The Positive Economics of Going Green

“The only way the Green Revolution will be achieved is through economic opportunity, not through regulation,” says Rob Rafson. A world-renowned environmental engineer and author of the highly regarded book, Brownfields: Redeveloping Environmentally Distressed Properties (1999), Rafson has cleaned up and redeveloped 17 brownfields — including four Superfund projects. He’s on a mission to teach sustainability management to businesses. “Once they see the economic benefits of going green, the transition is easy to sell to shareholders and management,” he tells us.

“In our opinion,” Rafson says, referring to Full Circle, his Chicago-based Sustainability Management Solutions firm, “any business interested in going green should do a cost benefit analysis of tactical opportunities that support their overall strategy and simply look at the return on investment (ROI). Whether it’s through renovating to make a building LEED certified, going to solar power, reducing waste stream, etc. — if you filter all the tactics by ROI, the steps become obvious. If you execute on the projects that have immediate and real economic impact, you can stair-step toward more complex projects with longer term ROI.”

We spoke with Rafson from his office to find out more about how he is teaching businesses to go green — and how well it’s working. This is Part One of a four-part interview.

BPGL: If it’s economically beneficial to go green, why aren’t more businesses doing it?

RAFSON: In my mind, the problem of gaining traction with the business world is that they get bombarded by all these great strategies. Any one of them may be good for the environment, but there are so many strategies that the business managers get lost. One company had a 250-page sustainability strategy. They hadn’t implemented any of it, simply because it was so overwhelming.

A CD collection takes up space that a electronic downloads do not.

BPGL: How do you convince a business to get started, when it seems such a huge task?

RAFSON: Our focus is that you can make money doing it. It’s not just about creating a better image, but about the economy of becoming more energy efficient, material efficient, transportation efficient, and more efficient in packaging. When you start to talk about cradle-to-grave, you can make real change. Look at WAL-MART; they changed their national waste program and saved $33 Million in the first year. It’s not just good for the earth, its good business.

Think about iTunes, for example. Eventually, a hard physical recording of media, theoretically, will no longer be needed. You can get all your music through electronic media. They’re selling pure information — intellectual property — as opposed to taking oil and aluminum, creating a CD, shipping it, putting it on a shelf, having to heat that space that you put the CD in, and so on.

There are many industries stuck in old technologies. The transition companies are starting to make is in realizing there are big economic advantages to doing things differently.

BPGL: How about an example of a company that can’t deliver its goods electronically?

RAFSON: Republic Services (which recently merged with Allied Waste Industries) is one of the largest waste hauling companies in the world. They’re making incremental transitions in all sorts of ways, but changing the entire way they do business? That’s huge. It may take a decade or two to get there. So, they’re making little steps.

Checking tire pressure every day saved thousands of dollars for a garbage hauler.

For example, no driver is allowed to get in the truck till they check that they’ve got the correct tire pressure. With this simple action, they’re saving between 1 and 1 ½ percent on fuel.

When you think about the fact that a fleet of 1,000 urban trucks will spend about $18-25 Million on fuel in one year, and you realize a company like Republic has 15,000 trucks…. Do the math. Tire pressure checks and maintenance become vastly more important than just keeping the trucks rolling. They’ll eventually have an impact on the company’s carbon footprint and help prepare them for cap and trade.

BPGL: That’s a significant savings for a trucking company, especially when fuel prices are high. What can other companies do?

RAFSON: Basically, every industry needs to look at how they can save fuel. In November, United Airlines flew to Australia. They did lots of strategizing and, without changing the plane at all, they saved 1,600 gallons of fuel. They flew at the same altitude, but slower. They reduced the amount of water on the plane and did everything they could to reduce weight.

It’s all about looking at what you’re carrying to reduce your drag. They avoided wind turbulence. They calculated the amount of fuel they needed more accurately, and used a constant descent vector on approach. They could have saved 2,600 gallons of fuel, if they hadn’t had to fly around a storm.

United Airlines cut their carbon footprint and their costs.

What usually happens is that a company focuses on their core business, and they’re already making transitions there. They don’t always look at other parts of their business. The reality for the airline industry is that 95 to 98% of their carbon footprint is the plane. But that’s leaving out the discussion of what to do with the ground equipment, anything outside of the plane.

United Airlines is committed to switching their ground gear to electric. Already, almost 100 percent of their pushback equipment is diesel electric or pure electric. They have other equipment they still need to transition.

A lot of airlines that don’t have electric equipment have gone to no-idle policies: If it’s not moving, it’s off. We may think that’s a simple idea, but it’s changing the way of thinking. Drivers don’t like to restart diesel engines when it’s cold outside. They used to turn the baggage trucks on in the morning and off at night. The trucks would run all day. Turning them off when not in use requires a cultural change, a change in the way of thinking.

