Monthly Archives: March 2007

A big Green Opportunity: 600 Sustainable Cities in India

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The semi-finals (Asia) of the Global Social Venture Fund was recently held at the Indian School of Business, Hyderabad. As part of the session, one panel discussion was on “Business Strategies for Inclusive Economic Growth”.

This discussion was moderated by my friend Dr. Reuben Abraham and the panelists were Dr. Atanu Dey (another good friend), Mr Varun Sahni of Acumen Fund, Mr K Krishan of Lalavalli Power Project, and Arjun Uppal of IFMR.

Atanu writes about his ideas relating to India’s economic growth on his blog.

First, he lays out the problem in Indian in relation to economic development.

You and I—and those who were gathered at the GSVC event—are exceptional. We live in cities, engage in non-agricultural work, and earn far more than what the average Indian earns. The vast majority of Indians live in villages, and eek out a meager existence from agricultural related labor. We tend to forget the fact that our economic prosperity and our lives in urban India are correlated. Therefore if the goal is India’s economic prosperity, somehow the 700 million living in some 600,000 villages of India have to have the same option of living and working in urban India on jobs in non-agricultural sectors.Economic growth is both a cause and consequence of urbanization. The reason is simple. Cities are the engines of growth. The high population and population densities of cities reduce “transaction costs.” Services are cheaper (as compared to the same in rural areas) because infrastructure is less costly because of scale economies. That is, infrastructure have high fixed costs and investment in infrastructure is lumpy. The high aggregate demand and supply of infrastructure in urban areas makes lower prices possible.

So the logic so far: economic development of India requires economic growth. Cities are engines of growth because there is a bi-directional link between urbanization and growth. Therefore the rural people have to be urbanized for India’s development and growth.

His main point is that India’s economic policy has focussed on the development of rural areas and not on rural people. That is a major insight. Once the problem is clear, then a solution can be presented.

In a second post, he provides the opportunities that large problems create.

Where there be challenges, there be opportunities. That is a mantra well-known to every entrepreneur. That immediately implies that India is truly the Land of Unlimited Opportunities.

It seems to me that the answer to rural development lies in urban development. Paradoxical but true.

Imagine building absolutely new cities from scratch for 600 million people. Imagine 600 new large cities of one million people each. Imagine building houses, schools, shopping centers, parks, factories, roads, public utilities, hospitals, libraries, . . . And now imagine doing that using the best urban planning known to humanity. Take whatever humanity knows about the best way to get things done, and use that to design and build cities that can develop and sustain the people for generations.

That is the greatest opportunity we have – of building from scratch – which is not available to any developed economy. Take for instance the US. US cities are the notoriously inefficient in terms of resource use and sustainability.

What we in India need is not so much hard resources as we need a bold compelling vision. We need the vision to look beyond the here and now, and see the future. If we have a bold, coherent, inspiring and realistic vision of the future, it will serve as the guide to purposeful action. I bet you are justifiably skeptical of my claim that we can work miracles. But I will argue in a future post how it can be done, and done with ease. Stay tuned.

Atanu is on to something this time. It pays to listen to what he has to say. Do read the entire post and the analogy in Telecommunications for understanding the leapfrogging concept.

(If you are interested or want to know more about Leapfrogging, check out the Leapfrog 101 by James Cascio and the leapfrog section at World Changing.)

One example of the leapfrogging solution is the work by William McDonough working with the Chinese government on building sustainable cities. It is called Dongton, located near Shanghai.

From Newsweek:

If McDonough’s method could be summed up in a phrase, it might be to leave nothing to chance. In each of the six cities, he is starting with a thorough examination of the land to be developed. He figures out how rainwater runs off and enters aquifers, how animals migrate, what plants grow where. He studies sunlight angles and wind patterns. Then he sketches in parks, which interconnect so citizens can walk or ride bicycles from one to the next and wildlife can carry on without disruption. Next comes the plan for the infrastructure, beginning with the angle of the streets. He slants them at a 15-degree angle to the winds in order to break up cold winter blasts and help keep city air clean. And orienting them on a diagonal rather than a rigid east-west grid also maximizes the sunlight that reaches apartments year-round. The cities are zoned for mixed residential, commercial and industrial use to ensure that transportation connects residences to the workplaces. Shops will be on the ground floor, residences above, and the rooftops will have farm plots. Bridges over the streets will connect the plots. The farmers will live downstairs.

