McKinsey Report on Consumers and Climate Change

In the recent McKinsey Quarterly, there is an interesting report on a global survey that shows corporations need to account for consumer concerns about climate change. In it, consumers say that a corporation’s performance in addressing the problems of the environment and climate change affects not only how much they trust the company but also whether they would buy its products.

Consumers also expect companies to promote the public good by providing healthier and safer products, retirement and health care benefits for its employees, and much else besides. Their expectations vary by industry and geography. As such, the study concludes, "every business should think about the role environmental issues can and should play in strategy so that they can build trust among consumers and offer products and services that address their concerns."

To read the whole article, sign up for a free account on the McKinsey Quarterly site. This is a useful newsletter for anyone interested in strategic management. McKinsey & Company is a global management consulting firm, the top, if you will amongst the big strategic management firms. They provide advising services to the world’s leading businesses, governments, and institutions. These reports are on-par with the Harvard Business Review in terms of quality, and covers a broad range of business management topics.

The survey focused on the petroleum, food and beverage, retailing, and high-tech industries. They have a common need to tackle environmental issues but otherwise face different societal challenges and opportunities. The study shows that there is a gap between how well company executives perceive they are doing -- in terms of protecting public goods and serving a positive role in society, and how consumers perceive the companies are doing. This gap is wider in Europe and North America, than in developing markets. Environmental responsibility is cited as a key differentiator for companies, as it increases consumers trust of the corporation. However, the survey explores many social issues and is not limited to the environment.

When it comes to desirable corporate behaviors, the top four consumer concerns of those polled are:

• environmental issues including climate change
• healthier and safer products
• pension and retirement benefits
• affordable products for poorer customers

Executives however, do not have the same priorities. The top two items remain the same, but the next highest were privacy/data security, and job loss related to outsourcing overseas.

McKinsey suggests that as companies focus on their reputation, they cannot ignore the environmental aspect, which would also bring new cost savings and strategic advantage. However, other issues should not be ignored. The report goes on to say that since consumer and corporate concerns about social issues vary by region, it is a complex picture. As such companies still consider these as risks rather than opportunities, even though the market share for environmentally friendly goods and services continue to grow.

Survey methodology: The McKinsey Quarterly conducted a survey of executives in September 2007 and received responses from 2,687 of them around the world (36 percent of them CEOs or other C-level executives). During the same month, McKinsey conducted a survey of 7,751 consumers in eight countries: Brazil, Canada, China, France, Germany, India, the United Kingdom, and the United States. The latter survey explored consumer perceptions of the role business plays in society, the way large global companies deal with sociopolitical questions, and the issues facing four industries—food and beverages, high tech, petroleum, and retailing.

As originally published on AskPatty.com.

“Earth The Sequel”: Energy innovations to stop global warming

The Environmental Defense Fund has just released an interesting book, called "Earth: The Sequel", subtitled "The Race to Reinvent Energy and Stop Global Warming". It is a message of hope, about how humankind ingenuity can "save ourselves from ourselves by getting the end of the story just right" (Fred Krupp, author and president of EDF). It is a story on how we can stop global warming through clean energy innovation by American entrepreneurs.

In it are stories about various innovations in energy production, possibly the biggest growth sector of our economy in the coming years, perhaps even right now. The book’s writing style is very accessible, especially if you like stories. It claims that: “twenty years from now some thirty-five-year-old is going to say the reason he’s a billionaire is that he read this book when he was fifteen”. Mayor Bloombergy of New York City gave it a glowing review: “Krupp and Horn have turned the doom and gloom of global warming on its head. Earth: The Sequel makes it crystal clear that we can build a low-carbon economy while unleashing American entrepreneurs to save the planet, putting optimism back into the environmental story.”

Amongst the innovative startup companies whose stories are told in this book are companies that:

• reengineered the metabolism of yeast to ferment sugar into pure petroleum (Amyris Biotechnologies, Emeryville, California)
• used nanotechnology to create a silicon powder that can then be printed like ink on thin-film solar cells, reducing cost and cell efficiently significantly (Innovalight, Sunnyvale, California)
• harnessed the up-and-down motion of ocean wave (kinetic energy) to pressurize water which then turns a turbine that generates electricity (Finavera Renewables, Vancouver)
• harnessed the geothermal potential of hot springs to produce electricity that keeps an ice museum frozen in the Alaskan summertime (Chena Power, Chena, Alaska)

To quote Fred Krupp, “nature teaches us, provides us everything -- we just have to open our eyes.” Read this book if you want to learn about innovation and investment opportunities in the growing energy sector, or if you are just curious what the leading, bleeding edge of energy innovation is like today. Many of these technologies are already powering the renewable energy portfolio of our utilities, which will only increase in the future.

