Smart meters and stakeholder engagement

 

You may have missed it last week, but there was an excellent piece on the opposition to smart meters in California in the New York Times.  PG&E has installed 7 million smart meters in California since 2006; they transmit real time data on consumers’ electricity use to the utility, helping them to allocate power more efficiently.  The goal is to give consumers information about how they use power, and incentivize them to use less of it.  However, opposition to the smart meters comes largely from two different constituencies: Tea Party conservatives and consumers afraid of EMF.  Initially, you may remember, opposition to smart meters came when electricity bills increased; critics first charged that the meters were inaccurate, but it soon became apparent that the old meters were undercharging.  Now, opposition from Tea Party conservatives to smart meters is predictable; doubtlessly PG&E is just the latest Big Brother out to destroy their lives.  However, the anti-EMF opponents are a constituency that PG&E can work with, and should have worked with.  After all, it would be easy enough to find a way to connect these meters to broadband lines.

However, if we step back and examine this problem, a lot of the fuss comes down to stakeholder engagement.  Both Santa Cruz and Marin Counties put up obstacles to these meters because PG&E did not effectively engage with them beforehand.  Ultimately, we are going to have difficulties adapting to our warming climate; as we make policy changes, it will be more important than ever to properly engage and address concerns before and during rollout.  Unanimous consent is probably an unrealistic goal, but acknowledging and working with people is a must.


A climate change movie that doesn’t care if you believe in climate change

A remarkable new documentary is out this month, called Carbon Nation.  Director Peter Byck bills this film as a “climate change movie that doesn’t even care if you believe in climate change.”  All I can say is you’ve got to see this film.  Take your conservative friends and family, too.  Byck really frames the challenges and opportunities of climate change in an elegant and open-minded way – this film is not preachy, it is straightforward; it drives home the point that people are confronting this problem already, with solutions that can be adopted on a much larger scale.  This film is a game-changer.


Eisenhower’s military-industrial complex leads on sustainability

Dwight D. Eisenhower, President of the United ...

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In the current issue of The Atlantic, BU history professor Andrew J. Bacevich revisits two famous speeches by President Dwight D. Eisenhower.  One of them, his farewell address delivered on January 17, 1961, in which Eisenhower warned America about the dangers of what he called the “military-industrial complex,” gained a lot of attention in light of our latest wars:

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.”

Bacevich ties the farewell address to an earlier speech, delivered on April 16, 1953, known as the “Cross of Iron” speech.  Bacevich identifies a constant theme in the two speeches, that investment in the military-industrial complex is undesirable:

“The essence of this theme was simplicity itself: spending on arms and armies is inherently undesirable. Even when seemingly necessary, it constitutes a misappropriation of scarce resources. By diverting social capital from productive to destructive purposes, war and the preparation for war deplete, rather than enhance, a nation’s strength. And while assertions of military necessity might camouflage the costs entailed, they can never negate them altogether. “Every gun that is made,” Eisenhower told his listeners, “every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.” Any nation that pours its treasure into the purchase of armaments is spending more than mere money. “It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.”

In light of the calls for austerity and the reduction of our budget deficit, any reduction in military spending remain controversial; however, recent investment by both the Department of Defense and the military contractors in sustainability initiatives has also been heralded as a positive contribution towards fighting climate change.  The military is investing in biofuels, clean energy, and innovative new efficiency technologies.  Contractors like Lockheed Martin are investing in innovative new clean energy technology:

“There’s a concentrated solar array whose curved mirrors move to follow a light that mimics the passing sun. There are a pair of small buoys that show how energy from waves can be converted to electricity and sent back to shore through underwater coils. And there’s a model of a town and military outpost that demonstrate how micro-grid technology can better manage energy use and reroute supplies during outages.  [Matt] Kier doesn’t work for a alternative-energy startup. He’s an engineer for Lockheed Martin, one of the country’s largest defense contractors. And the display room, which the company calls its Energy Solutions Center, is nestled near fighter, space, electronics and cybersecurity displays just down the road from the Pentagon. Over the past two and a half years, the Department of Defense has undertaken an ambitious effort to cut its energy use, start tapping renewable sources and understand the impact of climate change on its operations. Each military branch has laid out energy targets and has goals for reducing fuel use in vehicle fleets and feeding bases with alternative energy. For example, the Navy has committed to getting half its energy from alternative sources by 2020 and by then expects it will use 8 million barrels of biofuel a year. As the military gears up to meet its energy goals, it will rely on defense companies to help plan, engineer and build a leaner, greener force.”

