Monthly Archives: April 2007

Solar Loans Powering Rural India

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The BBC reports on a UN program to fund solar power systems in the rural part of the southern state of Karnataka, India capable of powering two to four small appliances, or lights, costs about $300-$500 . The UN Indian Solar Loan program recently won the Energy Global Award.

So What is this program?

India’s solar PV manufacturing sector has grown significantly since the 1990s, mostly for export, however the market for solar home systems has been slow to develop, in part due to a lack of consumer financing options. The aim of this effort is to help Canara bank and Syndicate bank develop lending portfolios specifically targeted at financing solar home systems (SHS). With the support of the UN Foundation and Shell Foundation, the project provides an interest rate subsidy to lower the cost to customers of SHS financing.

The BBC reports:

Since the project began in 2003, there has been a 13-fold increase in the number of the solar power units being financed within the scheme’s pilot area in southern India.

Project workers have credited solar powered lighting with helping schoolchildren achieve higher grades, and better productivity for cottage industries.

There are also health benefits associated with making the switch. The majority of homes in rural India are poorly ventilated, leaving the occupants exposed to harmful particles emitted by the lamps.

In terms of greenhouse gas emissions, the UN says a single wick lamp each year burns about 80 litres of kerosene, which produces more than 250kg of carbon dioxide. An estimated 100 million families in India use kerosene lamps.

Solar power systems are capital intensive products whose price may equal paying upfront an amount equal to 20 years of electricity bills.” The wick lamp is a major problem too. George Monbiot quotes Godfrey Boyle in his book Heat (p xvi).

It is quite remarkable that the complex process of choosing to burn a litre of kerosene in an engine, to drive a generator, to power a fluorescent lamp, can produce 250-450 times more useful light than burning the same amount in an oil lamp.

A similar incentive is needed in other places around the world to increase the adoption of solar power systems. This program shows the power of one of the oldest social innovations in the world – the power of credit.

Dealing with Climate Change in China

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In the current climate change discussions, China and India raise red flags everywhere. The general points are that they are the fastest growing developing countries and hence, their emissions need to be decreased or the growth of emissions needs to be decreased. In fact, Australia and the US claim to not signing the Kyoto Protocol due to the lack of emission reduction targets on China and India.

China and India on the other hand claim their per capita emissions, their poverty and the need for economic development as the drivers for not accepting to targets for CO2 reduction.

One common reason suggested for the worry is that China will eclipse the United States as the leading greenhouse gas emitter soon . The developed countries are looking into the future. However, if you look at the past, it is clear who bears the responsibility. A good way to understand this is the cumulative emissions of countries from 1900 to 2002.

The linked graph shows the cumulative CO2 emissions from 1900 to 2002. CO2 cumulative by country

Writing on the logic of doing it, the author suggests:

It does make sense to look at the sum of all CO2 emissions because the lifetime of the greenhouse gases like CO2 in the atmosphere is between 50 and 200 years. The current global warming is an effect of all greenhouse gases put in the atmosphere during the last 100 years, global warming is not just caused by the greenhouse gases emitted this year or last year! This is also one of the reasons why immediate action is required to reduce the emission of greenhouse gases like carbon dioxide, because the effects of the greenhouse gases will last for about 100 years.

A better way to understand the issue is to concentrate on the Top 10 producers of all time.

Top 10 Cumulative Emissions

The US is responsible for 41% of all the emissions for the last hundred years produced by the top 10 countries. China only 11%. India 3%. This puts things in perspective.

(Click the link below for the rest of the entry)

Continue reading →

A Different Shade of Green

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SRI or Green investing is starting to widen across the world. Investing is not an easy activity. In many markets around the world, a majority of the managed funds do not beat the average market’s performance like the S&P 500 in the US or the ASX 200 in Australia or the BSE Sensex in India.

For SRI investing it becomes a bigger issue. A set of green screens need to be used apart from the normal selection criteria of various funds.

When the Bill and Melinda Gates foundation was criticized that in a lot of the areas where their foundation was helping solve some problems, the investment arm of the foundation was investing in companies which were creating environmental and social problems in those areas.