BPGL: You mentioned that real change wouldn’t happen through regulation, but through realization of the economic benefits. Tell us a little more about that.

RAFSON: It’s so obvious and mind-blowing that people don’t think of it that way. In the past, most industries focused only on the strategies with regulatory pressure on them: air, water, CAFE [corporate average fuel economy] standards — whatever. Obviously when they quit changing the CAFE standards, all U.S.-based automakers quit thinking they needed to do anything more in terms of increased efficiency.

Changing from diesel to electric vehicles is economical, but requires a change of mindset.

Now, we’re not only dealing with greenhouse gases, but with terrorism and hugely high oil prices (not today, but they’ll be back again) as the economic drivers. U.S. automakers are losing out, because they didn’t think people really cared. When the price of gas was around $3.75/gallon, I estimated a Prius driven the average 12,000 miles per year saves $1,200 or $1,300. That’s assuming the Prius gets 55 miles per gallon (mpg), and that the average US car gets 22 mpg.

The average American keeps a car for 9 1/2 or 10 years, so the saving is about $12,000. Subtract that from the actual price of a car, and it’s a whole lot cheaper than anything else Americans have on the market.

If you look at it that way, selling a “cheap” car isn’t necessarily selling a cheap car. You have to look at the life cycle and operating cost for the vehicle, and then focus on additional strategies.

BPGL: What do you mean by “additional strategies”?

RAFSON: Somebody had a great idea for the Prius: Plug it into your business or home. Drain the battery during peak power and fill it up during non-peak power. In Chicago, the ROI for doing that with a Prius is something over $1,000 year. This is especially true during the summer, when the cost of electricity doubles in the daytime while air conditioning is running. You’re basically reducing the peak load demand.

Conceptually, one vehicle doesn’t matter; 100 doesn’t matter. But when you start to get to millions of vehicles, you start to change the structure of power distribution. You change the structure of demand. Then, if you add solar PV to the grid along with other inconsistent power generation devices, like wind, you can actually stabilize the power grid using strategies like this.

Part 1 of 4

Part 1: The Positive Economics of Going Green (Top of Page)

Part 2: Tax Incentives Boost Green ROI (Top of Page)

Julia Wasson

Blue Planet Green Living (Home Page)

"We Can Get Completely Off Oil in 15 Years”

Jeff Wilson has a plan: “We can free the United States of its dependency on oil, not just foreign oil, in 15 years.”

Yeah, sure. This guy’s dreaming. I thought, as I began to read his book, The Manhattan Project 2009. I’ve heard pie-in-the-sky schemes before.

Then I read his book, and I was convinced. My next thoughts were, Everybody needs to read this book. It’s all here, in a step-by-step program. He’s even written legislative proposals for congressmen. It’s all here, and it is possible. I wanted to talk to this guy.

So, Julia and I called him. We caught up with him in his office near Minneapolis.

BPGL: In 2008, you authored The Manhattan Project 2009, which describes a step-by-step process for the U.S. to escape our dependence on oil. How did you get interested in this topic?

WILSON: I’ve always had an interest in energy-related topics. I have degrees in physics, math, and electrical engineering.

6,800 lithium ion battery cells power the Tesla electric car. It can go 200 miles on a single charge and accelerate from 0 to 60 in four seconds.

I wanted to know the real situation with oil and our real possibilities for moving into alternative energy. There’s no consistent story about our oil use. Our government doesn’t have a consistent story; the media doesn’t have a consistent story. I delved into the research to answer the question for myself. What I found was so interesting that I felt compelled to share it.

I don’t see myself as a natural writer. My only virtue is that I have no patience for anything other than people getting straight to the point.

BPGL: How did you come up with the title?

WILSON: “The Manhattan Project” is a term I heard bubbling up here and there in the discussion about energy. The general public is way ahead of our federal government. The people know we need to get something done and are working to get to it. State and local governments are working toward it.

Every once in a while in America, we have something really important come up for which we need action right now, no ifs, ands, or butts. In the Manhattan Project and the Apollo missions, we stepped up to the plate and accomplished the impossible in a very short time. That’s what needs to happen now.

BPGL: How are we going to pay to create the infrastructure necessary to recharge electric cars?

The Chevy Volt, an electric car of the future. Photo: (c) General Motors

WILSON: In the book, I propose government subsidies to promote the manufacture and purchase of electric cars. This will cost hundreds of billions of dollars. But keep in mind that, in 2008, we spent at least a trillion dollars more for the oil we used (including the price of oil and the cost of protecting our oil interests) than we did in 1998, just 10 years before. And we aren’t using substantially more oil now than we did then. The cost of using oil kept rising. It has become so hideously expensive that we can afford to make a very major investment in getting ourselves off of oil and still come out ahead financially.

