of millions of dollars are being invested,” Houstoun said. “We want to ensure that those are wise investments.”

The research was largely based on input from 40 local businesses looking to thrive in the green economy. The industry sectors highlighted in the study were selected for their growth potential and the likelihood they would create family-sustaining jobs, especially for those who have the most difficulty landing work, Houstoun said.

The report cited deregulation of electricity generation and the increasing affordability of energy-efficiency options as driving business growth in the energy-efficiency/retrofit sector. What’s needed, it said, are workers with “the ability and willingness to learn new skills and technology.”

The city could play a big role in developing a vibrant construction and demolition-waste-recovery industry, the report said, by prioritizing bids for public projects from building contractors whose plans include such materials recycling. It also suggested adoption of an ordinance mandating such recycling for private-sector building and demolition projects.

But it was manufacturing that dominated the report.

While the city has lost 400,000 manufacturing jobs over the last four decades, that sector also represents “a new and exciting era” in Philadelphia, the report said. It cited the city’s infrastructure “from its workshop-of-the-world past” among the assets that position Philadelphia to catch “this wave of green manufacturing at the forefront.”

What the city lacks, the report found, is a workforce adequately prepared for green-economy manufacturing. Rather than mass-produced goods, the factories of the green economy will be required to produce highly specialized products for such things as solar panels and wind turbines requiring sophisticated equipment and processes and well-trained employees.

In addition to calling for the creation of more workforce development programs, the report’s manufacturing recommendations include:

Changing city procurement policies to give preference to local manufacturers.

Growing and finding ways to connect local supply and demand markets so that manufacturers can be assured of buyers for their goods.

Establishing a “green clearinghouse” of resources available to manufacturers for sustainability initiatives.

Because the report had input from a number of “key stakeholders,” including the city Commerce Department, the Philadelphia Industrial Development Corp., and Select Greater Philadelphia, Elliott Gold, the author of the manufacturing and waste-recovery sections, said he was optimistic that “our recommendations will actually be read and have higher likelihood for actual implementation.”

Among those intent on seeing that the report does translate into action is Natalia Olson-Urtecho, who serves on the city’s planning and zoning code commissions. She was also an adviser to the manufacturing and construction-waste-recovery portions of the report.

On manufacturing, Olson-Urtecho said, the study makes a case for stopping what has “eroded perilously” the city’s base of industrial-zoned land: the use of such tracts for commercial and residential development. Vacant industrial lots should be converted to clean technology parks, she said.

Stimulus Spending Fails to Follow Unemployment, Poverty

August 6, 2009

Written by Michael Grabell and Jennifer La Fleur as reported in ProPublica

Since the economic stimulus bill passed nearly six months ago, the Obama administration has repeatedly pledged that the money would reach middle America, seeping into the communities hardest hit by the recession.

But analysis of the most comprehensive list of stimulus spending to date found no relationship between where the money is going and unemployment and poverty.

Stimulus spending is literally all over the map, according to ProPublica’s analysis, which examined nearly all the contracts, grants and loans the government has reported awarding. Some battered counties are hauling in large amounts, while others that are just as hard hit have received little.

Take Trigg County, Ky. [2], where unemployment was 15.8 percent in June after the auto industry crisis rippled among suppliers. The stimulus has chipped in $1 million toward a biofuels facility and $30 million for a road project. According to the data, the county has been awarded $2,419 per resident.

But LaGrange County, Ind. [3], hasn’t fared so well. Despite having the identical unemployment rate, it has received only $33 a person. The community is still trying to recover after recreational vehicle plants shuttered last fall. Yet the stimulus has provided little more than the education and rural housing money that every county is scheduled to receive.

For months now, Democrats and Republicans have debated whether the stimulus is trickling down to communities that need it most. Much of the available evidence has been anecdotal, however, or based on studies that examined only transportation spending or a smaller list of projects.

The debate accelerates today as President Obama and Vice President Joe Biden visit Elkhart, Ind., and Detroit for a progress report on the economy that will again highlight the stimulus. What the available data show is that spending is uneven and sometimes runs contrary to measures of need.

Elizabeth Oxhorn, the White House stimulus spokeswoman, said much of the money thus far has moved through existing grant formulas that don’t take into account regional economic swings. But as some newer stimulus programs kick in — such as economic development grants and money to hire police officers — there will be more discretion in where to send dollars, she said.

“Where we do have opportunities to target assistance and programs that are meant to help hard-hit areas, we have done that, particularly in the hard-hit auto communities,” Oxhorn said.

First Look at County-Level Spending

Overall, the stimulus program will pump $787 billion into the economy, including tax cuts.

