In my last blog, I discussed the U.S. Clean Energy and Security Act that passed the House and is now up for debate in the Senate. Legislation of this kind is key to understanding future technology trends and requirements, particularly around Green Tech. For example, its passage could spur greater investment in teleconferencing technologies, accelerate smart grid projects and increase interest in building automation tools.
Why? Because all of these technologies have the potential to abate carbon emissions, which will be critical to the efforts to achieve reduction targets. The "Smart 2020 Report" estimated that the Information and Communications Technology (ICT) industry could cut annual CO2 emissions in the U.S. between 13 percent and 22 percent through 2020, translating into gross fuel and energy savings of between $140 billion and $240 billion.
Getting down to specifics, transportation is one of the biggest causes of carbon emissions, with automobiles alone accounting for approximately 20% of the country's greenhouse gas emissions. Using technologies, such as Web and video conferencing and remote access solutions that enable employees to securely connect into their company's network to access the information and resources they need to do their jobs, can reduce daily commutes into the office and subsequent emissions.
The Consumer Electronics Association found that telecommuting in the U.S. saves nine to fourteen billion kilowatt hours of electricity annually, reducing gasoline consumption by 840 million gallons, which represents close to 14 million tonnes of carbon emissions. Combine this statistic with the U.S. Census Bureau's research that found 9 out 10 workers drive to work and 78% are solo drivers, and you can start to see the potential for significant reductions. Even if employees just telecommuted one day a week, organizations could reap great benefits. For example, Sun Microsystems has more than half of its employees (approximately 20,000 employees) working from home at least one or two days a week under their "Open Work" program, resulting in reductions of approximately 31,000 tons of CO2 emissions. InformationWeek's story.)
The same dramatic savings can be achieved with the roll out of smart energy grids that modernize power generation and distribution to make the overall electric system more stable. It hinges on smart meter and reliable networking technologies, among other solutions, to link energy sources and destinations to achieve a real-time understanding of supply and demand, and then facilitate more granular controls and automated responses to better manage the overall system. We have seen glimpses of its potential. As reported in the New York Times, the Department of Energy conducted a trial in Washington State that demonstrated 15% reductions in consumption due to the visibility, efficiencies, and control of the system made possible by the smart grid.
The same benefits can be applied to buildings (both commercial and residential), which account for 40% of the emissions in the U.S. Through the use of building management systems, metering technologies, sensors, energy auditing and optimization software all connected by the communication networks there is a lot of potential to eke out energy consumption efficiencies. For example, the European Union estimates that close to a quarter (70 billion of the 400 billion kWh) of the energy consumed in homes could be saved by these measures. And we can't forget the mecca of building inefficiencies - the data center, which represent a proverbial treasure trove of opportunity to reduce consumption through the deployment of more efficient technologies and architectures(that's a future blog unto itself).
The list of the ways in which technology can be applied to drive efficiencies and abate carbon emissions goes on and on. But this technology needs to be considered in the context of policy; just as policy needs to be considered in the context of its potential economic impacts; just as economic conditions need to be considered when developing and delivering technology, and so on. They are all tied together. Only when considered as an eco-system, will we have a sustainable model to effectively tackle clean energy and climate change issues.
While we may have had the weekend to try to digest the House's passage (by a close vote of 219-212) of the American Clean Energy and Security Act, I find there's still no consensus on what it means for the U.S. It's not just because it is hard to extract saliency from the 1200 pages that make up the bill, but rather because it's virtually impossible to understand what form the bill will ulitimately take if (and that's a potentially sizeable if) it gets through the Senate. (You may fondly remember the catchy Schoolhouse Rock song "I'm just a bill").
I was at the Silicon Valley Energy Summit yesterday at Stanford University, where experts debated almost everything about the bill, from whether the cap and trade system it introduces will be effective to whether the carbon emissions targets are going to be impactful. And after much discussion, no agreement could be reached on what form the bill would need to take in order to pass the Senate; questions of which were the biggest sticking points abounded. So rather than dwelling in the world of "what if," let's look at what it means today.