What was the response? In a crude form – it is too hard to do that.

In this scenario, even if you want do good, SRI investing is not easy.

Socialfunds.com reports on Spectra Green Fund which have a different approach and philosophy. Their approach is based a real world approach where they believe that sustainability brings about competitive advantage to a firm and hence, they apply a green screen after selecting for other variables.

The Spectra Green Fund’s strategy is to look for growth companies first and then apply its sustainability and green screens. According to Zachary Karabell, executive vice president, chief economist and portfolio manager at Alger, this strategy is different because most green funds apply green screens first.

“We live in the real world, not the ideal world,” Karabell told Socialfunds.com. “Increasingly, it looks like there is a correlation between growth companies, innovation, and sustainability. We are focused on companies that are making their supply chain more environmentally friendly or bringing sustainable products to market that fulfill pressing global needs.”

“In the past, green investors have steered clear of resource intensive companies. Yet our world is driven by these companies, many of which are finding new ways of using cleaner fuels, shifting their energy use and changing their carbon-footprints. There is a surprising compatibility between companies making money and also dealing with their environmental impact,” Karabell added.

Karabell maintains that Spectra Green Fund has a clear agenda whose managers and analysts think is helping investors make money as they support innovative and far-thinking companies.

How to make money from WEEE

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James Murray at the Green Business News blog from IT Week (UK) provides an example of a mobile recycling company called Fonebak which is taking advantage of the new WEEE regulations to create a new business.

Under a scheme operated by mobile phone disposal specialist Fonebak and supported by leading mobile manufacturers, operators and retailers such as Vodafone, Orange, O2, Dixons, PC World and Virgin, firms can dispose of their unwanted mobile phones and attachments through a WEEE-compliant channel and get cash in return.

Firms signing up to the scheme receive either free post bags to send unwanted mobiles to Fonebak’s recycling facilities, or securely-sealed plastic boxes which they can fill with 40 to 50 phones ahead of collection.

According to Sarah Band of Fonebak the company then “sorts the phones, tests them, recycles the materials from those that don’t work and refurbishes those that are working, and remarkets them in Eastern Europe, Asia and Africa”.

This approach not only provides affordable mobile phones to developing world economies, but also generates revenue from the sale of both refurbished phones and the components and precious metals harvested from recycled handsets. “Plastics in phones are melted down and used in saucepans, traffic cones and buckets,” she explained. “While Gold, copper and the like is taken out and sold on commodity markets.”

We already know that “waste equals food”. Food equals money. In the meantime, we can make a difference to the environment and the community.

Climate Profits

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Marc Gunther of Fortune reports on the recently held conference “The Business of Climate Change: Risks and Opportunities.” by Goldman Sachs.

Some interesting ideas.

Carbon Tax was suggested as an alternative which I have suggested before.

…while conventional wisdom in the FORTUNE 500 holds that the best approach to regulation is a so-called cap-and-trade regime, one of the most impressive presentations came from a contrarian CEO named Lewis Hay III. Hay is chairman and chief executive of FPL Group, a big, forward-thinking electric utility based in Florida that has invested heavily in wind power. He argued persuasively that a carbon tax (or fee, if you prefer) would be a much simpler approach, and one that would avoid the looming political battles over how to structure a cap-and-trade approach.

On opportunities in the new world from John Holdren, a Harvard professor of environmental science and director of the Woods Hole Research Laboratory.

The first (and we’ve heard about these) are products and services that mitigate against global warming—wind, solar-thermal and photovoltaic electricity, biofuels that don’t compete with food, more efficient buildings and vehicles, and the like.

The second group (and we haven’t heard as much about these) are products and services that will help us adapt to a warmer planet—water desalinization and purification technologies because water will be in short supply, water storage and distribution businesses to deal with floods and droughts, the development of pest-, drought- and pathogen-resistant crops and trees. (“Pests will enjoy a warmer, wetter word,” Holdren remarked. He mentioned mosquito repellent.)