To assess what has happened so far, ProPublica combined all the data on the federal stimulus Web site, Recovery.gov, with reports from other government sources into a list totaling $120 billion worth of stimulus spending. Of that, ProPublica examined $55 billion that could be traced to the county level.

Getting a complete accounting of the stimulus is nearly impossible because some of its largest elements — tax cuts for individuals, increases in Medicaid and unemployment — aren’t being tracked to the local level or have yet to be distributed by the states.

While those programs clearly benefit individuals hurt by the recession, they aren’t intended to create or sustain many jobs, as with dollars aimed at infrastructure or schools. The 7 percent of overall stimulus funding in ProPublica’s analysis is the broadest, most complete snapshot of spending to date.

The largest categories are highway projects, Pell Grants for low-income college students and funding to school districts for disadvantaged students. The data also include airport grants, small business loans, housing assistance, nuclear cleanup and military construction contracts.

ProPublica tested the relationship between spending per person and several socioeconomic and demographic factors across more than 3,100 counties and equivalent areas, such as Louisiana parishes, to see if there was a statistically significant pattern in the way money has been allocated.

Nationwide, the results showed no significant relationship across counties when spending was compared against unemployment, poverty, race and income. Looking within state boundaries, spending did have a relationship to unemployment in a few cases — but not always in the same direction.

In New Jersey [4], for example, counties with high unemployment were more likely to get more stimulus money per person. The opposite proved true in Michigan [5], which has the nation’s highest jobless rate at 15.2 percent. A searchable list of county stimulus projects and demographics is here. [6]

Nuclear Cleanups Boost Rural Counties

The biggest winner so far — at nearly $12,000 per resident — is Thomas County [7], an area of 583 people in the Nebraska Sandhills. Unemployment there is 4.8 percent, about half the national rate.

Judy Taylor, chairwoman of the Village Board in Thedford, said the majority of residents consider the main stimulus project, a $7 million viaduct over the railroad tracks, a waste of money.

“Out here, there seems to be plenty of work for people,” said Janice Hodges, whose family owns a gas station nearby. “It probably could have been better used somewhere else.”

Overall, the counties faring the best in the stimulus program are sparse communities with a giant road project — such as Brooks County [8], Texas, or Hocking County [9], Ohio — as one expensive project to a county with few people can skew per-capita figures.

Other counties doing well are home to Cold War weapons plants. The stimulus includes $6 billion to clean up and dispose of waste in 12 states, and those were among the first contracts awarded.

Thanks to the massive cleanup of the Hanford Nuclear Reservation, Benton County, Wash. [10], has received more than $1.5 billion — second only to Los Angeles County’s [11] $2 billion in total funding so far. Benton County’s per capita spending: $9,300.

In metro areas, per-capita spending varies. LA County’s funding equates to $215 per person. New York County [12], which covers Manhattan, is receiving $610; its neighbor, the Bronx, is getting $185. Palm Beach County, Fla., is receiving $57, and Wayne County, Mich., epicenter of the auto industry meltdown, has received $183 per resident — about the national average for spending that could be tracked to the county level.

Some well-off counties are benefiting greatly.

Summit County, Utah [13], home to Park City and several upscale ski resorts, is one of the wealthiest counties in the country with a median household income of $83,000. Under the stimulus so far, it’s received $659 per person.

The money includes a $15 million interstate paving project, a $5 million bridge replacement, $1 million for sewers and sidewalks on Main Street in Coalville, and a $570,000 small-business loan to a Park City oral surgeon.

John Hanrahan, chairman of the Summit County Council, said the highway and bridge projects are in the rural part of the county and are mainly used by long-haul truckers rather than residents.

“It doesn’t necessarily help a farmer a lot for hay or gas,” he said. “It doesn’t affect the ski industry. We still have a significant portion of the population who are struggling with this recession.”

Hanrahan’s point underscores one of the basic uncertainties when determining who benefits from stimulus dollars. Money spent on a project doesn’t necessarily stay in the community. Construction workers often drive through several counties to job sites.

“People will live in one area and work in another,” said Mark Zandi, chief economist for Moody’s Economy.com. “Some county in a region could be getting more money but it could have a beneficial impact on other counties in the region.”

Obama’s Pledge: Help Is on the Way

When Obama launched the stimulus package in February, he visited Elkhart, a city that had seen its jobless rate skyrocket from a 5.8 percent in October 2007 to 20.8 percent this March.

The next day, he visited Fort Myers, Fla., which had been pummeled by the foreclosure crisis. Since then, administration officials have repeatedly visited auto industry towns to promise help.

Trigg County is one struggling area that has seen a flood of stimulus money. The county, on the Kentucky-Tennessee border, northwest of Nashville, has about 13,000 residents but received $32.5 million.