Here's the trailer. And here's how to buy the book. When I get a chance to read in more details Chapter 4 and 9, which have some nuggets on car-related energy innovation, I will post another blog summarizing them. Meanwhile let us know what you think about energy innovation, and the book, if you have read it.

A Twist for A New Year Resolution

As originally published on AskPatty.com, under the title "Women and Cars: The Psychology of Global Warming".

Here is an entertaining New Year resolution that we women could adopt to help fight climate change. What’s more, it seems like it will makes for a lively conversation topic with girlfriends!

Recently, Britain’s top government scientist, Professor Sir David King of Cambridge University, was quoted as saying that if women stop admiring guys with fast and sexy cars, the world could be a greener place. An advocate for individuals to assume more personal responsibilities in fighting climate change, he was asked at a lecture by a young woman what she could do. His advice? “Stop admiring young men in Ferrari's.” Instead, admire people who conserve energy.

What an interesting take. Although a bit flippant, he does have a point. Our mindset determines the kind of world we live in. It is all in the attitude.

Personally, I too am an advocate for individuals being more aware of the impact of their personal actions on the environment. That was the reason I originally started writing my blog. Little decisions that we make regarding our choices in daily life can make a huge difference, even if the benefits are not readily apparent. After embarking on my personal journey for making changes in my personal life to be more sustainable, I found that every little action became a little seed that further opened my eye to more possibilities in the world. I kept learning about the world, which is fun, and renew the sense of awe that I had lost after childhood.

Mother Theresa once said, “Don’t wait for leaders. Do it individually, one person at a time." Personally, I made some small changes that added up to a lot, in the end. It started with being conscious of my car usage and writing a blog about the topic (which happily got me a gig writing for AskPatty). I have learned so much about alternative cars and fuels. Then I converted to solar power (thanks to my fiances' persistence), requested a worm bin for composting as Christmas gift, and enrolled in a sustainable MBA program so I could be in jobs that make a difference. Each step made me feel good, and each step was a learning experience. This Christmas, I gave green services as presents (e.g. GreenDimes.com, Kiva.org) instead of goods, after watching the short movie “The Story of Stuff”. So Professor King’s suggestion was exciting to me, because unlike my green adventure so far which was mainly stuff-related, he is suggesting some psychology to go with it.

Obviously, Professor King’s quote angered Ferrari owners and sports car racers, which is understandable. But the fact remains -- those fast cars have really low mileage. That means more fossil fuel used, which is the greatest contributor to greenhouse gas. (Click on the graph below for the breakdown.) However, if electric sports car, such as the Tesla Roadster are more widely used – I think Professor King will approve of women admiring such race car drivers. :-) Well, really there is nothing wrong with liking the look of muscle cars. In fact, I admire the look of the Lotus and Lamborghini very much. However, there is no waay I will let my vanity contribute to climate change. I strongly agree with the professor that we all have levers. Similar to the concept of voting with our purses, we can vote for goodness in the world with our heart. He said: admire guys who are into a sustainable lifestyle. I like that. We women are known to be emotional, so why not let our emotions help fight climate change?

Interestingly, the article also mentioned that although 77% of the population in U.S. believe in climate change, only 40% believe that it is due to human activities. However, if you look at the EPA figure below, the chart clearly shows that human-related activities, especially transportation and electricity contribute the most to greenhouse gases. Now, even if you think that the professor’s comment is a little chauvinistic, don’t you think he has a point?

Pie Chart: This graph clearly shows the biggest contributors to greenhouse gas emission, from human activities.

Another interesting concept: "Ecological Debt Day"

As originally published on AskPatty.com, with the title, "What is Your Ecological Footprint?"

The Footprint Network tells us that this year, we have finished consuming all the natural resources the world produces for the year, on Oct 18. Globally we humans now requires 1.3 planets to support us. In other words, we are not living sustainably. We are borrowing resources from future generation in order to cover all our consumption needs today. This calculation is made by calculating humanity’s Ecological Footprint (its demand on cropland, pasture, forests and fisheries) and compares it with global biocapacity (the ability of these ecosystems to generate resources and absorb wastes).

The Ecological Debt Day has been creeping earlier on the calendar. According to current calculations, humanity’s first Ecological Debt Day was December 19, 1987 - the first time we spend more than earth can replenish. Since then, our eco-footprint has continued to grow, and we are exhausting the world's natural supply earlier and earlier each year.







This reminds me of the glaciers I saw in Alaska. According to the park ranger, the melting of these glaciers are significantly faster each year in the past few years. The amount that used to melt in 3 months is now melting in a week. Apparently, within a decade, most of the glaciers up north will be gone. This very visible impact of our increasing demand on earth’s capacity to support life is scary stuff. However, since each of us contributes to the problem, we can each do something about it. We pretty much owe it to our grandchildren, don’t we? Borrowing against their bank of future natural resources just to satisfy our own personal needs today for more stuffs, is pretty irresponsible of us.