Holdren also talked about improved treatments for human health problems like malaria, dengue and West Nile diseases and, finally, products to cope with storms and rising sea levels like “storm-resistant construction” and “raised, strengthened and additional dikes and storm-surge barriers.” Yes, pest control and dikes.

Gunther concludes well.

It strikes me now that the fact that the conference took place is probably more important than anything that was said. The problem of climate change is so big and complicated that we’ll need all the brainpower and money we can muster to deal with it. Goldman brings plenty of both to the table. If that means that people will rich by selling wind power, fuel-efficient cars, pesticides or even dikes, so be it. I don’t see any better way out of this mess.

Dealing with Climate Change in India

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Chandrashekhar Dasgupta, a Distinguished Fellow at TERI, writes a sensible op-ed in Business Standard on India and Climate Change.

Climate change is not a big issue in India at this point in time. The sheer size of the poverty issue overrides any other program. Combine that with the economic development policies, foreign policy (e.g. Kashmir issue), internal terrorism (e.g. the Maoists) and it is clear that climate change is not on the top of the agenda. This is rightly so.

In this op-ed, Dasgupta outlines the issue of climate change, the IPCC report, effect on India and possible policy actions.

He points out that “the wealthy, industrialised countries are responsible for causing climate change, the main victims will be the world’s poor. Developing countries are more vulnerable because they lack the financial and technological resources needed to cope with and adapt successfully to climate change”.

In this scenario, the first task of the government is adaptation and this can only be based on rapid, sustained development and poverty eradication.

Adaptation will require a wide range of responses, including a shift to drought resistant plant varieties, economical use of water resources, water conservation measures, watershed management, protection of coastlines and disaster management. Low-income countries will be unable to implement these measures on an adequate scale.

The second goal is to moderate the use of greenhouse gases through measures which will be economically beneficial and the funds are not diverted from poverty reduction and economic development needs. This is important because funds for development are scarce in India.

There are many areas where such possibilities exist. Cost-effective energy saving and energy efficiency programmes serve our development goals and also result in lowering emissions. Policies designed primarily to reduce local environmental pollution (such as the substitution of diesel by cleaner fuel in some of our major cities) can also lead to reduced greenhouse gas emissions. The promotion of nuclear, wind and solar power not only serves our energy security interests but also results in lower greenhouse gas emissions. In all these cases, measures designed primarily to promote our developmental objectives also yield important co-benefits for climate change mitigation.

Additional programs can be achieved through the Kyoto Clean Development Mechanism and Joint Implementation.

According to Dasgupta, the third leg of the strategy should concentrate on managing the rising expectations of industrialized nations to force India to cut down on its emissions.

If the demands of these developed countries are conceded, funds will be diverted from our national priority goals of development, poverty eradication and progress on local environmental issues like air and water quality. The rate of growth of the economy will be slowed down, with the result that India will remain highly vulnerable to the impacts of climate change.

To counter the argument of high greenhouse gases emitted by India due to its population he suggests a analogy based on food consumption.

This is like arguing that India should restrict its food consumption because its total calorie consumption is very large, even though the per capita intake is inadequate! India’s per capita carbon emissions are only one-eighth that of the EU and one-twentieth that of the US. The total figure is high only because India is a very large and populous country, with a population exceeding the combined total of the US, the European community, Russia and Japan.

As with everything in India, population exacerbates the climate change issue.

Beyond Cleantech Investing

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Paul R. Holland writes in BusinessWeek.com on the opportunities and perils in investing in the greening of business.

He says, “In coming years the green energy movement will expand even further and touch many more multibillion-dollar industries, many of them overlooked today. In fact, the expansion is already underway. Here are three industries that from an investor’s perspective are certain to be touched by the greening of business.”

Let’s begin with construction…CH2M is also leading the explosive growth in green building infrastructure. For the last 10 years it has been a world leader in protecting the environment through smarter management of environmental impacts of its own operations as well as those of clients. In 2006, CH2M’s North American operations implemented a broad effort for reducing waste, institutionalizing environmental practices, greening the supply chain, reducing carbon emissions, and measuring impacts.