The county’s largest manufacturer, Johnson Controls, made car seat frames until it closed in March, leaving 560 people out of work. But right on the heels of that shutdown came $30 million in federal money for an ongoing project to widen U.S. Highway 68.

That stimulus money freed state funds already pledged to the $55 million expansion, protecting the contractor’s current workforce. State officials said it might have stalled without the stimulus.

The U.S. Forest Service awarded $2 million in contracts to clean up the Land Between the Lakes recreation area, which had been devastated by an ice storm. The agency also gave the county a grant for a facility that will convert wood to fuel to power a local hospital.

“When you tally it up and see the dollars that will come into our area through the stimulus, it is working,” said Stan Humphries, Trigg County judge-executive. “It doesn’t move as fast as we would like or reach as many families as we would hope for. But we feel that we are getting our share of the funds.”

Big Pots of Money Hard to Track

Edmund Phelps, a Nobel laureate who is director of Columbia University’s Center on Capitalism and Society, said it’s no surprise that spending so far doesn’t relate to characteristics like employment or poverty. To get money out quickly, the government relied on funding formulas that aren’t designed for an economic downturn. “It’s kaleidoscopic,” he said of the stimulus. “And it was all done very quickly.”

Some of the largest pots of money — tax cuts, food stamps and Medicaid assistance — go to more than 100 million individuals, and government auditors are struggling to estimate the local impact.

“Can you send a man to Jupiter? In theory you can,” said J. Russell George, the Treasury inspector general for tax administration. “We could in theory track every dollar, but you have to consider the expense and the time it would take to do that.”

For other types of spending programs — such as the $54 billion to stabilize state budgets and help local schools, or $6 billion to build water and sewage treatment plants — the money trail stops at the state governments, which are still deciding how to divvy up the funds. Only a fraction of the stabilization money has been sent to the states from Washington.

Other programs, such as transit grants, mask where the jobs are created. When the Akron, Ohio, transit authority bought 19 buses, for example, it created work at local rubber suppliers — but also at the plants that made the buses in Kansas, North Dakota and California.

“It’s difficult to take into account all of the different dimensions,” said Steve Murdock, a former Census Bureau director who is a professor of sociology at Rice University. “You have populations with various kinds of needs and local economies that reflect different kinds of conditions.”

Elkhart’s Poor Cousin Next Door

As Obama returns to Elkhart, he might want to consider LaGrange County just to the east.

While Elkhart County has been awarded about $169 per resident — a little less than the national average — LaGrange has received just $33 a person, according to the data.

Both counties saw their economies crater last year when high gas prices and tight credit made it difficult to sell recreational vehicles, a primary industry there. Dozens of factories, dealerships and suppliers shut down while thousands lost their jobs.

LaGrange County has several needed transportation and infrastructure projects, said Keith Gillenwater, the county’s economic development director. But so far, it has been shut out of any of the federal highway funding doled out by the state government.

“It’s frustrating,” he said. “To me there’s a lot of disparity that should be re-examined and taken into consideration.”

 

ProPublica is America’s largest investigative newsroom.

Study: US technology key to China and climate

H. JOSEF HEBERT | June 19, 2009 05:16 AM EST 

 

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WASHINGTON — Finding an economical way to capture carbon dioxide from existing coal burning power plants is key to getting China to reduce its greenhouse gas emissions as well as for U.S. efforts to combat global warming, says a study being released Friday.

The report by the Massachusetts Institute of Technology concludes that the United States cannot meet its targets for stabilizing greenhouse gases unless it finds a way to economically capture carbon dioxide emissions coming from existing coal-burning power plants.

coal plants generate about half of the country’s electricity and 80 percent of the nearly 2 billion tons of carbon dioxide released annually into the atmosphere from power production. China also relies heavily on coal for electricity production and in the last five years has been on a rush to build new coal plants _ none of them designed to capture carbon dioxide.

“There is no credible pathway towards stringent greenhouse gas stabilization targets without CO2 emission reductions from existing coal power plants,” says the report. Members of Congress, where a bill to limit U.S. greenhouse gas emissions could come up for a House vote as early as next week, were being briefed on the MIT report.

Carbon dioxide has been captured and put into the ground in relatively small scale projects _ mostly in connection with enhanced oil recovery, for years, but never in the huge volumes that would be needed to capture emissions from a large coal plant.

The MIT report says there are multiple technologies being explored for carbon capture, but the government still has not adequately supported carbon capture research and is moving too slowly to develop large demonstration projects to show that capturing carbon dioxide and injecting it into the ground will work at the scale needed.