Also, you can check out McDonough’s vision in 2 minute video at Big Picture TV. We will be tuned in for Atanu’s next installment.

Clearly, there is a great opportunity for building sustainable cities in India and China.

A Perspective of Ourselves

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Much of the sustainability literature talks about the need to understand the time scales of human evolution and its effect on nature and the finiteness of the earth. Generally, it is not easy to imagine both of these.

One important way to understand this is a visual representation.

Atanu Dey blogs about the “narrow corner” and “When are We?” which kind of puts things in perspective.

He writes:

“Short, therefore, is man’s life; and narrow is the corner of the earth wherein he dwells.” Marcus Aurelius Antoninus – (121-180) noted that in his Meditations. Here is a picture of how small the earth is whose narrow corner we dwell.

Earth in Perspective

For a even bigger perspective, click on the picture above.

On time:

Time Scale

The holocene—which means “recent”—is the name for the time span from less than 10,000 years to the present. Pretty much all of recorded human history falls in that period. Geologic time scales puts us in our place.

So there we are. On a tiny planet only 4.6 billion years old. It is hard to imagine such long time spans as we are creatures who live in what Richard Dawkins calls “middle world”—middle in terms of size, and middle in terms of the time scales we can intuitively handle.

Another way of understanding this is condensing the history of the universe, some 13.7 billion years into a single calender year.

If you look at the picture below or click on this link the shocking information is that “first humans appeared on Dec 31st, 9:24 PM and one second before midnight ‘Voyage of Christopher Columbus’ – Year 1492″.

Now: The first second of New Year’s Day – Widespread development of science and technology; emergence of global culture; acquisition of the means of self-destruction of the human species; first steps in spacecraft planetary exploration and the search of extraterrestrial intelligenc.

Cosmic Calender

These pictures above put our life and the earth into perspective. It is an humbling experience to imagine this.

Arnold King on Carbon Offsets

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If you want to fight carbon emissions, then join the Pigou Club and push for taxes on bad energy. If you want to fight carbon emissions at a personal level, then act as if there were a high tax on your use of energy from carbon-emitting sources, and reduce your use of that energy. If you are not really all that worried about carbon emissions, but you get pleasure from making empty, self-righteous gestures, then do what Al Gore does — buy carbon offsets.

Arnold King at TCS, Via “The Economist Blog”, Via Joshua Gans.

IBM Goes Green

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The largest corporations in the world are seeing the benefits of going green. Most are thinking of internal and external opportunities. Cnet reports that (Hat Tip: Green Options) IBM is using its consulting services, internal experiences, technology tools and R & D to develop solutions in the environmental area.

The computing and consulting giant is building up a business to chase “green dollars,” or money spent by corporations that are looking to conserve natural resources and reduce waste.

“From an overall business opportunity perspective, this is absolutely huge, though I couldn’t put my finger on how big now,” said Sharon Nunes, the vice president in charge of developing the Big Green Innovations business. “I don’t think we know truthfully all the problems that are to be solved.”

Big Green Innovations was the brainchild of Innovation Jam, IBM’s companywide online brainstorming sessions that occurred over two three-day periods last year.

“There is a demand for people to understand how to account for carbon, how to reduce energy usage, because IBM’s already done a tremendous job internally,” Davies said. “I haven’t seen too many people offering services focused on how you do this on the ground.”

An obvious application for that internal experience would be consulting services that address pressing environmental problems such as water use and energy management. Longer term, IBM is seeking to apply its expertise in materials to improve water purification and solar photovoltaic cells.

In my work I face data and IT issues daily dealing with reduction of energy, waste and water. A company like IBM has all the right resources to merge all of these together to create a great new source of revenue.

Even The Biggest Boxes Can Go Green

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Terry Slavin writes about John Duggan who runs Gazeley which develops sustainable warehouse for customers including Wal-Mart.

Gazeley, together with U.S. eco-architect Bill McDonough and U.K. photovoltaics specialists Solarcentury, is to develop an “eco-template” for environmentally friendly warehousingEco Template.

Occupiers pay no more than what they would for an unadorned tin roof and four walls, but get 11 energy- and water-saving features fitted as standard. These include solar thermal heating, storm water collection, energy-efficient lighting, recyclable floor coverings, water-saving toilets and timber from sustainable sources. All developments also feature some other renewable technology, such as ground source heat pumps, photovoltaics and wind turbines.