In a very broad nutshell, the Act as it stands now, also known as the "Waxman Markey" bill, uses a 2005 baseline to set reduction targets of 17% on carbon emissions by 2020 and 83% by 2050. These percentages would be used to cap "allowable" emissions, putting a limit on the amount of pollutants that an energy producer can emit into the atmosphere. These "allowances" will then be made available by the government in the form of permits, which can be traded on the open market (hence the moniker cap and trade system). Ultimately the cap will get "tighter" and the allowances fewer, with the intent of pushing up the price of emissions to motivate greater reductions. The benefit of a cap and trade system is that the outcome is predictable in the form of specific emisison reductions; the downside, is that the costs of achieving it are less so because they are set by the market.
With this backdrop, one of the biggest sticking points is that these targets don't align with the Koyoto Protocol, which is the international agreement that came out of the United Nations Framework Convention on Climate Change. The Koyoto Protocol uses a 1990 baseline to set reduction targets, which when compared to the Act's targets fall short by more than 5% of where the U.S. should be in 2020, if we had signed the accord (The Koyoto Protocol called for a U.S. reduction of 7% from 1990 levels; if we adjust the 17% reduction from 2005 levels, it translates to a 1.8% reduction from 1990 levels). These targets also are not in line with many European country's emissions targets (for example, the EU has set a target of 20% below 1990 levels by 2020).
Turning to the proposed cap and trade system, there are some that question the reasoning behind initially giving away many of the permits. There is also talk of whether a carbon tax would not be a more effective mechanism. The benefit of a tax is that it would fix the cost of carbon; the downside is there is no certainty of the outcome - depending on what that cost is, there is debate on whether a tax would be enough of an incentive for high pollutants to dramatically change. Still others question the impact that any new model might have on the recovery of our economic system.
So, when asked the question "what does this Act mean?" I think the only thing we can say for certain, is that it's a start. And it's an important one. Regardless of how much we may actually be doing to address climate change concerns (there are definite pockets of goodness that are recognized internationally, for example, in California, Colorado and the northeast), the U.S. as a nation has a perception problem that needs to be overcome. Timing is critical, as the December meeting in Copenhagen draws near. This is when the world, with President Obama at the table, will meet to try to come to agreement on where to take the Koyoto Protocol. The passage of this Clean Energy Act would help build credibility that our political machinations are ready and able to enact change, regardless of whether or not, it contains all the provisions and goals that advocates would like to see.
We have to start somewhere, and this is definitely a start.
The subject of "being green" can create emotions akin to those that bubble up when talking politics or religion. It can quickly devolve into talks on the melting ice caps and diminishing polar bear habitats, which may or may not be productive. The difference is "green" has a definite role in business, while politics and religion are probably best left outside the board room. Why does "green" matter? Setting aside issues around climate change - which is often where religious debates occur - from a practical standpoint, there are real business implications.
For starters, energy is a non-trivial operating expense, so reducing energy consumption can help reduce costs and free up resources that can go straight to the bottom line or applied to revenue-driving initiatives. In that same vein, when an organization pays attention to its energy consumption it is often able to identify and then rectify cascading operational inefficiencies.
Organizations may find that the legacy equipment or hodge-podge of devices that have proliferated over time present opportunities not only to reduce energy consumption, but also better leverage resources and maximize investments overall. By retiring equipment, integrating devices and collapsing layers in the infrastructure, organizations can achieve economies of space, power and cooling, as well as the simplification of their operations that reduces ongoing maintenance and management costs. And considering it is estimated that most IT departments spend 70 percent of their time on "lights on" activities, it's easy to see the impact that any resource savings can have in tipping the scales toward greater innovation.
Pending legislation is most likely going to force businesses to pay attention to "green" issues, whether they want to or not. In Japan, which has committed to achieving carbon dioxide emissions 6 percent below 1990 levels by 2010, businesses have already been adjusting to operating under carbon caps, which often relates to their overall energy consumption. And there are plenty of indications that the new U.S. administration will create legislation to force emissions reductions, whether it is a cap and trade system, a carbon tax or some other mechanism is still to be determined. (See Environmental Leader for a good summary on some of the proposed legislation.)