Since we are spending a deficit of 30% in natural resources this year, let's see what that means closer to home. Say you are spending 30% more money than you earn each month, and you keep on with it, you will need to constantly borrow against those credit cards to finance yourself. The lifestyle may seems good in the short-run because you can keep buying the things you want soooo much to have, but what are you doing to yourself in the long run? You will need to work forever, just to pay the interest and minimum payments. You will never get out of debt. Is the short-term worth doing? Definitely not. The only solution then is to immediately start spending below your earnings so that you can make a dent on already accumulated debt.

Now the forests, oceans, soil, climate, and air around us do revive themselves so we have been taking them for granted somewhat. They provide services necessary for our lives, such as oxygen, food sources, medicinal sources, and various cleaning services that keep our water supply potable and available. There is no “Ecological Debt” credit card statement in our mailbox to remind us. However, there are plenty of evidences of them suffering. Scientists are most worried about ecological overshoot, when a natural system is so taxed that it cannot recover by itself. Remember the collapse of the Great Banks fisheries off the Atlantic Coast of Nova Scotia in 1992, forcing its closure? The Atlantic cod fish stock was decimated.

I found an intriguing competition by Planet2025.tv, called the Ecological Debt Day video competition ending Jan 31st, 2008. They, along with Footprint Network, are trying to get the word out on the concept of ecological overshoot. Perhaps you can think of an innovative way to describe overshoot by tying the concept into your daily life -- e.g. commute, home, or work.

While the footprint concept seems to be related to the renewable capability of planet earth, I think it is relevant to an automotive blog, since our cars are the biggest contributors to GHG emissions, which taxes our atmosphere's capability to regulate earth's temperature and air quality properly.

How Good is Ethanol for the Environment?

As originally published on AskPatty.com at Thanksgiving, 2007.

Ethanol is all the rage in some circles now as an alternative fuel for our cars. Midwest America is especially enthusiastic about it because the agricultural economy can benefit from it. Brazil has successfully built a national industry based on sugarcane ethanol and biofuel cars. How good is ethanol really, for the environment?

The hope is that ethanol can potentially produce many more benefits compared to oil. Farmers, obviously, are eager for the ethanol economy because it expands the market for their crops. Midwest America hopes that ethanol will help restore many rural agricultural communities perhaps even making them profitable enough so we can do away with government subsidies one day. That's the dream.

Ethanol has the potential to help nations achieve energy independence, reducing dependency on foreign oil. For example, Brazil announced last year that it has weaned itself off of oil, after 10 years of intensive effort in encouraging the budding ethanol industry to mature. This is a hopeful development. Imagine if China and India and USA goes energy independent! This would definitely change the geopolitical picture of our world. Indeed many countries with agricultural economy create enough agricultural wastes to produce certain amount of domestic ethanol fuel sources. Brazil used its sugarcane stalks leftover from its sugarcane processing industry. Closer to home we have weed grass and corn stalks in abundance.

Ethanol proponents also claim that it creates no net addition to the world’s carbon emission. Plants are carbon sinks, meaning they absorb CO2 from the atmosphere to grow, so when we burn biofuel, we are simply releasing what it had absorbed. How true is this? A recent National Geographic article explored this quite effectively, in my opinion.

The gist of the article is that it is important that the right agricultural product is used for producing ethanol. The drawback of our national ethanol picture today, is that, it takes herbicide, machines, land, and lots of water to produce corn and soybean which generates most of our ethanol today. This creates competition with food supply (think cereal and feedstocks). Even if we turn all our soybean and corn supply into ethanol, we can only replace 12% of our gasoline and 6% of our diesel. The article also said that there is no net gain in fossil fuel replacement by moving to corn ethanol because it takes as much gasoline to produce the amount of corn needed. Additionally, to produce enough corn as ethanol feedstock, we will need to plow into increasingly marginal lands.

Biofuel According to Nathanael Greene, a senior researcher with the Natural Resources Defense Council, the key is to figure out how to make fuel from plant material other than food: cornstalks, prairie grasses, fast-growing trees, or even algae. Brazil did a great job in this area by converting the agricultural waste products from their massive sugarcane industry into fuel. These would have ended up as waste anyway, so finding another usage for them is a great example of whole-system thinking. As a result of their forward-thinking approach, 85% of Brazilian cars now run on alcohol, and although most have flex-fuel ethanol-gasoline engine, the price advantage of sugarcane ethanol in Brazil means that many haven’t visited the gas station for years. That's something I'd like to have for the sake of my ever diminishing wallet! Still although the ethanol picture in Brazil is rosier and definitely more sustainable than that of the United States, it is not without problems. Pressure for deforestation because of acreage expansion, burning of cane to prepare fields for harvesting, and worker exploitation remain issues to be solved.