The report, a copy of which was provided to The Associated Press in advance of a press conference Friday, says the federal government and industry need to “dramatically expand” its support for carbon capture research and development to the tune of $12 billion to $15 billion over the next decade. 

Such technology, if shown to work in U.S. plants, could get China to reduce greenhouse gases from its rapidly growing network of coal burning power plants, the report says.

“We’ve got to address the carbon emissions from our current fleet (of coal plants) and also have to think how the technology we develop can be applied in China,” Ernest Moniz, director of the MIT Energy Initiative and co-author of the report, said in an interview.

Together, the U.S. and China account for 20 percent of the world’s carbon dioxide from coal burning power plants, said Moniz. If China doesn’t address emissions from its coal plants “we really can’t address the climate issue in a serious way.”

The MIT report summarizes a consensus view of participants in a symposium sponsored by MIT’s Energy Initiative on the feasibility of retrofitting existing coal plants with carbon capture technology. Participants included 54 representatives utilities, academia, government, public interest groups and industry.

The report said about half of the U.S. coal plants _ most of those producing 300 megawatts or more of power _ may be suitable for carbon capture technology. Many of the smaller plants, accounting for about 30 percent of electricity production, can achieve emission reductions through increased efficiency, use of a mix of coal and biomass as fuel and other measures. Other plants, especially the oldest, may have to be replaced, said Moniz.

Wayne Leonard, chief executive of Entergy Corp., who was a co-chairman of the symposium, said the symposium’s conclusions should be viewed “in an international context” especially as carbon capture technology development relates to China.

“In the U.S. coal is the reality. But in China and India it is the future” and they won’t abandon it because of climate change, said Leonard. “But offering them a technological solution, a solution that we are actively developing and deploying ourselves on our own coal plants, would be something that has a far better chance of success in getting them to act.”

While Entergy, the New Orleans-based utility, relies on coal for less than 10 percent of its electricity production, it was a co-sponsor with MIT of the carbon capture symposium on which Friday’s report is based.

EPA: Recession Won’t Stop Clean Energy Revolution

ANGELA CHARLTON | May 28, 2009 05:01 PM EST |

PARIS — The top U.S. environment official says it’s time for the United States to shed its energy-wasting image and lead the world race for cleaner power sources instead.

After several years with a relatively low profile under President George W. Bush, the U.S. Environmental Protection Agency “is back on the job,” EPA Administrator Lisa Jackson told The Associated Press on Thursday during a trip to Paris.

What the EPA does domestically this year will be watched closely overseas. Nations worldwide are working toward a major meeting in Copenhagen in December aimed at producing a new global climate pact. The U.S. position on curbing its own pollution and helping poor countries adapt to global warming is seen as key to any new pact.

Jackson was in Paris for international talks on how rich governments can include global climate concerns in overall development aid.

She dismissed worries that economic downturn was cutting into aid commitments or investment in new energy resources. She said the United States should take the lead on clean energy technology, recession or no.

“We have to get in the race now _ and win it,” she said. “I don’t expect a moving backwards because of recession.”

At climate talks in Paris earlier this week, European environment ministers welcomed greater U.S. commitment to environmental issues under the Obama administration _ but said it still wasn’t aiming high enough in its targets for cutting U.S. emissions.

Jackson said a shift in the American mindset is only beginning.

Talking about energy efficiency and saying companies should pay to pollute _ “that’s a revolutionary message for our country,” she said.

For a long time, she said, “People didn’t even expect the EPA to show up” at events, much less set policies that could be seen as examples for the rest of the world.

“Now it seems like every day we’re rolling back or reconsidering a Bush era policy on clean air,” she said.

She said it was time for the United States to take a more active role in limiting chemical pollutants, after falling behind Europe in that domain.

The U.S. also has lessons to learn from countries such as the Netherlands, she said, after visiting its low-lying, flood-prone lands to study ways cities like her native New Orleans can better manage water.

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Obama calls for new era of energy exploration

NEWTON, Iowa — President Barack Obama, standing Wednesday in the shell of a once-giant Maytag appliance factory that now houses a wind energy company, declared that a “new era of energy exploration in America” would be a crucial to leading the nation out of an economic crisis.

With pieces of wind turbine towers as a backdrop, Obama touted the small manufacturing firm as a success and as a step toward reducing the United States’ reliance on polluting fuels. But as the president on Earth Day set a goal for wind to generate as much as 20 percent of the U.S. electricity demand by 2030, legislation to make that a reality faced a challenge back in Washington in the Democratic-led Congress.

“The nation that leads the world in creating new energy sources will be the nation that leads the 21st century global economy,” Obama said in a state that launched him on the road to the White House with a surprise upset over one-time rival Hillary Rodham Clinton.