BPGL: You’re working against a number of huge lobbying entities — the internal combustion auto industry, oil companies. How will you combat that?

WILSON: I see the move toward the electric car, in particular, and alternative energy, in general, moving much faster than I anticipated. And it’s gaining momentum quickly.

A couple of entrepreneurs started a business software company. They sold out to SAP software, and walked away with $400 million. One of them, Shai Agassi, says he realized then that he had enough money. He asked himself, What can I do with the rest of my life? He settled on a cause: getting us off of fossil fuels. So, he started a company called Better Place. Its main focus is how to most efficiently move the world to electric cars.

To do this, we need to put a number of things in place, most particularly, the infrastructure. This means we need charging stations everywhere: at businesses for their employees, in shopping centers for customers, and at home. He’s also working with car companies Nissan and Renault to help design the necessary support systems.

Better Place’s first client was Israel, a country that feels much more threatened by dependency on foreign oil than we do.

Its second customer was Denmark. By the end of 2007, Denmark was getting 20 percent of its electricity supplied by wind. Their problem was that they had so much wind energy installed, if it was blowing during a period of low demand, such as at night, they had far more electricity than they had customers to buy it. They were giving up some return on investment on their wind generators because they had too much energy. They saw electric cars as an opportunity to use the electricity during non-peak hours, nighttime. Everyone wins.

Better Place’s third customers were the cities San Francisco, Oakland, and San Jose. They all made commitments to make the Bay Area compatible to electric cars. They are planning to spend up to $1 billion to construct charging stations in the next few years

Better Place has now signed contracts with the state of Hawaii as well as a large electric company in Australia. There is a list of other pending contracts, too. Their business is exploding. And all this is happening without governmental support or, rather, in spite of it.

Small wind installations will change the way the grid works.

I see Better Place as the next Microsoft. The big companies of the late 1900s related to computers. In the new century, alternative energy and electric cars will be the boom industries. Better Place is growing so fast, I’m not sure how they’ll keep up with it.

BPGL: Does your book deal with anything about home energy use?

WILSON: No, not really. Home energy use is not so dependent on oil. Heat and electricity for homes come mostly from natural gas, uranium, and coal, and we have at least 20 years before those supplies will get tight.

My book is different from most green-related books on the market. Mine focuses on oil and getting us off oil. Seventy percent of oil in the US is imported. Worldwide, we’re using oil at two times the rate at which we’re discovering new oil. But here in the United States, we’re using oil at four times the rate at which we’re discovering new domestic oil. The oil supplies are tight and getting tighter. We have an immediate crisis with oil.

BPGL: We’re looking at a huge paradigm change. The people are changing much faster than the government does. How can we push the government?

Solar installations supplement power in many states. This installation has been working for 20 years.

WILSON: The other point that drove the title and format of the book is that I not only saw the general populace ahead of the government, I saw them concluding that nothing will happen with the federal government before the current administration is out. Everybody is hoping that something major will happen with the new administration.

In the book, I provided all the information needed to create a proposed energy policy. In fact, the second chapter is a proposed legislative agenda of bills that need to be passed daily, as soon as the new president takes office.

BPGL: Who is helping you push this?

WILSON: I’ve sent the book to Shai Agassi, to my governor, and to mayors in cities in California, who are pushing electric cars. I’ve done radio interviews and articles on a few websites. I’m hoping for that big break, but don’t know where that might come from.

BPGL: Where do you see home energy use in the future?

WILSON: I mention this in the book, in my legislative proposal for the Smart Grid. In every backyard, you’ll have a 100 kW battery buried there, which can run an average house for three days. The Smart Grid will solve the problem that we currently have with intermittent energy from wind and solar. We need a way to even out the general electrical demand. Ultimately, that means storage at individual homes.

This is how I see the future: At your home, you’ll generate whatever electricity you can with solar panels. You’ll have an Internet connection between your battery charger, an energy controller, and the electric company. You’ll be able to get the price of a kW at any given moment. Then you can buy when it’s low, and sell to the grid when the price is high. In some cases, you might make money. In the big scheme, it evens out the electrical demand for the grid, and makes it so you run your home on the lowest price of electricity.

BPGL: I see giving the public access to the grid info as counter-intuitive to the way the current power companies see the grid. They see it as “their grid.” They don’t want the public to know the price at which they buy and sell electric power. Won’t that be difficult for them to approve?

WILSON: The only interface between the electric company and the general public will be, “What’s the price at any given moment?” They’ll change the price up and down with supply and demand.

Today, the electric companies are the power generators, but over the next 20 years, they’ll shift to simply being power brokers.

BPGL: They have to start improving the grid now.

Independent wind farms contribute more than half the power of XCEL Energy.

WILSON: We’re moving from 500 and 1,000 MW power plants, to 10 MW wind farms. Instead of a few huge generators, you’ll have a large number of small generators.