Interestingly, while Eisenhower worries, in his farewell address, that government direction of research and technology might endanger the “solitary inventor” and the “free university,” he also warns of a greater danger:

“As we peer into society’s future, we — you and I, and our government — must avoid the impulse to live only for today, plundering for our own ease and convenience the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage.”

While Eisenhower was arguing against the 1950s belief that we could have our guns with our butter, he also worried that we might waste our precious resources.  In light of our runaway greenhouse gas emissions, climate change, and growing resource scarcity, the investment by the DoD and our military defense contractors in sustainability and clean energy technology is true leadership.  While the Chamber of Commerce and companies like Koch Industries spend billions of dollars each year to fight climate scientists and confuse the public about climate change, the Department of Defense and its contractors are investing money in the technologies that will make significant contributions outside the realm of defense, like algae produced biofuels.  Eisenhower would surely be disheartened by the power that the defense industry holds over the public purse and policy, and yet I think he would be equally disheartened at the American failure to confront climate change seriously.  These initiatives by the DoD and defense contractors will not solve all of our problems, but they are a step in the right direction, one that Eisenhower would have applauded.


Our culture of disposability, and its costs

Van Jones spoke at a TED event in Santa Monica in November, about the economic injustice of plastic, and the culture of disposability that permeates our society.  He brings up a really interesting point when he compares the person who recycles their plastic water bottles and the person who throws them away. Typically, the person who recycles their bottle will feel satisfied that they are doing their part for the environment.  However, the cost of plastic manufacture and recycling are borne by the poor of the world.  The stretch of American known as ‘Cancer Alley,’ along 85 miles of the Mississippi River from Baton Rouge to New Orleans, produces plastic and petrochemicals, and has disproportionately high cancer rates.  Van Jones points out that plastic is often shipped to China for recycling, where more poor people process it.  When we satisfy our thirst conveniently with disposable containers, there are costs borne outside of the direct transaction, what economists call externalities.

However, our culture celebrates convenience and consumption, and many of us don’t understand the true costs of how we live.  Bill Gerlach talks about Mindful Consumption in his blog, The New Pursuit.  He writes about restoring our balance with the natural world, and becoming present to our lives, the world around us, and our place in it.  He offers some helpful strategies for mindful consumption, including buying less plastic, single-tasking, and pausing before making a purchase.  Becoming more mindful  is difficult in today’s world, with the litany of communication media, and our go-go-go lifestyles.   However, we have crucially lost touch with what it is that makes us human.  Thomas Berry, author of The Dream of the Earth, was a Catholic priest and a deep ecologist.  He wrote that our culture is distorted, and is “the origin of the deteriorating influence that we have on the life systems of the Earth.”  We would be smart to rethink our throwaway culture, because honestly, there is no ‘away.’


Addicted to Risk

Naomi Klein speaks at TED last month about how “our underlying assumption of limitlessness allows us to take the risk that we do.”  She looks at the Alberta Tar Sands, the BP Oil Spill, and our ever falling EROEI, and examines why we continue to see unending growth as the answer to all of our problems.


A review of 13 Bankers

When you talk with Conservatives about regulation, they will generally tell you that government regulation is too pervasive and ineffective; additional regulation is out of the question, and existing regulation should be simplified.   Those same conservatives often blame the financial crisis and the Great Recession on government involvement, and claim that if only the markets were free of government interference, rational actors would allow the markets to regulate themselves.  However, deregulation during the last three decades eliminated most of the protections put in place after the Great Depression, and put us in a hole we have yet to dig ourselves out of.

Simon Johnson and James Kwak, creator of The Baseline Scenario blog and authors of 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, examine the long history of financial regulation and deregulation in their recent book.  They show that, without question, the Wall Street banks continue to hold inordinate power over our government and the U.S. economy.  They carefully trace the bipartisan financial deregulation that began under Ronald Reagan but continued through each successive administration, leading to the near collapse of the Global economy:

“Never before has so much taxpayer money been dedicated to save an industry from the consequences of its own mistakes.  In the ultimate irony, it went to an industry that had insisted for decades that it had no use for government and would be better off regulating itself – and it was overseen by a group of policymakers who agreed that government should play little role in the financial sector.”

For example, Johnson and Kwak explain the SEC agreement of April 28, 2004 that allowed the five large investment banks (Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, and Bear Sterns) to calculate their own net capital based on internal models, rather than using standard models, allowing them to expand their leverage extensively for the next three years.  In fact, the regulation put in place by FDR after the Great Depression was systemically dismantled, and 13 Bankers shows how that dismantlement created massive financial institutions that were not only Too Big to Fail, but too powerful to control:

“The fact that their failure could entail the loss of millions of jobs gave the banks the power to dictate the terms of their rescue.  If the government insisted on paying market prices for the toxic assets, or insisted on taking majority control, the banks could simply refuse to go along, secure in the knowledge that the government would have to come back to the table.”

