This blog will cover some news items related to Sustainability: Corporate Social Responsibility, Stewardship, Environmental management, etc.


Starting over: When you've lost everything, you need a grant rather than a loan

Microcredit and disasters

Starting over

Dec 14th 2005 | DELHI
From The Economist print edition

When you've lost everything, you need a grant rather than a loan

THE United Nations named 2005 the Year of Microcredit. In much of Asia, it was the Year of Disaster Relief. It began just after the devastating tsunami that killed hundreds of thousands and wrecked millions of livelihoods from Indonesia to Somalia. Then, after the annual monsoon floods, an enormous earthquake in Kashmir in October inflicted on Pakistan a catastrophe of even greater logistical difficulty. In both cases, huge sums poured into the relief effort. The fast-growing and fashionable industry of microcredit—the provision of tiny amounts of finance to people of little means—might seem an obvious vehicle for transmitting it to the poor. Only up to a point.

In fact, the very idea of using microcredit for relief work seems almost heretical to some purists, for whom the whole point of microfinance is that it is not charity, but a self-sustaining means of helping people start or expand a small business. If micro-lenders start dabbling in disaster relief, they send confusing signals about their real business.

Yet Syed Hashemi, of the Consultative Group to Assist the Poor, a microfinance consultancy, told a conference in Delhi last week that many donors and aid agencies assumed microcredit was “the answer” to the problems left by the tsunami in the places it shattered, such as Aceh, on the Indonesian island of Sumatra. He says that lenders, who may themselves be badly hit by a disaster, are best advised to limit their involvement in relief work. Similarly, governments and donors should avoid muddling aid and credit by offering cheap loans. If people have lost everything, they probably need to be given money, not lent it. “To disguise this through a subsidised loan undermines the whole operation.” After grants, a phase of cash-for-work (on reconstruction, say) is often needed before microcredit comes into play.

Not many microfinance institutions offer the services that people need most after a catastrophe: insurance, and access to their savings and to remittances from their families and friends. However, there is also a demand for income-generating assets—fishing-nets, tools, bicycles, stocks for a small shop, and so on—and hence for microcredit to finance them.

In the remote parts of Pakistan worst hit by the earthquake, where 300,000 people have been affected, there are fewer than 10,000 “active” microfinance loans. Yet in tsunami-hit Sri Lanka, where there was a large existing microcredit network, it has played a big if controversial role. The government and foreign donors have been lending at a concessional rate of just 3% a year to banks and microfinance institutions, which have been lending on at 6%.

Alessandro Pio, in Sri Lanka for the Asian Development Bank, which has helped finance this, concedes it is not a perfect solution. It is, though, a good way of reaching the fishermen, stall-holders and others who need small business loans. For a lender wanting to help, there is little choice but to match the existing subsidies. But it is hard for subsidised lenders to revert to lending on commercial terms; and because the banks and microfinance institutions are taking all the credit risk, most of the money flows to known customers.

Even what look like post-disaster success stories are ambiguous. Vijayalakshmi Das, of Friends of Women's World Banking, an outfit based in the Indian state of Gujarat, describes how, after a terrible earthquake there in 2001, it lent about 10m rupees ($210,000) to farmers. The loans, of about 100,000 rupees, 20 times the Friends' normal credits, financed water-pumps, seeds and tools and were all paid back within a year. But the group's mandate is to help women and poor households. Lending to farmers was a job that banks should have done.

Friends could help because it was quick and flexible, and active in the area. This should be the great strength of microfinance institutions. One lesson of the year of disaster relief is about the limits to what microfinance can achieve. But a more important one is the need for more of it.

Vendor Claims Fuel-Cell Power Boost

Vendor Claims Fuel-Cell Power Boost
PolyFuel has developed a very thin membrane for fuel cells in handheld devices that it claims delivers 33% more power density than the previous industry benchmark.

Vendor Claims Fuel-Cell Power Boost

PolyFuel has developed a very thin membrane for fuel cells in handheld devices that it claims delivers 33% more power density than the previous industry benchmark.

John Walko
EE Times

Dec 15, 2005 07:55 AM

LONDON — Fuel cell membrane specialist PolyFuel, Inc., has developed an especially thin membrane for passive direct methanol fuel cells (DMFCs) that it says delivers 33 percent more power density than the previous industry benchmark.