The company says its tenants enjoy average energy savings of 8 percent, and 50 percent cuts in water usage on a standard warehouse. Where Gazeley also fits out the interior of the warehouses, with low-energy heating and lighting systems, the environmental impact is much more dramatic.

(Image Source: Gazeley)

It adds a small percentage to the build cost,” he admits, but the eco-template design helps smooth progress through the planning system, and also attracts five-star customers such as John Lewis, Woolworths and B&Q at an early stage in development. “Letting them out earlier more than makes up for any extra build costs,” Duggan says. “There’s a strong business basis for this.”

“Until recently, I took the view that environmentalists were irresponsible,” says Duggan. “They didn’t care about the economic and social side. But Bill McDonough had such a positive take: let’s rethink the way we make things so it has a positive rather than negative impact. I felt his approach was unassailable intellectually, as well as good business sense. We all share the same planet.”

Charting the New Course

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The 2007 Melbourne Financial Services Symposium held this week was charting a new course for new frameworks and business models important to the industry and specifically to the superannuation sector.

The Keynote speaker (Beyond Sustainability Screens: Doing The Numbers) wGeoff Wellsas Geoff Wells, Managing Director of Imperative Plus, a Sustainability Consultancy based in Adelaide. I have known Geoff for more than a year now and he has immense understanding of the sustainability sector and its implications for business. He has been kind enough to guide me to understand and learn the important concepts and tools in this area. Most importantly, the tools developed by Geoff help to integrate the new sustainability issues within the existing financial and strategic frameworks of corporations.

Environmental Management News has more:

Traditional finance models can be distorted by their inability to model the impacts of environmental and social financial factors, he said.

“The financial implications can be dramatic, in some cases current values are shown by Value-Based Sustainability Management to be as much as 100% over- or under-valued,” Wells said.

“All businesses face the new sustainability challenges, especially now with the emerging impact of climate change,” he said.

“Companies have a choice; to be out in front by learning and applying the new sustainability techniques, or to be left behind.”

Stewart Brand : “Environmental Heresies.”

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Stewart Brand is a man ahead of the curve. Reading about him I realized the importance of understanding this person and his ideas.

(He published)…the Whole Earth Catalog, he organized the first Hackers ConfeStewart Brandrence, in 1984, and helped found The WELL, the early electronic community that was a sort of prototype of the Web. In Professor Turner’s history, he was the impresario who knew everyone and brought the counterculture and the cyberculture together, from the Homebrew Computer Club in the 1970s to Wired magazine in the 1990s.

I first heard about the Whole Earth Catalog in Steve Jobs’s Keynote presentations. I rushed to the University library in Adelaide and started reading all the various versions. It was an amazing experience. That it was published in the 1970s was incredible. The idea, the combination, the presentation were inspiring and informative.

The “now” version of that is the World Changing book which I had a chance to contribute to. However, it does not still come near the original.

Stewart Brand is important to understand because “He expects that environmentalists will soon share his affection for nuclear power. They’ll lose their fear of population growth and start appreciating sprawling megacities. They’ll stop worrying about “frankenfoods” and embrace genetic engineering.”

These ideas are not discussed “heretic” in the environmental movement. However, as a wise friend once said, in a second best world we need second best ideas.

He is a person who clearly understands the difference between idealism or what he calls a romantic and a practical person or what he calls a scientist.

“My trend has been toward more rational and less romantic as the decades go by,” he says. “I keep seeing the harm done by religious romanticism, the terrible conservatism of romanticism, the ingrained pessimism of romanticism. It builds in a certain immunity to the scientific frame of mind.”

And then he suggests the following,

On Nuclear power:

“There were legitimate reasons to worry about nuclear power, but now that we know about the threat of climate change, we have to put the risks in perspective,” he says. “Sure, nuclear waste is a problem, but the great thing about it is y72heresiesspread.jpgou know where it is and you can guard it. The bad thing about coal waste is that you don’t know where it is and you don’t know what it’s doing. The carbon dioxide is in everybody’s atmosphere.”

On Mega-cities:

He now looks at the rapidly growing megacities of the third world not as a crisis but as good news: as villagers move to town, they find new opportunities and leave behind farms that can revert to forests and nature preserves. Instead of worrying about population growth, he’s afraid birth rates are declining too quickly, leaving future societies with a shortage of young people.

