"Read odd stuff. Look anywhere for ideas." Tom Peters
Fred Krupp, president of the Environmental Defense Fund, is a pioneer in the use of market forces to achieve ambitious environmental goals. He leads EDF's teams of scientists, economists, and attorneys in developing solution-oriented approaches to four main goals: stabilizing the Earth's climate, preserving species and habitat, protecting human health, and safeguarding oceans and marine life. His achievements run from strengthening the Clean Air Act to making the biggest corporate buyout in history, of the Texas utility TXU, contingent on climate action. He has advised presidents and partnered with DuPont, FedEx, GE, McDonald's, and Wal-Mart. With coauthor Miriam Horn, who is on staff at EDF, Fred Krupp has just released an optimistic book about how we can solve global warming, Earth: The Sequel—The Race to Reinvent Energy and Stop Global Warming. Erik discusses the book with Fred for our interview.
tompeters.com asks ...
Fred, what's the big message here?
FK: We all know what's happening with the earth right now: melting glaciers, rising sea levels, strengthening hurricanes, dying coral reefs. The question is, what comes next? It can be a future with an abundance of alternatives to generate electricity, and to get us out of this fix we're in. There are a lot of reasons to be hopeful that if the government passes the climate change law we need—that is, the kind of cap and trade law all three presidential candidates are committed to—it will start an incredible race for clean alternative energy. Because once you put a lid on global warming pollution, those alternatives can compete fairly on a level playing field.
Can you explain cap and trade briefly?
FK: Sure. Nowhere in the world have we ever solved an air pollution problem—which is essentially what climate change is—without putting a legal limit on the amount of pollution that can be thrown into the air. A carbon cap sets the legal limit on the amount of global warming pollution that can be spewed into the sky. The trading mechanism gives companies the flexibility either to make the required reductions, or to buy credits from those who have found a cheaper way to reduce that pollution. Anything that reduces carbon dioxide in the sky, in a scientifically verified way, can earn a tradable credit.
Basically, we take the current situation—where there's no cost for throwing global warming pollution into the sky—and we turn it on its head. You will have to pay to get a permit to put pollution in the sky. The cap will decline over time, so there will be a steadily decreasing number of permits. If you invent or deploy a technology that reduces your emissions beyond whatâ€™s required, then you will have a new, profitable commodity to sell in a marketplace. So it aligns our economic incentives with what society needs.
You say that this is what reduced acid rain in the Midwest and Northeast United States in the '90s.
FK: Yes, a similar system was used to reduce acid rain nationwide. Emissions have been cut in half at a tenth of the price that was expected. So it shows that with the right type of government intervention, we can unleash a tremendous amount of creativity.
Of course in the U.S., the government could easily determine which factors were causing pollution within their own borders. When you're talking about cap and trade on a global scale, it's much more complex. We can't control what's going to happen in China, India, or Germany for that matter. Isn't that an issue?
FK: Absolutely. All the other developed nations have already moved forward to limit their global warming pollution. We're the last remaining developed nation that has yet to commit to action. Once we do, the focus will be redirected from us to the developing countries and their need to act. A combination of carrots and sticks—like those mapped by the Lieberman-Warner bill—will then get those countries to make legally binding commitments.
It seems that the larger message of your book is that we need these cap and trade regulations set up to release innovation around the world. You showcase a lot of the innovation that is already going on. I think much of it will come as news to many people. You discuss solar, geothermal, wind, and marine sources of energy. Which do you think will provide most of our energy moving forward?
FK: Actually, I think it will be human energy. When we unleash this incredible amount of resourcefulness, talent, and genius, it's going to prove that the same profit motive that got us into this fix can get us out of it. I cannot predict whether it's going to be solar cells far cheaper than the ones we have now, or new methods of harnessing the immense power of ocean waves, or new advanced sorts of bio-fuels. But I can tell you that there's such an abundance of alternatives that the process of writing this book really helped me to see that just over the horizon lies a very bright future.
Let me read you something I found in the Week Daily based on an interview Ray Kurzweil, another of our Cool Friends, did with LiveScience.com. "The sunlight falling on earth offers 10,000 times the amount of energy that humankind consumes every year. Once we perfect solar power, we'll be energy-rich, able to power homes and make hydrogen fuel cells for our cars."
FK: There have been incredible advances in solar power. First Solar now has a market capitalization in the billions because they figured out a way to make solar cells less expensively. While it was among the first to go public, a range of other entrepreneurs are hot on its heels to make huge volumes of solar cells even more cheaply. In the book we look at a bunch of pioneers, including Conrad Burke from Innovalight. Innovalight figured out a way to take silicon from cheap, un-purified sources, and blend nanoscale particles of that silicon into an ink. They can then print this ink onto rolls of flexible material, like steel foil. Half the cost of solar panels today goes to making and installing those big glass and aluminum frames. Innovalight's flexible solar cells wonâ€™t have to go on the roof, they will be the roof.
Bill Gross from Idealab has taken a different route: heâ€™s figured out how to focus a lot of sunlight on a little solar cell. With cheap optics, he concentrates sunlight 800 times, so that one square inch of solar cell produces as much electricity as 800 square inches without those concentrators. The solar cells he uses are the worldâ€™s best, made by Boeing for the Mars Rover. But the microprocessors he uses to keep his lenses following the sun cost about 30 cents each. Twenty years ago they would have cost 2,000 dollars each. There's example after example in this book; it's really a guidebook to what's happening out there, whether you want to participate as an inventor, investor, or just an informed citizen. When the race begins in earnest, when our government caps global warming pollution, then all of these things that are now starting up will take over.