Just 45 micron thick, the membrane is already being utilized or studied worldwide by original equipment manufacturers (OEMs) of hand-held devices, particularly in Japan.

Polyfuel (Mountain View, Calif.) says the significantly reduced thickness increases performance by reducing the resistivity of the membrane, while allowing a higher level of water back diffusion.

“PolyFuel has been working very hard with OEMs to refine its membrane technology to meet their specific needs,” said Jim Balcom, president and CEO of PolyFuel.

“Perhaps the most requested feature has been a thinner membrane that retained the methanol crossover, water crossover and durability advantages of our 62 micron membrane, while meeting aggressive, new fuel cell performance targets. We are pleased that we have been able to specifically engineer a membrane to meet these requests.”

The 45 micron membrane’s peak electrochemical performance in passive hardware at 40C is 80 milliwatts per square centimeter of membrane (80mW/cm2) at 0.28V versus 60mW/cm2 for the 62 micron membrane – a 33 percent improvement that results directly from the 27 percent reduction in thickness. Balcom said Polyfuel is working with six major corporations that are developing DMFC systems, including NEC and Sanyo Electric. Of these six, five are already evaluating the 45-micron membrane for “near-term” commercial use, including conducting extensive durability and performance testing.

The new membrane will be available in both a hot-bondable version, and a conventional version.

"With all of the sizzle of new portable applications, such as downloading feature films to a mobile phone, or watching the news, the cold reality of 'where will the power come from?' is being completely under-reported," says Balcom.

"The truth is that, according to our customers, a consumer's daily mobile power requirements in 2007 will be at least four times what the best-available batteries can deliver today, and 2-1/2 times greater than experts believe batteries will ever deliver. As a mature technology, batteries are essentially tapped out."

He maintains that fuel cells, which use refillable or replaceable cartridges of methanol fuel, are on the verge of delivering the necessary continuous power levels that video- and wireless-intensive applications require. They will offer essentially continuous run times as replacement cartridges or refills.

Cell phone maker Samsung, at a recent industry seminar, confirmed that the functional energy requirements of 4G phones will be four times that of existing models.

And market research group NanoMarkets, LC, in a September, 2005 report, predicted that in 2007, 4G phones, which run high-speed multimedia applications, will be able to have less than 30 minutes of talk time using contemporary batteries, and reiterated that today's 3G cell phones in some parts of Asia are already limited to 60 minutes talk time.

They concluded that lithium batteries cannot be safely advanced much further, "...with perhaps only a potential for a 50 percent improvement in battery energy density possible hereafter." One problem has been that the airline industry has raised concerns about passengers being allowed to take or use micro fuel cells and methanol cartridges aboard aircraft. However, the ICAO (International Civil Aviation Organization) voted recently to allow passengers do this.

"This is a critical, non-technical advance towards the commercialization of portable fuel cells," said Balcom. "The rest is up to key component suppliers like PolyFuel and its customers.”


China waking up to the environmental cost of breakneck growth: experts

China waking up to the environmental cost of breakneck growth: experts

AFP, 9 December 2005 - Toxic spills, smog-filled skies and swathes of land reduced to dust -- scenes all too common in China, but green experts say the country is finally realising it must stop sacrificing the environment for growth.

While the government still struggles to be transparent when environmental disasters strike, China is increasingly worried about the effects of decades of rapid economic expansion, said leading climate change expert Crispin Tickell.

"There is quite a substantial change going on in the Chinese attitude," Tickell told AFP at a media and environment conference here. A former United Nations ambassador, Tickell has advised British prime ministers on environmental issues and is a member of the China Council for International Cooperation on Environment and Development.
Formed by the Chinese government in 1992 and including unpaid international experts who volunteer their expertise, it has direct access to Chinas leadership to advise on environmental issues.

Tickell said a council meeting at the end of November with Chinese Premier Wen Jiabao indicated a change in attitude towards climate change as well as other environmental problems.

"We received from the Chinese prime minister a strong affirmation that he fully supported the Kyoto protocol," said Tickell, referring to the global convention to reduce the emission of greenhouse gases. "They talk all the time about the balance between economic progress and conservation and care of the environment," he said.

