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Green makes green
May 10, 2005 7:10 AM   Subscribe

"We're at a tipping point where energy efficiency and emission reductions also equal profitability," The world's largest company announces a massive commitment to the environment. Though not everyone agrees, both consumers (as suggested by this modern-day protest song) and market conditions are making "greener" companies the winners, even in the largest industries. Is the market the solution to environmental problems?
posted by blahblahblah (29 comments total)

 
I may send them a resume. I've been waiting for one of the corporate giants to do this for a while. Whoever gets there first will have a huge advantage in the market place. My biggest concern is that the payoff will not be immediate and the shareholder will grow impatient. Considering how long people hold dot-coms before they expect a payback, though, maybe people are ready to bank on GE ultimately succeeding.
posted by Doohickie at 7:31 AM on May 10, 2005


Interestingly, I sent the link to this post to my wife, who works at GE. She tells me that she's blocked from viewing MeFi there. So, feel free to speak ill of them.
posted by psmealey at 7:47 AM on May 10, 2005


This declaration certainly can't hurt but until the "market" takes into consideration the damage (translated into dollar cost) that certain activities cause to the environment, there will never be a "market" solution.

This is one of those cases where the "market" must be controlled outside the benevolent actions of the Great Invisible Hand.

I'm interested in how this declaration of intent develops into concrete action.
posted by nofundy at 8:02 AM on May 10, 2005


GE? Here's what another said:

Ecomagination - you heard it here first
posted by rough ashlar at 8:14 AM on May 10, 2005


It's good to hear that GE is doing this, but they aren't the first big company to realize that there are profits to be made in Green technologies. The Corporation profiled a guy named Ray Anderson, who's been working on profitable sustainability with his company, Interface, since 1994.
posted by carmen at 8:23 AM on May 10, 2005


From rough ashlar's link:

In checking with the trees that GE said were a little happier, I was told that this was not so when they figured out how many of their brothers and sisters had been massacred for this ad.

Puh-LEES. You do know that wood is our most renewable resource, right? That the EPA requires a minimum level of post-consumer content for most paper types, and that newsprint is one of the most amenable types of paper to using recycled fibers? Of course there have historically been problems with paper production, like harvesting old-growth forest, but that's nothing like implicit in the use of paper.

Tree massacre? Come ON.
posted by rkent at 8:26 AM on May 10, 2005


This is great.
posted by rush at 8:28 AM on May 10, 2005


The world's largest company announces a massive commitment to the environment.

no, it's more of a massive commitment to profitability.

and there's nothing wrong with that.

a typical coal fired or nuclear power reactor produces a constant 600-1200MWe (megawatts of electric power). a wind powered turbine generates about 1.5 MWe - when the wind is blowing. so it takes about 800 turbines to replace each reactor and many more than that to provide a constant replacement of power to the grid.

there is also a huge amount of money to be made in offshore installation, cabling to the mainland, maintenance and operation.

not to mention in picking up carcasses of dead birds.

now if GE can only convince the residents of coastal areas to trade their view of the sea for a turbine farm...
posted by three blind mice at 8:35 AM on May 10, 2005


not to mention in picking up carcasses of dead birds.

Please provide proof in form of number of turbines, location and size for your claim.
posted by rough ashlar at 8:45 AM on May 10, 2005


not to mention in picking up carcasses of dead birds.

Windmills do not, by and large, kill birds. Modern designs 1) have smooth tubular supports so that birds can't nest, and 2) rotate very slowly so that there's virtually no chance a bird can be "chopped." Check the facts. An excerpt: "current scientific consensus is that bird kills on up-to-date wind farms amount to an average of one bird per turbine per year."
posted by rkent at 8:50 AM on May 10, 2005


[THIS IS GOOD]
posted by PEAK OIL at 8:57 AM on May 10, 2005


Well, I haven't heard anything about it switching back, so it should be noted that as of February, GE isn't the worlds largest company, ExxonMobile is (1, 2, 3). And I'm not sure we want to be congratulating them on their commitment to the environment...
posted by NotMyselfRightNow at 9:00 AM on May 10, 2005


I am willing to accept "we think we can make a lot of money doing something that happens to be good for the environment" as a Good Thing until proven otherwise.
posted by ilsa at 9:15 AM on May 10, 2005


In other news, Abusive Spouse Announces "I'll Change".
posted by George_Spiggott at 9:17 AM on May 10, 2005


It's about frigging time, but I'll believe it when I see it.
posted by fungible at 9:26 AM on May 10, 2005


NotMyselfRightNow, GE is the world's largest company again after its brief eclipse -- Exxon's current market capitalization is $366 Billion. GE's is $380 Billion.
posted by blahblahblah at 9:26 AM on May 10, 2005


We'll have to see if it's just greenwashing, or real. Given our current government, we can't look to them to take the lead on anything that reduces profits for oil/gas companies.
posted by amberglow at 9:35 AM on May 10, 2005


I'll believe it when I see it. Though I do have GE stock. So...um... yay GE?
posted by tkchrist at 10:47 AM on May 10, 2005


a typical coal fired or nuclear power reactor produces a constant 600-1200MWe (megawatts of electric power). a wind powered turbine generates about 1.5 MWe - when the wind is blowing.