I noticed that solar would take up less real estate for the same amount of electricity generated by wind power. Is that an issue or is there enough land?
FK: Well, communities all over the country will have to decide. There are even cases where you can do solar energy and wind power together, because the wind turbines don't block that much light, and they typically hit peak production at different hours of the day.
Cape Wind is trying to build a wind farm in Nantucket Sound. They've met with massive amounts of resistance from an aesthetic standpoint. Do you think that's just because they happened to site it near a playground of the wealthy? Or is it something that most people can expect to run into as they start developing alternative energies?
FK: The reality is that there are going to be siting issues for everything in our society. But I'm hopeful that as time goes on, people will understand that a clean wind turbine is actually attractive. It represents a future where we can generate power and live in harmony with the planet.
I participate in the Pan Mass Challenge, a bike ride fundraiser for cancer research. We spend a night sleeping in tents at the Mass Maritime Academy in Bourne, which is on Cape Cod. They have a massive turbine that's about 300 feet tall with blades that are probably 150 feet. I was sleeping almost underneath this thing. It was beautiful, just lying there listening to it slowly rotating. And it's even more beautiful knowing that it's generating electricity.
FK: I think our sense of aesthetics will change over time, will allow more of these things to generate community support.
You write, "Innovation can come from unexpected sources and policy must take that into account." That leads to your discussion of prizes. We're now all familiar with the X PRIZE and the founder of Netflix offering a million dollar prize for somebody to develop a better algorithm for recommendations. In the New York Times there's an article about a company called Kluster that's trying to match businesses with common folks suggesting ideas for businesses or products, and create a market. What do you make of that?
FK: The reason we talk about prizes in the book is that everyone understands that a prize can get the juices of entrepreneurs going. Competition also highlights the humility that we should all have as we approach problem solving. One of the first examples of competing for prizes on a large scale was when the British Parliament offered a prize to solve what was then a big challenge of the day: figuring out how ships could tell how far east or west they were; their position in longitude. They offered 20,000 pounds which was a huge amount of money back then.
Everyone assumed that the answer would come from leading scientists making sophisticated maps of the constellations. In fact, the answer came from a clockmaker named John Harrison, who figured out that if he could just get a clock to work reliably at sea—in the salty air that corroded most clocks—all the ship's captain would have to do was look straight overhead when the clock hit noon, and the position of the sun would tell the captain how far east or west he was from Greenwich.
So innovation comes from unlikely sources. That's why this should be an open competition where prizes are awarded based on performance. The best way I can explain cap and trade to you, Erik, is that it will offer a stream of mega-prizes to those who figure out how to reduce carbon emissions. And that stream of mega-prizes can reverse this mounting disaster.
Why are we in this dire situation? Because our economic incentives fail to take into account the cost of throwing global warming pollution into the sky. Once you fix that one simple thing, and limit the amount that can go into the sky, boom! Things fall into place. Entrepreneurs coming up with new answers don't have the tremendous disadvantage of having to compete against the belching industries of yesteryear that don't have to pay any cost for using our atmosphere as a trash can.
Existing industries are going to try to fight this as much as they can, until there's a reason not to.
FK: Yes, although the fact that our three presidential candidates are all for a carbon cap is a reflection not only of citizens, but also businesses coming around and realizing this problem has to be solved. We now have 29 businesses that are part of the United States Climate Action Partnership, including John Deere, Caterpillar, Duke Energy, and GE, all of whom are calling on Congress to pass a cap on carbon. A lot of mainstream businesses have realized that this sort of change is necessary. It not only protects our economic future and our human future, it also sets up different rules under which confident, well-run businesses will be able to compete.
You can go to TerraPass and other sites online and buy carbon credits to offset your own footprint. Is this meaningful?
FK: The standards for carbon credits have yet to be developed. Because the government hasn't established legal limits, there isn't an official definition for what a carbon reduction is. There is uncertainly when you go online and buy a carbon credit. What are you getting? To the credit of TerraPass and several of their competitors, even in this voluntary market they've tried to make sure that the credits they're selling are real. But the best thing for the public will be when the government gets involved and defines standards so that not just anybody can claim to be selling a carbon credit.
What about recycling? You don't cover it in the book, but isn't it a form of energy reduction? Are we wasting our time recycling?
FK: It depends on the material. Each material has its own energy equation. It takes one-twentieth of the energy to recycle an aluminum can into new aluminum as it does to make aluminum from bauxite—in other words, from scratch. By and large, for many materials, recycling does give us a real global warming benefit.
When we cap carbon, it will add great financial incentives to do the recycling that really makes sense, because it will further heighten the profits of recycling.
A couple of years ago, people were stealing newspapers out of recycling bins, because for a brief moment in time recycled newspapers had a serious value per ton. But that quickly ended. I don't know what happened. It was this weird little spike in the recycled newsprint market.
FK: It has to do with the number of de-inking plants that are built. But the important point is that the economics, without government taking action, don't lead to innovation. Profit seekers could be the ones polluting and not solving the problem. So that's why it's very important that government fire the starting pistol to begin this race by setting up a cap and trade system. Then we must find ways to inspire the rapidly developing countries to do the same.
Excellent. Fred, thank you very much for your time.
FK: Thank you, Erik.
Email: fkrupp (at) – edf.org