CGI, Day 4 – Clean Technology and Smart Energy: Deploying the Green Economy

Moderator is John Holdren, Science and Technology Advisor to President Barack Obama and Director, White House Office of Science and Technology Policy. Participants are:

• Nadia K. Al Dossary, Chief Executive Officer and Partner, Al Sale Eastern Co. Ltd
• Gary Hattem, President, Deutsche Bank Americas Foundation, Deutsche Bank
• Tri Mumpuni, Executive Director, IBEKA
• Conrad van Oostrom, Chief Executive Officer, OVG Real Estate

Ms. Al Dossary is introduced as one of the few, if not the first, female business leader in Saudi Arabia. (See her comments later for a variant opinion,)

Mr. Holdren opens by speaking of the three levels of technology adoption:

1. Barrier Busting: “overcoming obstacles to the use and diffusion of technologies” that are available today.
2. Incentivizing: changing the economic or the regulatory landscape to make socially- and environmentally-attractive technologies more attractive.
3. Inventing and Improving: R&D demonstration that makes technologies with improved characteristics and lower costs.

Mr. Hattem, whose duty is “to direct capital to people and places that are currently outside of the economic mainstream,” means that his attention focuses on rural areas, and works with a data focus to ensure that the returns are realized.

Ms. Al Dossary, an English Literature major who is very fond of Disneyland, found herself moving the business into new directions, concentrating on “the carousel of progress,” and noting that she has often failed but ends up ahead.

Mr. van Oostrom moved primarily into green building technologies after meeting with Al Gore. Discovered that there was abundant information about how to build green buildings, and moved to that space.  Decided to make buildings “for half the money, in half the time, and completely carbon-neutral” after finding abundant support for the transition within his firm—middle and upper managers enthusiastic about being at the forefront.

Mr. Hattem notes that the emphasis on building development has to be on energy efficiency. (He points out that NYC is relatively energy efficient even now)  Concentrated on the transition in lending and investment practices in NYC and applied the information gained there to developing structures and investments in green technology.  Seeing even residential buildings being developed with expectation of cutting energy demand by 30% or more through technology such as using solar panels to provide hot water.

Ms. Al Dossary emphasizes that it is necessary to link green technology with people’s interests, not the glories of the technology. We are presenting it as reducing electricity and water bills and providing a better environment for your kids. Competition abides: the more competition in the marketplace, in the presentation of the products, improves results.

Mr. Holdren notes that Ms. Mumpuni has been working from the ground up, and her effort has often been more successful than the governments that have been pushing from the top.  Ms. Mumpuni takes a “community-based approach”; what has worked have been to utilize the local resources—especially water—with local people developing and maintaining (and therefore having a sense of ownership of) the microhydro technology.  One of the things she noted is that the microhydro technology leverages the existing environment—maintaining the local forests instead of cutting them down enabled leveraging the existing terrain without having to engage in destruction, creative or not—and therefore makes adaptation easier.  She has been expanding and adopting this practice into the rest of the Asia-Pacific area and Africa.

Ms. Mumpuni re-emphasizes that development and dissemination of Green Technology must be done on a community basis.  This is, she says, essential to the small (ca. 1,000 household) villages that are attempting to move to greener technologies.  She is later asked what effect those community developments have on the larger utility companies in Indonesia.  She noted that the initial reactions—once the communities became prominent enough—was that the large companies had government support to force the communities to buy power they did not need.

However, as a woman, she was able to outwait the system.  Over the next four years, she got the government to start buying power from the communities, and the result over time was that the government and the utility companies (which no longer needed to maintain so many long, “technologically inappropriate” power delivery lines) realized that the “creative destruction” (not her phrase) could be good for everyone. (AB readers note especially: the restriction in this case was first supported by the so-called “private enterprise.”)

Mr. Holdren notes that in many cases the pitch for alternative energy is “you will have to pay more, but the externalities are worth it.”  Conrad van Oostrom notes that “the real economics” (Mr. Holdren’s phrase) works well for new buildings, where you can (for instance) “bring forward” the energy savings over the next ten years. (Businesses understand Present Value.) We are seeing that many new cities in China and India are being built using green technology.

The difficult part is retrofitting buildings, where there have to be multiple negotiations with existing tenants. Even there, though, it is much less difficult to do that when you can give them “a real guarantee” that their future energy costs will be reduced by 30-50%.

Mr. Holdren then asks Gary Hattem to provide a macroeconomic perspective on what retrofitting and green technology development is and will be doing for the job market.  Mr. Hattem notes that they are doing detailed studies of how the ARRA dollars generally and are working to align policies to workforce training for where the jobs actually will be.

Mr. Holdren asks Ms. Al Dossary if she, as “a business leader and a woman,” is an inspiration to other women in Saudi Arabia and the Middle East. Ms. Al Dossary notes that women in Saudi Arabia and the Middle East are “not really interested in [being on the] media that much. There are so many successful stories for women.…I’m just in front of the TV; that’s the difference.”

António Guterres, the UN High Commissioner for Refugees, asks about the “Small is beautiful, big is necessary” conceit, especially the last part. He notes that they had a very successful experience installing solar energy in a refugee camp, but did not see any expansion of solar into other areas; no one overcame the institutional and cultural issues.

Ms.Mumpuni notes that they need to create trust be able to address the needs of the community.  She always tells them in advance that there must be continual community participation, from the planning to the maintenance, or her organization cannot risk its reputation on working with them.  Effect is that the community has customization and ownership, which goes a long way to overcome those issues.

Remy Chevalier of the Environmental Library Fund asks about the lighting of green technology buildings. Mr. van Oostrom notes that, in Western Europe, the issues of heating and cooling have been solved entirely for purposes of a “green building.”  The issue is lighting.  There has been some progress from the use of smart glass technology.  One thing that has helped in their buildings is to automatically have the lights go off at 6:30pm in the commercial buildings, while allowing people to press a button to relight the area. (I’ve worked in buildings that were set up that way in the U.S. as well.)  This simple move cut electricity costs by about 20%.  Mr. Hattem notes in that context that 1.6 billion people in the world do not have access to electricity, and that solar has become “an access point” for both the technology and distribution.

Ms. Mumpuni is asked about costs.  She notes that production via microhydro costs depend on geographic situation: from about $800 per Kw installed to as $4,000 per Kw installed.  But again there have been breakthroughs that are reducing that cost steadily: now producing a “community hydro” that produces ca. 500 Watts –enough energy to power to run five (5) to ten (10) houses—for about $1,500.

Ms. Al Dossary—asked to discuss possible obstacles to expansion into the “new clean energy” in Saudi Arabia—notes that, “Nothing is everlasting, not even water” and urges people to investigate all types of alternative energies, even as the Saudis are.

An audience member asks about the best retrofit idea.  Mr. Hattem notes that the best innovation is not going to come from the technology, but from the users and the culture.  “Technology is there now.”  Mr. van Oostrom says that it is “all about business models” now; the technology is there and ready; have to convince current residents to do things.

Ms. Mumpuni notes that in the developing world, the people need the technology: lights for children to read, to be able to cook (see the Cookstoves Initiative announced on Day 2; for a dissenting view of that initiative—though not the idea that people need energy to cook—see this guest blog at Bill Easterly’s Aid Watchers).  In that context, people use energy as they need it, not because it is accidentally left on.

Mr. Holdren notes that about one-third of what we need to do in the next twenty years is such “low-hanging fruit” that we should be able to realize it.  Putting a full price on carbon emissions would reach the next third.  It is the final third—new innovations,