Wait a minute, hippies - three blind mice is right! If major investments in R&D and the increasing mainstream use of these energy technologies fails to change a single thing about their efficiency, it'll take millions of them to replace the coal power plants we built from scratch in 1850 that produce all that power!

In other news, 1989 called to say that there's no way the Internet can provide broadband data transfer, so the notion of watching videos using this medium is a fantasy.
posted by gompa at 11:02 AM on May 10, 2005


I think it's real (as in they're not lying). Energy companies in the U.S. have been torn between enjoying the "Bush bubble" while also preparing for the inevitable change in practices that the global market requires.

The market is a solution, not the solution to "environmental problems." It won't be easy, whatever the solution is.
posted by mrgrimm at 11:19 AM on May 10, 2005


a typical coal fired or nuclear power reactor produces a constant 600-1200MWe (megawatts of electric power). a wind powered turbine generates about 1.5 MWe - when the wind is blowing

The biggest wind turbine I am aware of, the E112 produces 4.5MW.
Typical coal and nuclear power stations are also not available 100% of the time. 80-90% is more likely.
posted by biffa at 11:25 AM on May 10, 2005


I’m not sure we can solve the problem. I hope we can. I think we have a shot. I mean, it may be that we’re not going to solve global warming, the earth is going to become an ecological disaster, and, you know, somebody will visit in a few hundred million years and find there were some intelligent beings who lived here for a while, but they just couldn’t handle the transition from being hunter-gatherers to high technology. It’s certainly possible.
posted by mrgrimm at 12:25 PM on May 10, 2005


GE has been positioning itself as the leader in alternative energy for some time now. Its mainly been doing this by quietly buying up solar, wind and hyroelectric companies.

I for one agree that this is a good long-term bet. Putting aside any environmental concerns, natural gas and oil will continue to get harder to find and hence more expensive, leading people to look for alternatives. When they do GE hopes to be there with a complete portfolio of products. Maybe in the short term this isn't going to amount to much, but I'm hoping it will in 30 years or so.
posted by darkness at 2:35 PM on May 10, 2005


a long time ago my brother (a lawyer) left the EPA to work for the dark side (GE). Here's hoping it's the return of the jeti.
Go Doug!
posted by pointilist at 11:24 PM on May 10, 2005


Wait a minute, hippies - three blind mice is right! If major investments in R&D and the increasing mainstream use of these energy technologies fails to change a single thing about their efficiency, it'll take millions of them to replace the coal power plants we built from scratch in 1850 that produce all that power!

gompa please allow me to introduce you to thermodynamics

thermodynamics is the science that says you can't get something for nothing. your snarky estimate is probably not to far from the truth.

world consumption of primary energy in 2000 was estimated at 397 quadrillion BTUs. hydroelectric and nuclear production provided only 13% of this demand.

you can do the rest of math yourself.

"hippies" who believe that wind power is a suitable replacement for existing energy sources are as ignorant and misinformed as those who believe global warming is pseudo-science invented by tree-huggers instead of a sober conclusion derived from statistical mechanics.
posted by three blind mice at 2:20 AM on May 11, 2005


sober conclusion derived from statistical mechanics.
posted by three blind mice at 2:20 AM PST on May 11 [!]


So, oh sober claimer of 'truth' - where is your analysis of bird strikes?

Well? I'm waiting for you to provide proof of your claim.
posted by rough ashlar at 4:43 AM on May 11, 2005


"hippies" who believe that wind power is a suitable replacement for existing energy sources are as ignorant and misinformed as those who believe global warming is pseudo-science invented by tree-huggers instead of a sober conclusion derived from statistical mechanics.

Very few stakeholders in renewable energy suggest that wind energy alone is an alternative that can provide for all of our electricity or other energy needs. Most people within the field suggest a mixture of different renewable resources is the most likely solution to energy production, whilst also emphasising the need for reductions in energy use through improved energy efficiency.
See for example, the energy policies of the UK and Denmark. Certainly there are technical challenges to be met with regard to integrating high levels of RE technology into networks, there are also regulatory challenges which if met would allow some benefits of RE to networks to be properly monetised and would contribute to both cheaper power prices and greater choices for consumers in meeting their energy needs.
You may also be interested to note that Denmark meets >20% of its electrical needs from wind power and that this fraction is set to rise over coming decades. Total renewable contribution to Danish electrical needs is expected to hit 29% as soon as two offshore wind farms come online. Denmark does not focus solely on wind however, it has also invested in the development of biomass as both a source of electricity and heat and has partially reformed its tax system to focus more heavily on environment rather than income. The result has been a reduction in the average energy used for domestic heating of about 2/3 over the last 15 years.

