Energy SustainabilityWhy CA must take sustainability seriously,

how we can go about doing it, and how it will benefit everyone in the long run

Energy TodayFossil fuels (coal, oil, natural gas) account for

about 85% of the energy used in the US.This is about 2/3 of our electricity and almost

all of our transportation fuels.The remainder of our energy comes from

biofuels, hydropower, nuclear, geothermal, wind, and solar.

Fossil Fuels…Fossil fuels are dead plants and animals from

the carboniferous period of the Earth’s history, about 300 million years ago. They took tens of millions of years to build up.

They are all hydrocarbons, long chain-like molecules that can undergo combustion.

Some studies suggest that we’re burning 400 years worth of plants and animals every year.

They are solar energy.

…and their problemsUsing fossil fuels drastically upsets the

carbon cycle.This upset drives climate change and

extreme weather.They are costly and the supply is always

running lower.Using fossil fuels introduces many toxics to

our environment and destroys habitats.By using fossil fuels we are hindering

domestic energy producers while lining OPEC’s pockets.

We may already have passed “peak oil”, and if we haven’t then we will soon.

Will Technology Save Us?Solar, wind, geothermal, biofuels, tidal power,

nuclear fission, and more can reduce and eventually eliminate our dependence on fossil fuels.

On the horizon we have possibilities of nuclear fusion, space based solar, and ocean thermal power.

These technologies have existed for decades and have steadily been improving, yet our society has yet to seriously adopt them.

Evidently, technology alone is not enough.

Rules and Culture Must Drive InnovationRules consist not just of written laws and policies,

but also of cultural norms, mores, and taboos. Every organization has its own culture.

We must make changes to our policies, our organization, and our culture if we are to take advantage of the benefits that sustainability offers.

To innovate, you need both technologies and rules that drive their use. –Paul Romer

By recognizing sustainability asa megatrend we can make these changes.

Sustainability is a MegatrendMegatrends are major societal and economic

shifts such as globalization and the rise of the internet.

Like the IT and product quality megatrends before it, firms that do not effectively embrace sustainability will become irrelevant.

By studying firms that have “won” on previous megatrends 4 stages of value creation have been discovered.

Stage 1: Do old things in new waysFirms focus on outdoing regulations and reducing environmental costs and risks. This develops proof cases for eco-efficiency.

“A kilowatt saved is always easier and cheaper than a kilowatt produced” –Ed Begley, Jr.

Our focus in Stage 1 should be on efficiencyBut how?

A 3-step plan for efficiency: Step 1If CA is to become an energy company we need clear goals from leadership, with a multi-year vision. A baseline must be established early on through professional green

energy audits on our facilities, including at the very least an infrared inspection.

We should aim for at least a 25% reduction in combined electricity and gas & fuel (building) over 5 years; 5% a year from the baseline.

A comprehensive audit will cover recycling and the waste stream and water use, among other things. This information would stage us to tackle more than just our energy consumption.

A 3-step plan for efficiency: Step 2We need to create stakeholders in these goals by working it into the reviews of key people across divisions. Sports and Fitness, IT, Construction, and Purchasing should be

included. S&F facilities consume ~91% of the energy and building fuel. IT must be included because the energy used by IT equipment is out of

facility manager’s hands. Several technologies work, we need to find ones that fit our facilities (WOL, thinclients, etc.).

Construction is more qualified to make decisions on heating and cooling systems, insulation, etc., and must be included.

Purchasing must be included to provide the accounting expertise necessary to back up longer term investments (geothermal, cold water).

These people must be the decision makers who can make this happen, present sustainability committees can only make suggestions.

A 3-step plan for efficiency: Step 3These stakeholders must be brought together for regular meetings to work towards these goals. The existing sustainability committees should advise this “super-

committee”, they can provide many innovative ideas to put on the table early on in this process.

Through the annual review process the stakeholders will be held accountable to leadership’s goals.

This presentation is concerned primarily with energy, but this model can be used to address recycling, water use, and other sustainability issues.

Stage 2: Do new things in new waysFirms engage in widespread redesign of services

and processes to optimize natural resource efficiencies and risks.

Generate renewable power through solar, wind etc.

Google is doing this by investing in smaller companies that pay for solar panels on residential roofs and charge for the electricity.

Other possible “new things” include composting, forest management for profit, biofuels, zero-waste, and a focus on nutrition and sustainable eating through our health programs (Michael Pollan).

Stage 3: Transform Core BusinessAs the sustainability vision expands and takes

hold, sustainability innovations become sources of new revenues and growth.

CA can be an energy company and can help drive Columbia’s transition to a green community.

Part of Rouse’s original vision was to respect the land, we must return to that vision with a modern understanding of sustainability.

Stage 4: New business model creation and differentiationAt the highest level, firms exploit the megatrend as a

source of differentiation in business model, brand, employee engagement, and other intangibles, fundamentally repositioning the company and redefining its strategy for competitive advantage.

Imagine CA as a:Green energy providerSustainable lumber providerFood waste composter and soil creatorPromoter of local and sustainable foodAnd so much more

Firms end up in one of 4 categoriesLosers: Only modest improvements are made, the

vision id vague or disjointed, and market position is lost.

Defenders: Make improvements just enough to stay ahead of competition and regulations, surviving but not living up to true potential.

Dreamers: Make ambitious investments without proper planning or first steps, set goals beyond abilities, and end up greenwashing and wasting money. (CSS, biodiesel)

Winners: GE Ecomagination, Clorox Green Works both made a sincere and significant shift in strategy.

BibliographyEd Begley, Jr.’s Guide to Sustainable Living, Ed Begley

Jr., Potter Publishing, 2009Environmental Science: Where the Natural World &

Human Lives Intersect, Debby Luquette, Howard Community College, 2010

The Sustainability Imperative, David A. Lubin and Daniel C. Esty, Harvard Business Review, 2010, http://www.zurichna.com/internet/zna/SiteCollectionDocuments/en/media/FINAL%20HBR%20The%20Sustainability%20Imperative.pdf

Why Sustainability is Now the Key Driver of Innovation, Ram Nidumolu, C.K. Prahalad, and M.R. Rangaswami, Harvard Business Review, 2009, http://www.acteonline.org/uploadedFiles/Why%20Sustainability%20Is%20Now%20the%20Key%20Driver%20of%20Innovation%20Harvard%20Review.pdf

Biodiesel Basics and Beyond, William H. Kemp, Aztext Press, 2008

Photo Creditshttp://

www.charlierose.com/view/interview/4261http://

www.britishamericanauto.com/car-repair-education-and-info-blog/bid/42112/How-the-Columbia-Auto-Repair-Center-Got-it-s-Start

http://www.bnet.com/blog/clean-energy/halliburton-and-the-gulf-oil-spill-maybe-faulty-cement-is-the-smoking-gun/2996

http://www.gearthblog.com/blog/archives/2008/04/google_earth_april_fools_joke.html