“America can be that nation. America must be that nation. And while we seek new forms of fuel to power our homes and cars and businesses, we will rely on the same ingenuity _ the same American spirit _ that has always been a part of our American story.”

It’s an American spirit, though, that has been damped with economic downturn and financial crisis.

The president left Washington for a few hours Wednesday to visit this small Iowa town, which took a huge economic hit when Maytag Corp. shut its doors in 2007. The Maytag plant employed some 4,000 in a town of 16,000 residents in jobs that paid about $30,000 to $40,000 a year.

In its place is Trinity Structural Towers, a 90-person manufacturing firm that makes parts of wind turbines the president hopes to expand on land and at sea through the government’s first plan to harness ocean currents to produce energy.

O”Now, the choice we face is not between saving our environment and saving our economy,” Obama said. “The choice we face is between prosperity and decline. We can remain the world’s leading importer of oil, or we can become the world’s leading exporter of clean energy.”

In Washington, the president’s plan to increase alternative energy sources and create environmentally friendly jobs hit some snags despite Obama’s fellow Democrats controlling both chambers of Congress. Energy Secretary Steven Chu, EPA Administrator Lisa Jackson and Transportation Secretary Ray LaHood reinforced Obama’s message in testimony to a House Energy and Commerce subcommittee on Wednesday.

The administration’s draft bill is designed to help stem the pollution blamed for climate change by capping greenhouse gas emissions and reducing the nation’s reliance on fossil fuels. The goal is to reduce greenhouse gases by 20 percent from 2005 levels by 2020, and by 83 percent by mid-century.

The White House wants to see movement on the legislation by Memorial Day. To help that along, aides said the president plans to personally make his case that the costs of dealing with climate change can be reduced dramatically by adopting programs that will spur energy efficiency and wider use of non-fossil energy such as wind, solar and biofuels.

In Newton, Obama proclaimed that “once-shuttered factories are whirring back to life,” although the facility he toured is a shadow of what it replaced here about 30 miles east of Des Moines.

“Today this facility is alive again with new industry,” Obama said, while noting that “this community continues to struggle and not everyone has been so fortunate as to be rehired.”

Trinity now employs about 90 people _ hardly the replacement Newton so desperately needs.

“We’ll never have another Maytag,” said Paul Bell, a Newton police officer who also serves in the state legislature. “Maybe we shouldn’t have had a company here that the majority of people worked for. We put all of our eggs in one basket.”

Recognizing the challenges remaining in Newton and scores of towns like it coast-to-coast, Obama quickly added: “Obviously things aren’t exactly the same as they were with Maytag.”

With the same root in realism, Obama acknowledged the United States’ energy policy will not change instantly, given the country’s reliance on oil and natural gas.

“But the bulk of our efforts must focus on unleashing a new, clean-energy economy that will begin to reduce our dependence on foreign oil, will cut our carbon pollution by about 80 percent by 2050 and create millions of new jobs right here in America, right here in Newton,” he said.

But it won’t come quickly. The United States imports almost 4.9 billion barrels of oil and refined products annually. That is raw energy that cannot be replaced, one windmill at a time.

Instead, Obama urged bold thinking _ and spending _ to address climate change and energy supplies.

“So on this Earth Day, it is time for us to lay a new foundation for economic growth by beginning a new era of energy exploration in America,” he said to applause.

Obama also pushed personal responsibility, calling on every American to replace one incandescent light bulb with a compact fluorescent. The president also said the leaders of the world’s major economies will meet next week to discuss the energy crisis.

In Landover, Md., on Monday, Vice President Joe Biden marked Earth Day by announcing that $300 million in federal stimulus money will go to cities and towns to purchase more fuel-efficient vehicles.

___

Associated Press writer Brian Westley in Landover, Md., contributed to this report.

Reset: Making Sustainability the Centerpiece of Our Recovery

Daniel C. Esty

Posted April 20, 2009 | 03:50 PM (EST)  As reported in Huffington Post Green

Talk has begun to turn to the new economy that will emerge from the present collapse. General Electric CEO Jeff Immelt has suggested that the current crisis is not just a recession but a fundamental “reset” of how business gets done. And Time magazine has taken up this theme with a reset cover story. But there has been little discussion of exactly what changes – in principles and practices — should be made so that we rebuild our economy on firmer foundations. As we celebrate Earth Day this week, it is a good time to commit to “sustainability” as a centerpiece of a revitalized regulatory system.