You dismiss gompa comments about efficiency, but clearly gompa's point concerns the fact that most RE technologies are as yet not mature (though wind is getting their - GE's decision to purchase Enron Wind highlights that) and that investment in them on a large scale will see their cost drop over time, in some cases there is also significant potential for improved efficiency, for example, as with some solar cell technologies. We have seen both drops in unit costs and increases in efficiency for the whole range of renewable energy technologies over the last few decades and we will continue to see reduced prices as performance increases over the decades to come.

Denmark's support of wind actually provides half of an example relevant to the main question set in the FPP? 'Is the market the solution to environmental problems?'
There are two main mechanisms generally used to support renewables in different nations and states around the world, with additional instruments used for extra stimulus. The first, a tariff mechanism, is used in countries such as Germany, Denmark and Spain. Eligible renewable generators are able to sell their electricity to a supply company, which is legally obligated to take it, and to pay a government mandated price for it. The other mechanism is a quota mechanism, often called a Renewable Portfolio Standard (RPS), this is used in a number of US states as well as in the UK (where it is known as the Renewables Obligation). This places an obligation on supply companies to supply a certain amount of all the electricity they provide in a year from renewable resources, if they fail to do so they have to pay a fine. The higher the fine the greater the stimulus for the supply company to get hold of some RE and the higher a price they will be prepared to pay. The tariff mechanism means that anyone who can generate electricity from RE qualifies for the price, the total amount that will be stimulated is left to investors and whether they can generate profitably. The generators do not have to compete to sell their electricity. The quota mechanism creates a market alongside the market for electricity (effectively a market for the environmental benefits of the technology), and RE generators have to compete to sell their output. The theory is that this competition will drive down costs and the consumer/taxpayer will get the environmental benefit at the least cost. Fine in theory, however, it has been suggested that in practice, the risks associated with having to compete, i.e. the risk over price, risk of not selling all output and risk relating to costs concerning balancing of the grid which are present in the quota and not the tariff system are such that prices can be comparable under either system. It should also be noted that those countries which have employed tariff systems have had the most success in increasing RE capacity and in developing new manufacturing industries relating to the development of new RE technologies.

Less specifically, there is considerable literature concerning the ability of the market to provide solutions to environmental problems. In general terms the answer is obviously no. There are copious examples of how markets left unregulated cannot even provide all the economic benefits that they should. To assume that they can somehow provide environmental and social benefits, or operate without having negative impacts through self-regulation would be to ignore the history of our species and of all our experience. This is not to suggest that market solutions do not have the potential to deliver environmental benefits, there is evidence that competition properly applied could enable environmental benefits and costs to be more clearly taken into account and to provide economics advantage to particular competitors. Some are obvious, there remain plenty of opportunities for companies to improve their performance through enhanced energy efficiency, but equally there are plenty of examples where companies will continue to be environmentally damaging as it suits their economics to do so. Where this is the case it behoves society to consider how regulation already applies to create negative results and how it might be more ably applied to enhance innovation and allow businesses which improve their environmental performance to benefit fro doing so economically.

There is a whole branch of theory as to whether proper environmental regulation acts to stimulate or to hamper new business development. The Porter hypothesis suggested in 1990 that it was possible that those countries that were first to introduce new environmental regulations would be able to drive their national industries to create new technological and process solutions which would then make them world leaders and improve the economies of the first mover nation. The antithesis of the theory is the oft-quoted 'race-to-the-bottom' which suggests that countries will outdo each other to compete to draw 'dirty' businesses in by dropping their regulations. The Porter hypothesis is still controversial though there is some evidence that wealthier nations or states with high levels of cross border trade can influence their neighbours into a 'race-to-the-top' by influencing their manufacturers to produce goods to the same standards as home producers.

GE adoption of a more environmentally oriented approach to business actually lags moves by both Shell and BP to diversify their energy related investments and to rebadge themselves as energy companies rather than purely as oil companies. This has seen both companies establish renewable energy arms in the last 5 or so years and BP has become one of the biggest manufacturers (and purchasers) of solar cells in the world. It is perhaps notable that the major US oil companies were dismissive of this direction taken by their more European competitors and themselves declined to make similar investments.
posted by biffa at 4:43 AM on May 11, 2005


Nice master's thesis, biffa.
posted by Doohickie at 8:36 AM on May 12, 2005


Cheers, Doohickie, but some of this is postdoctoral work!
posted by biffa at 3:11 AM on May 16, 2005


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