This makes a lot of sense. Coming from India I can understand the need for mega-cities. That is a far more sustainable option that living in 600,000 villages as is the current option in India. As Stewart says, lets work with the future trends rather than fighting for some idealistic situation.
What is more important is his thinking.

Mr. Brand would rather take a few risks.

“I get bored easily — on purpose,” he said, recalling advice from the co-discoverer of DNA’s double helix. “Jim Watson said he looks for youngThe Long View scientists with low thresholds of boredom, because otherwise you get researchers who just keep on gilding their own lilies. You have to keep on trying new things.”

That’s a good strategy, whether you’re trying to build a sustainable career or a sustainable civilization. Ultimately, there’s no safety in clinging to a romanticized past or trying to plan a risk-free future. You have to keep looking for better tools and learning from mistakes. You have to keep on hacking.

It is important not to be idealistic but stick to facts and situations. Most importantly, is ok to change. Withought change there is no progress.

Additional Resources:

Algae for Oil : From Pond to Pump

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The NYTimes on the idea of replacing crude oil with Algae.

Algae may be slime to the average person, but to some venture capitalists, it is the path to energy independence. But Lissa Morgenthaler-Jones and her husband, David Jones, are betting their careers and personal fortunes that they can grow masses of the slimy organism and use its natural photosynthesis process to produce a plentiful supply of biofuel.

Like thousands of other pioneer venture capitalists over the last two years or so, these two San Francisco Bay area investors have trolled through the dizzying, complicated world of renewable fuels — from wave power, to hydrogen fuel cells, to lithium batteries, to cow manure for making methane. And just like their predecessors of the dot-com boom a decade ago, they have come up with their very own gamble, started their own company, called LiveFuels Inc., and are now negotiating with other potential venture capital partners.

What is different, though, about Ms. Morgenthaler-Jones and this latest entrepreneurial wave is that the search is for something that both produces profits and offers something good for the environment. One goal, for instance, is to find an energy-efficient way to convert algae into fuel, which is why she was visiting a catfish farm here that was for sale.

Farmed catfish could provide a useful source of carbon dioxide for the algae, as well as a critical revenue flow to keep research going. The timing may be just right. With oil prices at high levels and fears of global warming growing, the old world of conventional hydrocarbon energy has been joined by an alluring new array of alternative-energy gadgetry, technical wizardry and potential riches. But there are still many more blind alleys than successes, and sleepless nights go with the territory.

TXU Buy-Out is Green

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Coal powers most of the world by providing electricty and is also responsible for a large percentage of CO2 emissions. Even though there are efforts to create clean coal, energy companies need to have a better ‘green business strategy’.

In a previous post, there was a argument about how private equity may drive a “green business strategy”. This week’s TXU buy-out provides more evidence.

Matthew Wheeland, Managing Editor of GreenBiz, writes in this weeks newsletter about the unprecendented buyout of Texas energy utility TXU by Private Equity players.

The new owners announced that at least eight of the planned power plants would no longer be built, and that the new owners would increase TXU’s commitment to sustainability.

The Red Herring suggests that Coal is losing in this acquisition.

Some environmentalists are hailing this buyout as a possible win because it comes with an announcement that the company has given up plans to build eight of the 11 proposed coal-fired plants. The scale-back represents a 75 percent reduction in new coal capacity, or 56 million tons of annual carbon emissions, according to a TXU statement on the sale.

Executive Editor of GreenBiz Joel Makower said that the deal is a major development because the environment became a “top line negotiating point for utility acquisition.”

“I think it puts everybody on notice that carbon is an investment risk and that utility growth going forward needs to look beyond fossil fuels,” said Mr. Makower.

GreenBiz.com explains why this buy-out may provide a signal to other energy companies.

Eric Kane, an analyst at Innovest, said this his company recently highlighted the risks to investors from TXU’s expansion plans. “Although the TXU case was unique in its proposed scale, the challenges faced are indicative of a growing trend throughout the utility industry,” Kane said, and added that “the lessons learned from TXU will have national implications. Industry peers will face similar challenges as they move forward with expansion strategies that rely on new power plants that utilize outdated, highly polluting pulverized coal technology.”

Update: Andrew Winston at Eco-Advantage talks about being “On the Right Side of History”.