Look at XCEL Energy, one of the biggest power suppliers. More than half of the wind energy that they bring on line, they purchase from independent wind farmers. Power companies will have to switch to purchasing power from independent generators.

Just in the last few days, I read about Xcel Energy’s experiment with a 7 MW-hour battery at a wind farm. That would supply about 200 homes with a full day of electricity. They are installing it and starting to play with it. Right now, the batteries are too expensive to be practical, but they’re getting ahead of the curve. The ones they’re using (sodium/sulfur), are about the size of two semi trailers.

Indianapolis Power and Light is experimenting with a 1 MW lithium battery for dealing with peak handling.

Minnesota and Iowa are the two biggest states for in-state wind generation. Both get 7% of their in-state generated power from wind. That’s developing into a healthy competition.

BPGL: We’ve been reading about car companies doing research on lithium and problems with the electrical flow. When you have that much power in a small space, there is risk.

WILSON: Altair Nanotechnologies makes a battery that, in my mind, is way ahead of all the others. They got rid of the polymer electrolytes that have been in most lithium batteries. Their battery is unusually safe. They’ve shot a bullet into it, dropped it till it bursts, and nothing happens. The brand name is Nanosafe.

The Nanosafe battery can do 10,000 or 12,000 discharge cycles — which is 10 times as much as a typical lithium battery — before it starts to get weak. And, it can be charged quickly.

This Phoenix can be fully charged in 10 minutes.

The first electric car being made with it is from Phoenix Motorcars in San Bernardino, California. It can be charged in as little as 10 minutes. There will be a problem getting that much power from the electric company for 10 minutes, but at least the car and battery have that ability. In fact, Altair claims its batteries can be charged to 80% in 60 seconds. It’s a game-changer in battery technologies.

This kind of battery technology makes long-distance travel possible. The first-generation Phoenix cars go 120 miles on a charge. The second-generation goes 250 miles. You can charge it in 10 minutes, then go another 250 miles. Now, you’ve answered the problem of long distance travel with the electric car.

I see a number of companies advancing in technology so fast that it’s mind boggling to me. A couple of other battery companies are being forced down that path. Warren Buffett just bought 10% of BYD in China for a quarter of a billion dollars. They’ve started shipping an electric car. Their battery can quick-charge in 30 minutes. This one came out of nowhere. Warren Buffet called that one correctly. They’re taking on the world. They can go 100 km without recharging.

Another quick-charge battery is the one in the Subaru test car. It charges 80% in 15 minutes. I’m not sure who supplies their batteries.

Do you see my earlier point? I’m surprised at how quickly this stuff is moving even with our government standing in the way.

BPGL: So, the conclusion here is that your legislation is key?

WILSON: Yes. I guess the point I was making was, it’s moving surprisingly fast without the legislation, but let’s get the legislation in place and go full force.

BPGL: With bailouts from our government for the automakers, wouldn’t this be a good time to force them to change their behavior with your legislation?

WILSON: I see the current issue of the Big 3 as being more an issue of survival. They had their chance a few years ago with the General Motors EV-1 that they were shipping into California. They let that drop. Really, whether most of the Big 3 stays in business or not doesn’t have much bearing on the advancement of this technology.

In my book, I propose providing subsidies directly to the consumer to purchase electric cars. Let the customer decide who’s offering the best products. There are plenty of other companies who will step up to the plate.

The cool thing about green collar jobs is, we’re not just making an excuse to give someone a paycheck. These paychecks will be paid back many times over with the money we save on energy.

BPGL: What do you plan to write in the future?

WILSON: I can’t say that I see that far ahead. What I have in mind is to do frequent updates to the book. I’ll put out a new addition about every six months.

BPGL: How long did it take you to write the book?

WILSON: My first book was How Much Energy Does My Car Use? I finished that one in April or May of 2008. That’s when I decided to write the second book. I submitted the finished manuscript around Labor Day.

It was a labor of love. I love this technology. I can’t tell you how much I enjoyed running the numbers on this stuff. I get real excited about it. We’re about to move into a very interesting future.

BPGL: One last question. If you could speak directly to Mr. Obama, what would you say?

WILSON: Our government showed us a couple months ago that, if they consider something to be important and urgent, they can come up with a trillion dollars over a weekend.

The fact that it’s a trillion isn’t a shame. But the trillion should go into something that will pay back big. If you put a trillion dollars into converting to alternative energy, that would have huge payback for us, our children, and our grandchildren.

BPGL: Anything else?

WILSON: The bad news is that the oil supply is an immediate crisis. The good news is that we can get completely off oil in 15 years, if we make the commitment. We can move ourselves into a new world with a never-ending supply of cheap, clean energy.

Joe Hennager

Blue Planet Green Living (Home Page)