Then there’s food and water. Novazone, in Livermore, Calif., purifies 90% of the world’s bottled water via ozone purification. The company, in which my firm was an early investor, is experiencing exponential growth in the market for using ozone to treat food and produce, because it can erase outbreaks of E.coli and salmonella without the use of harmful chemicals. It also helps produce growers and retailers keep up with increasing consumer demand for organic produce.

A third notable area of investment is recycling—and this means much more than office paper or putting bottles and cans at the curbside each week. It’s a growth industry. For example, Lehigh Technologies in Naples, Fla., recently struck a deal with a major collector in the Southeast to turn as many as 15 million tires annually into high-quality crumb rubber feedstock that can be used in such products as floor mats and speed bumps or on surfaces like playgrounds and sports courts.

Check out the rest of the article for possible risks and market trends.

CSR and Communications

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Bill Valentino, an MBA from Thunderbird, writes about the importance of
importance of CSR and Communications in the MBA’s toolkit.

Communication is an important aspect of a organization’s toolkit and so is for any MBA graduate or a manager. Bill suggests the basics that “Teaching future managers the tools needed to promote a product, a service, or the organization is aimed at ultimately achieving business success, a good image and creating, maintaining or protecting a valuable brand”

In his rather long article he explains why communication is a reputation-building tool and connects it to the CSR aspects of business. As I have mentioned before, CSR is too mushy to be a real sustainability tool for any organization.

He concludes:

It needs to be emphasized that aligning CSR and Corporate Communications in the MBA’s toolkit is not about public relations and publicity. It is about the perceptions that for a large part are the products of CSR, the actual transformation of what companies say they are in into actions that have a beneficial impact on society as well on the business.

Before we align CSR and Communications in the MBA toolkit the more important aspect is aligning sustainability into the MBA tool kit. Connecting strategy and sustainability, supply chain and sustainability, finance and sustainability and then when real work has happened it needs to be communicated.

One good aspect of this area is that once the tools and knowledge are gained in the MBA it can be easily applied in the sustainability field. What is required is updating knowledge of the field and a chance to work in any of the areas.

Most of the MBAs are still lacking any kind of sustainability aspects. Communication, in my view, is the least of the worries.

S&P to rate carbon funds

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S&P which is creating new sustainability indexes is now moving into rating Carbon Funds.

“We’re seeing people come to us for views on how carbon caps and carbon trading are affecting companies’ credit quality,” Wilkins said. “Over the past couple of months, we’ve had some unsolicited enquiries from carbon funds for ratings.”

Wilkins added that the company is currently devising a methodology for rating funds. However, he expects that S&P will look at the underlying emissions reduction projects in which the funds are investing and possibly at the creditworthiness of companies developing the projects.

While S&P rates some investment funds on their financial performance, carbon funds would instead most likely be assessed on their creditworthiness, combining their probability of default with likely loss recovery to generate an expected loss figure, said Wilkins.

An example of a Carbon Fund can be found here (Download-PDF).

2007 Socially Responsible Business Plan Awards

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Aram Kang from WRI reports on on NextBillion.com on William James Foundation’s 4th Annual Socially Responsible Business Plan Competition.

Third place was awarded to EcoMisha, an environmental consulting service for individuals who want to make lifestyle changes that benefit the environment. Part of the business is to approach companies to include such consulting services into employees’ wellness packages, similar to a gym membership. Targeting the lifestyle transformation sector is no easy task, and I was encouraged to see an innovative model such as EcoMisha’s.

Winning second place was Rethos.com, an online social networking platform for individuals, nonprofit organizations and corporations interested in social and environmental issues. With its unique design and model, Rethos.com offers an online platform that distinguishes itself from all the others that exist today (check out the website).

Natural Capital took the gold that evening with plans to build near-zero-net-energy homes in urban St. Louis. Incorporating design elements that utilize nature’s capacity to heat and cool as well as materials that have low impact on the environment, the model brings energy efficiency and sustainability to traditional urban renewal projects. I hope that the people from Architecture for Humanity and the Open Architecture Network take note of this laudable project.

I think the environmental consultancy idea is innovative for its social aspects.

Also, check out some good resources at at the William James Foundation.