For the past three decades, debate has raged over whether and how to deregulate. But while markets offer the prospect of promoting innovation, growth, and prosperity, few now believe that capitalism is self-correcting or that the private sector needs only minimal supervision. From the demise of Lehman Brothers and AIG to the skullduggery of Bernie Madoff and Allan Stanford, the signs of inadequate regulation and market failure surround us.

Two particular forms of market failure underlie the meltdown of the past year and make sustainability the right touchstone for our regulatory reset efforts:

• Externalized costs and risks
• Incomplete information

Both of these problems require that we rethink our approach to regulation — and re-establish the fundamentals of our economy on a more sustainable basis. And note that this principle should apply broadly, not just in the financial arena.

We need regulations which ensure that companies cannot structure their operations so that any upside gains accrue to their owners (or worse yet their managers), while risks or costs get shifted onto society as a whole. In the banking sector, rules against over-leveraging are urgently required. The recently released Turner Report in the UK outlines the first steps in this direction that should be taken. More generally, financial reporting rules must be designed to expose hidden risks and externalized costs.

We should likewise insist that companies which send emissions up a smokestack or out an effluent pipe cease their pollution or pay for the harm inflicted on the community. In our “reset” world, economic success cannot come at the price of harms imposed on the public in the form of contaminated air and water or risk of climate change. Thus while we lay the foundation for a more sustainable economy, let’s similarly adopt rules that provide for a sustainable environmental future. This will require overhauling the traditional approach to environmental regulation which countenances way too much in the way of externalities by offering “permits” up to a certain level of harm.

President Obama’s call for a price on carbon dioxide emissions represents a good first step in the “no externalities” direction. But let’s broaden the push and make polluters pay for all the harm they cause. If companies — and each one of us in our personal lives — had to pay for our waste and pollution, behavior would change. Putting a price on harm-causing creates incentives for care and conservation — efficiency and resource productivity.

More importantly, these price signals will drive a market response. Companies that are positioned to help others reduce their waste or cut their emissions will find customers eager for their goods and services. And where no easy solutions are available, harm charges will motivate “cleantech” innovation as inventors and entrepreneurs recognize the prospect of making money by solving environmental problems.

In parallel with a commitment to internalizing externalities, we must adopt transparency as a watchword. Market capitalism does not work without adequate information about economic actors. This reality has been understood in theory, but now needs to be advanced in practice. Government has a critical role to play in establishing the terms of disclosure about companies, markets, products, investment vehicles, and more. Public officials must also be empowered to ensure that disclosures are complete and accurate.

Well-designed reporting rules make it easier to spot externalized costs or risks and harder to hide malfeasance. Widely available metrics also facilitate benchmarking across companies, which offers a mechanism for assessing performance, highlighting leaders and laggards, and spurring competitive pressures that drive all toward better results. Studying the leaders offers an important way to identify best practices in everything from corporate strategy to pollution control. Likewise, outliers (such as those who make 10% returns year after year without fail) can be isolated for special review and scrutiny.

Such transparency would make it easier to refine our compensation systems to reward superior performance and real value creation. Carefully constructed disclosure rules could help, on the other hand, to unmask mere financial engineering, which should not be credited with outsized rewards.

There is a great deal of work to be done to re-establish prosperity across our country and the world. Smart regulation can channel corporate behavior and individual effort toward sustainable economic growth — that is durable because it rests on solid underpinnings not hidden risks or externalized costs.

Daniel C. Esty is the Hillhouse Professor at Yale University with appointments in both the Yale Law School and the Yale School of Forestry and Environmental Studies. He is the co-author (with Andrew Winston) of the prize-winning book, Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage (just released in a revised and updated edition published by John Wiley). A former Deputy Assistant Administrator at the US Environmental Protection Agency, Professor Esty advised the Obama Campaign on energy and environmental issues and served on the Obama Transition Team.

Obama to Buy Fuel-Efficient Fleet for Uncle Sam

 

By Kendra Marr

Washington Post Staff Writer
Friday, April 10, 2009; Page A12

 

President Obama yesterday announced plans to buy 17,600 American-made, fuel-efficient cars and hybrids for the government fleet, the White House’s latest gambit to steer aid to the nation’s beleaguered automakers.

This Story

• In Boost for Detroit, Obama to Buy Fuel-Efficient Fleet for Uncle Sam
• After Decades Selling Chevys, Dealer Switches to Nissan

The move came in a week when the administration accelerated efforts to revive an industry suffering it lowest sales in decades. Earlier this week Obama dispatched a team of 15 finance experts to Detroit to work with General Motors and Chrysler on restructuring efforts. On Wednesday, the Treasury Department began to release $5 billion in aid to parts suppliers. And yesterday Ed Montgomery, the president’s new adviser on auto communities and workers, visited Ohio to discuss what assistance might be needed there.