13 Bankers examines many common assumptions about the financial crisis; for example, conservatives tend to blame the entire crisis on Fannie Mae, Freddie Mac, and the Democratic Party.  However, Johnson and Kwak artfully disarm that claim:

“The riskiest mortgages, however – the ones that pushed the housing bubble to dizzying heights – were simply off-limits to Fannie and Freddie.  The [Government Sponsored Enterprses] could not buy many subprime mortgages (or securitize them) because they did not meet the conforming mortgage standards… ultimately regulatory constraints prevented them from plunging too far into subprime lending.  As housing expert Doris Dungey wrote, ‘the immovable objects of the conforming loan limits and the charter limitation of taking only loans with a maximum [loan-to-value] ratio of 80%… plus all their other regulatory strictures, managed fairly well against the irresistible force of innovation.’”

In short, the banks lobbied for years to remove the regulations that limited their size and scope; they developed complex financial instruments that were impossible to understand without a PhD from M.I.T.; they used those instruments to hide risk inside AAA rated securities that ultimately plummeted in value, and to move debt off their books; and finally, they had the nerve to complain about government interference after taxpayers backed up those risky bets.

Last summer, the Financial Reform Law was finally passed by Congress and signed by the President.  On The Baseline Scenario, Simon Johnson quickly identified the missing ingredient in the new regulation: it does nothing to reduce the size of institutions that are Too Big To Fail.  In 13 Bankers, Johnson and Kwak examine some common arguments about large banks, that they supposedly gain economies of scale, and that our large corporations require large, multi-national banks.   In fact, those claims “suffer from a shortage of empirical evidence.”  Johnson and Kwak provide good evidence to the contrary; for example, Johnson & Johnson used 11 different banks in their 2008 debt offering, and 13 different banks in their 2007 debt offering.

13 Bankers clearly identifies the systemic risk that TBTF banks offer, and warns of an even more dangerous crisis to come in the next financial cycle.  One of the main reasons is that TBTF institutions are effectively subsidized by the government, getting money for lower interest rates than smaller competitors; this occurs because investors know the government will always bail out TBTF institutions; this competitive advantage will provide the TBTF institutions a strong incentive to take excess risk.  Ultimately, until TBTF institutions are reduced in size, they will remain dangerous to long-term economic health.  Johnson and Kwak propose that commercial banks be limited to 4% of GDP and investment banks to 2% of GDP.  This would affect only six institutions: Bank of America (currently at 16% of GDP, JP Morgan Chase (14% GDP), Citigroup (13% GDP), Wells Fargo (9% GDP), Goldman Sachs (6% GDP), and Morgan Stanley (5% GDP). The goal would be to allow these banks to fail without taking down the entire economy with them.

13 Bankers will give you a good understanding of how bankers and the government have navigated the regulatory question over America’s history, and what caused the financial crisis.  The book also provides an excellent prescription for tackling the TBTF problem.  The Baseline Scenario is also an excellent resource, updated daily.


Kodachrome, marketing nostalgia.

Today, the last roll of Kodachrome film was developed into slides in Parsons, Kansas, at Dwayne’s Photo, the last store in the world to process the film.  This story brings to mind the Season One Finale of Mad Men, the famous Carousel scene, when Don Draper speaks about how “technology is a glittering lure, but there is the rare occasion when the public can be engaged on a level beyond flash, if they have a sentimental bond with the product… a deeper bond: nostalgia; it’s delicate, but potent… In Greek nostalgia means the pain from an old wound.  It’s a twinge in your heart far more powerful than memory alone.”  He then goes on to show images of his family taken with Kodachrome film.

In the months leading up to today, people flocked from all over the world to Dwayne’s Photo in Parsons, Kansas to get their film developed.  This is the reverse of a story like the release of the iPad, or a new iPhone, because Kodachrome is nostalgia personified.  Unlike the new smartphones, which will be outdated in a few years, Kodachrome managed to stick around for 75 years.  Paul Simon wrote an unforgettable song about it.  The nostalgia which Don Draper talks about is indeed potent.  In fact, nostalgia is under-appreciated when it comes to marketing sustainability.  While technology increases in leaps and bounds, it can overwhelm us; the simplicity which will be necessary to shift towards sustainability is channeled through nostalgia.  Nostalgia is the long letters we used to write, the joy we used to find in our communities, and the pleasure of making things for ourselves.  Nostalgia is the emotional key to our collective hearts.  The folks who flocked to Parsons, Kansas certainly felt it.


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