Some groups are working on taking the food chain out of the picture entirely. This seems to be most promising path for the U.S. ethanol progression. Cellulosic ethanol, made from plants with high-level of chains of sugar molecules in the plants’ cell walls, is currently hailed as great replacements for soy and corn sources. These alternatives are none other than the deep-rooted perennial prairie grasses like switchgrass or buffalo grass, sawdust, and other non-food stalks and leaves (e.g. cornstalks). The trick is to make processing them cheap enough to be competitive with other fuel sources.

In sum, the ethanol picture is complex. It is an alternative for now, in competition with electric and hydrogen fuel cell to power our vehicles. The eco-footprint argument for ethanol is still murky and will probably remain contentious for the next few years. As voters and consumers, it is important that we continue to educate ourselves on the total impact of each fuel alternative, as billions and billions of dollars are being poured into each. Which one will help us reduce our greenhouse gas and carbon footprint the fastest? How long can we afford to wait before having a real solution to power our car more sustainably? The climate crisis is here, and we can’t afford to fool around for years until a solution is found. We need market solutions that will make a significant dent on the climate crisis, TODAY, so we better spend our precious R&D dollars and time wisely.

If you haven’t seen the news yet, IPCC, the U.N.'s Intergovernmental Panel on Climate Change, has just given us the last warning on climate change in its final report as reported by NYTimes this past weekend. Even in its cautious and measured tone, IPCC has declared global warming as "unequivocal." That’s scary stuff.

Interview with FlexFuel USA CEO

Ask originally published on AskPatty.com under the title, "Flex Fuel USA Ethanol Conversion Kit".


Flex Fuel USA, an American startup in Chicago, recently announced the release of
Flex-Box Smart Kit™, a first-of-its-kind fuel conversion system that is EPA-certified. After a year of R&D, the company was able to produce the first and only E85 conversion unit has been certified by the Environmental Protection Agency (EPA) for fleet vehicles, and allows fleet operators and drivers to fill up on E85 (a blend of 85 percent ethanol and 15 percent gasoline) E20, E10 or pure gasoline. Go American entrepreneurs! Together we are making our vehicles greener!

The EPA certification is important because it means you will not void your car’s warranty. Bear in mind though that this system is only useful if you live where ethanol public access fuelling stations are fairly readily available, e.g. in the Midwest. If you live in California you are out of luck, since there is only one public access fueling station, in San Diego… To find a pump, click here.

Flex Fuel USA is currently targeting the fleet market (e.g. taxis, livery, police departments) because most of them have their own fueling sources. According to Mitch Sremac, CEO, consumer versions should be available for 80% of today’s late model cars in the fall of 2008. So stay tuned! However, if you work with a fleet today, you may want to check out their website for more information. The press release notes that the system provides:

* An approximate 15 percent per gallon fuel cost saving over gasoline
* Additional fleet incentives such as rebates, fuel discounts, and access to HOV lanes
* An 85 percent reduction in fossil greenhouse gas emissions
* Independence from foreign oil & supports domestic farming
* Significant increase in vehicle horsepower, acceleration and performance. Ethanol is a high octane fuel hence burns more efficiently.

In their test with a fleet-type vehicle, the Crown Victoria, fuel efficiency measured in miles-per-gallon is comparable to slightly lower than gasoline. Regular gasoline version for the 2007 model comes in at 17/25 city/highway, while with the kit it is 16.9/26.8 city/highway. However, since ethanol only costs about $0.60 per gallon today, overall fuel savings is significant. According to Sremac, the payback period for a fleet is about 6 months, while for consumers with already efficient cars and low overall mileage, it could be between 12-15 months. This does not yet factor in the tax credits or state rebates. Monetary cost, alone, however should not be the only guide in our decisions on fuel sources. Let’s not forget about the environmental and political cost of using gasoline and foreign oil.

Curious about how difficult it is to get this system into my car when it becomes available, I asked Mitch what a consumer needs to do. AAMCO Transmission Centers “Eco-green Auto Service™” program can already install the kit, but if you want to save another $200, and you already know how to do tune-up, change your own oil and brakes, it should be easy enough to DIY, with two hours time investment. The retail cost will be $1295, while a system purchased from and installed by AAMCO will be $1495. Sounds to me like a fairly affordable and immediate way to reduce your carbon and eco-footprint. I am looking forward to fall 2008 for the consumer version and future stories about whether this helps E85 take off as an alternative fuel.