By June 1, the government plans to spend $285 million in stimulus funds to buy fuel-efficient vehicles from General Motors, Ford and Chrysler. The purchase is slated to include 2,500 hybrid sedans, the largest one-time purchase of hybrid vehicles to date for the federal fleet.

“This is only a first step, but I will continue to ensure that we are working to support the American auto industry during this difficult period of restructuring,” Obama said in a statement.

Each vehicle must have a better fuel economy rating than the one it replaces. The government aims to boost the new fleet’s overall fuel efficiency at least 10 percent.

The new cars are intended to reduce the government’s gasoline consumption by 1.3 million gallons a year and prevent 26 million pounds of carbon-dioxide from entering the atmosphere, the administration said.

The General Services Administration, which is buying the cars, will also pledge $15 billion to test advanced technology vehicles, such as compressed natural gas buses and all-electric vehicles, in the federal fleet. These orders will be placed by Sept. 30.

“We look forward to showing him the many GM vehicles we have that will fit this purpose,” GM spokesman Kerry Christopher said. Industry-wide, car companies expect to sell less than 10 million cars and trucks this year, the lowest level in more than two decades. Consumers are avoiding showrooms, and major rental car companies have cut back on fleet purchases as businesses and vacationers cut back on travel.

In the first quarter, 271 U.S. auto dealers went out of business, according to the National Automobile Dealers Association. The association estimates that about 1,200 dealers — primarily sellers of domestic brands — will close their doors this year.

Although Obama’s purchases will give U.S. automakers some needed sales, it won’t bring the industry back up to the boom years when Americans bought around 16 million vehicles annually.

“On the big scale, no, that’s not going to change anyone’s bottom line,” said George Augustaitis, an analyst for CSM Worldwide.

But it is symbolic.

“This is a welcome and important step that reflects the president’s commitment to the survival and revitalization of the domestic auto industry,” Rep. Sander M. Levin (D-Mich.) said in a statement.

The administration has already loaned GM and Chrysler a combined $17.4 billion, and has offered more if the companies can cut debt and reduce labor costs. It continues to work to increase the flow of credit to potential car buyers and dealers. The president has also pledged to work with Congress to pass a “cash-for-clunkers” bill, which would offer cash incentives to people who trade in their older, fuel-inefficient cars for cleaner models.

During his campaign, Obama spoke of his desire to convert the White House fleet to battery-powered vehicles within the year, as security permitted, and by 2012 he said he wanted half of the cars the federal government buys to be plug-in hybrids or electric.

Meanwhile, Cleveland Mayor Frank G. Jackson met with Montgomery yesterday and emphasized his desire that local businesses that benefit from government help reinvest in the Cleveland economy. “Those dollars turn around the economy multiple times and help support small- and medium-size businesses that are on the brink,” he said.

Montgomery promised he would bring that message to Washington.

“He understands, he understands,” Jackson said.

Pentagon looks at green options

THE Pentagon may seem an unlikely promoter of alternative energy, but the biggest consumer of oil in the United States is looking at ways to become just that by partnering with private firms.

From correspondents in Washington, USA

March 29, 2009 12:33pm

 

“When you don’t use as much fuel, not only does it not cost you as much, but it also saves lives and injuries of those people who would have to deliver fuel through hostile territory,” Assistant Army Secretary for Installations and the Environment Keith Eastin said.

Despite reducing its overall energy consumption by five per cent between 2005 and 2007, the US military spent $US13 billion ($18.46 billion) on energy in 2007 and requested an additional $US5 billion ($7.1 billion) due to a spike in oil prices.

The stakes are high, with the army estimating that reducing fuel consumption by just one per cent translates to about 6400 fewer soldiers in fuel convoys, a favourite target of insurgents in Iraq and Afghanistan.

All of this has added up to renewed urgency for the Pentagon to reduce its energy consumption. It is already federally mandated to obtain 25 per cent of its electricity from renewable sources by 2025.

Hundreds of small companies are expected to benefit from the military’s green energy push, developing everything from alternative fuels to electric vehicles and efficient power generators.

One low tech initiative that has yielded surprisingly big results is spraying tents with a layer of hard foam. The insulation helps maintain steady temperatures inside the tents, reducing fuel consumption for heating or cooling by 50 per cent and saving an estimated 100,000 gallons of fuel or $US2 million ($2.84 million) per day.

“Each gallon you save is a ton of money that can be used elsewhere, either at the installation or fighting the war,” Mr Eastin said. He estimated that a three-dollar gallon of fuel can end up costing up to $US28 ($40) on the battlefield after factoring in transportation and security costs.