Finally, there is the non-trivial people aspect of being "green." The fact is to attract and retain top talent, companies need to be mindful of their impacts on the environment and do what they can to reduce them. No one wants to work for "that monster" of a company that's known for dumping waste into the river. For those companies that don't do their own manufacturing, it may seem as though there is little at stake, but employees and customers are increasingly mindful of how an organization monitors and manages all of their impacts. These include those under their direct control, within their own four walls, and those that are part of their extended influence, such as partners and those organizations that make up their supply, manufacturing and distribution chains.
Don't believe it really matters? Just ask someone from "generation Y" and you will most likely get a diatribe on how important it is to work for a company you can respect and that respects the world we all share. Just look at the study of MBA grads - the very bastion of business and enterprise - which found that a vast majority (97 percent) said, all things equal, they would forgo some financial compensation to work at a company they believed to be more socially conscious and responsible.
So, like it or not, to be competitive, businesses are going to need to be mindful of "green" and have some of the hard discussions around how they are going to approach their impacts, tackle potential problems and work to leave the world they operate in just as they found it, or better yet - improve it. And for the record, I like it!
As companies and individuals, we are all increasingly aware of our impacts on the environment - more specifically the ways in which our actions consume energy that result in carbon emissions or create waste that goes into landfill. And if we somehow forget, there are reminders everywhere we go. From the reusable bags sold in grocery stores, to energy efficiency labels on our appliances, to news stories on the latest energy-saving or recycling tips. Even oil companies are asking us to use less, advocating "human energy" instead.
And most of us, when given the option of doing something bad for the environment versus something good, will go for the good, more sustainable option. No hesitation!
But often it's not that easy - there are no signs that label things as a "bad option" or "good option" to help guide our decisions. So, we struggle through trying to figure out what we should be doing and which option is "better." I can't tell you how long I have stood in the aisles of my grocery store trying to figure out which detergent or cleaning product to buy - and am often still confused after making my choice whether I did the right thing (just Google "bleach" and you get a sense of the debates that can go on).
So when it comes to the role of the information and communications technologies can play in "greening" the planet, it is easy to see how the groans can escape and eyes glaze over. The potential complexity of items and issues that need to be waded through can seem overwhelming. But, I argue it's worth it, because the pay offs can be huge.
The "Smart 2020" report, commissioned by the Global eSustainability Initiative (GeSI), with analysis by McKinsey & Company, estimates that information and communications technology (ICT), of which the network is a key component, has the potential to reduce global carbon emissions by 15 percent by 2020. That should be enough to make someone want to sit up and take notice. If you haven't already seen it, check it out.
How would these technologies make this impact? McKinsey also released a detailed study, "Pathways to a Low Carbon Economy," that identifies over 200 opportunities for ICT technologies to reduce emissions, spanning multiple industries, including transport, energy and buildings, over many geographical regions. It's great reading if you are at all interested in how technology can help as we tackle some the world's toughest environmental problems.
Just think of the emissions that are saved when you work from home versus getting into your car and driving into the office. Or the efficiencies that can be gained with just-in-time merchandising systems that cut down on guessing at consumer buying patterns or the practice of over-stocking. Or the waste that can be minimized with better tracking and management over the distribution of goods (50 percent of food is wasted due to inefficiencies in the supply chain).
But it is also true that "green" IT is not all roses. The ICT industry does contribute to overall emissions during their lifecycle. And as more information and resources are digitized and the reliance on our connections to these online assets increases, those emissions will increase too. So there is work that needs to be done within the industry to ensure maximum benefit is derived from communications technologies, while minimizing their impact. In a nutshell, it requires the networking equipment vendors to look at their devices on a component, box design and broader solutions level to create greater efficiencies. The trick is to make sure the energy consumption of the communications infrastructure doesn't grow at the same rate as the exploding traffic growth its going to need to support. (Internet traffic is doubling approximately every two years)
My goal is to try to wade through all the noise in subsequent blogs and make sense of the interdependencies to determine ways in which we can all better use the network to create a more sustainable planet.