With a staggering $US7.7 billion ($10.93 billion) spent last year on aircraft fuel alone, the US Air Force is the military’s biggest energy consumer.

It is purchasing renewable energy, reducing aircraft loads and certifying its entire fleet to fly on a 50/50 synthetic fuel blend by 2011.

“Our efforts to drive a domestic source of synthetic fuels is a piece of the puzzle to be more secure as a nation and as the air force,” said Kevin Billings, acting air force secretary for installations, environment and logistics.

Our Perspective:

It is good the government is willing to take the lead with this issue. Too much has been spent on business as usual. By setting a good example the public wll soon follow. Thet will also be looking for alternative solutions to help reign in cost.

Let us know your thoughts? You may leave a comment or email george@hbsadvantage.com

Obama Administration Says Energy Reform Not Negotiable

By Philip Elliott  from AP

WASHINGTON — President Barack Obama’s aides say the administration will work with Congress on his budget proposal, but energy independence is not subject to wheeling and dealing.

Obama planned to make the case Monday for a budget proposal that invests billions in research designed to reduce climate change and guarantees loans for companies that develop clean energy technologies. Obama has tied his first budget proposal as president to a renewable energy program to help the United States move toward energy independence.

In a fact sheet released Monday, the White House said Obama’s meeting with “clean energy entrepreneurs and leaders of the research community” will outline an energy program that draws on the administration’s $787 billion stimulus package for $39 billion at the Department of Energy and $20 billion in tax incentives for clean energy.

It also disclosed that his 10-year budget proposal contains spending of nearly $75 billion to make permanent existing tax cuts for energy research and experimentation.

“The president is prepared to negotiate on this budget with folks like those at this table … and the president’s been very clear about this, as has our budget director: We don’t expect these folks to sign on the dotted line,” said Jared Bernstein, Vice President Joe Biden’s economics adviser.

“What we do expect and what we are going to stand very firm on _ because this president, this vice president have made this clear _ that there are these priorities that brought them to the dance here: energy reform, health care reform, education, all done in the context of a budget that cuts the deficit in half over our first term.”

Obama and his aides plan an aggressive push to deliver a $3.6 trillion budget that contains many of his campaign promises. He plans to speak about the energy portion of his budget at the White House on Monday, highlighting research and development in clean energy. He also will highlight how part of the $787 billion economic stimulus package already is working to create much-needed jobs.

Obama plans to follow that with a prime-time news conference on Tuesday. The president is back in campaign mode as he stumps for a budget proposal that, so far, has faced opposition from members of both parties.

Democrats worry the plan inflates deficit spending; the Congressional Budget Office estimates Obama’s budget would generate $9.3 trillion in red ink over the next decade. Republicans say it would impose massive tax increases, including on polluters; Washington could raise billions from companies that use unclean fuels, what GOP leaders called a carbon tax.

Obama said the country must provide incentives for so-called green businesses.

“I realize there are those who say these plans are too ambitious to enact,” Obama said in his weekly video and Internet message. “To that I say that the challenges we face are too large to ignore. I didn’t come here to pass on our problems to the next president or the next generation. I came here to solve them.”

Bernstein spoke Sunday on ABC’s “This Week.”

Despair over financial policy

Written by Paul Krugman  NY Times

The Geithner plan has now been leaked in detail. It’s exactly the plan that was widely analyzed — and found wanting — a couple of weeks ago. The zombie ideas have won.

The Obama administration is now completely wedded to the idea that there’s nothing fundamentally wrong with the financial system — that what we’re facing is the equivalent of a run on an essentially sound bank. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved.

To this end the plan proposes to create funds in which private investors put in a small amount of their own money, and in return get large, non-recourse loans from the taxpayer, with which to buy bad — I mean misunderstood — assets. This is supposed to lead to fair prices because the funds will engage in competitive bidding.

But it’s immediately obvious, if you think about it, that these funds will have skewed incentives. In effect, Treasury will be creating — deliberately! — the functional equivalent of Texas S&Ls in the 1980s: financial operations with very little capital but lots of government-guaranteed liabilities. For the private investors, this is an open invitation to play heads I win, tails the taxpayers lose. So sure, these investors will be ready to pay high prices for toxic waste. After all, the stuff might be worth something; and if it isn’t, that’s someone else’s problem.

Or to put it another way, Treasury has decided that what we have is nothing but a confidence problem, which it proposes to cure by creating massive moral hazard.

This plan will produce big gains for banks that didn’t actually need any help; it will, however, do little to reassure the public about banks that are seriously undercapitalized. And I fear that when the plan fails, as it almost surely will, the administration will have shot its bolt: it won’t be able to come back to Congress for a plan that might actually work.

What an awful mess.

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