"Somehow these two elements have to be balanced. For the moment they're not being balanced, but they all accept the fact that they need to balance it."

Asian Development Bank (ADB) environment advisor in China, Niu Zhiming, said that in one sign of the shifting mood, the government has put forward a new agenda to improve the environment over the next five to 10 years.

"One (goal) is to establish a so-called new rural society. That is aimed at several hundred million rural people to improve their livelihood, improve their environment, living conditions and so on," he said.

"The other is the government is trying to promote a kind of energy-saving development and recycling economy," he added. "Both these items are now being seriously considered in the government agenda and programs."

Pelting along the development path, China, is projected to grow by 9.4 percent this year, maintaining its hectic rate of expansion from previous years.

But the growth of cities and industry has led to land, air and water pollution -- Beijing is infamous for its smog -- and experts say programs to stop the damage are slow-moving.

Outside of the cities, the ADB has said that about 40 percent of China's land has been devastated by wind and soil erosion, deforestation and pollution. In the latest in a series of environmental disasters, the Chinese city of Harbin lost its water supply for five days after an explosion at a factory saw toxic chemicals spilled into the Songhua river which feeds the city.

The spill was initially covered up by local authorities, and environmental minister Xie Zhenhua was sacked over his handling of the case. "At present, the blind pursuit of development in some localities is placing huge pressures on protecting the environment. The situation is extremely serious," Chinas State Environmental Protection Administration vice head Wang Yuqing said at the time.

Tickell said the reaction to the recent incidents indicated the government was now taking the problems seriously and that a deeply ingrained culture of denial was now beginning to shift.

"They told a lot of lies in the beginning of course, they can't bring themselves to tell the truth the first time," he said.
"(But) I was quite struck by the fact that after these disasters, the prime minister himself went up to each place to see, and they've been much more transparent than they usually are."

One of Beijings challenges is trying to balance economic development, especially in deeply impoverished rural areas, with protecting the environment. "The development of the rural society is huge work and you have to find ways to improve the rural economy and improve the environment of the rural societies," said Niu.

"Economic development is very critical for environmental protection or improvement. It's impossible to solve environmental problems without sufficient money."

One area of change could be Chinas role as a growing producer of greenhouse gases such as carbon dioxide. Friends of the Earth says the country is expected overtake the US as the worlds biggest carbon emitter by 2025.

The group noted recently that China this year passed a renewable energy law to increase production of energy from sustainable sources such as wind and solar power, and has called on Beijing to continue its efforts.

Sustainable development review: EU is weak on ambition and targets

Sustainable development review: weak on ambition and targets, 14 December 2005 - The European Sustainable Development Strategy (SDS) was agreed at the European Council in Gothenburg in 2001. In the run-up to the Johannesburg World Summit on Sustainable Development, the EU also adopted a communication on the external dimension of SD to integrate the global aspects of this strategy.

The Commission was supposed to review the SDS "at the beginning" of the new Commission's mandate but several postponements indicated that the Commission's services were struggling with the review. In February 2005, the Commission agreed on an "initial stocktaking and future orientations" communication and in May it presented Guiding Principles on Sustainable Development, which were adopted by the European Council one month later.

Sustainable development is enshrined in the EU Treaty as the "overarching" principle of all European policies. But the vagueness of the concept of sustainable development and inherent problems of operationability, together with the EU's increasing focus on economic competitiveness and the effects of globalisation, has decreased the EU leaders' interest in this issue. It is significant that there is a special Council of Ministers for competitiveness but not for sustainable development.


The Commission's communication on the SDS review present itself as a "fine-tuning" of the 2001 strategy. Although the February 2005 stocktaking identified several unsustainable trends (see EurActiv 15 Febr 2005) , the Commission apparently does not see a need to strengthen the strategy.

The communication is a long list of implementations and actions that were already in the pipeline and presents this as a "stronger focus", with a "clearer division of responsibilities, wider ownership, broader support, a stronger integration of the international dimension and more effective implementation and monitoring".

The review's chapter on "key issues" lacks consistency. It mentions for example that the EU "uses a disproportional share of the world's natural resources" and states the need to reduce the EU's 'ecological footprint', but in the key actions connected to the same chapter does not come further than the proposal to "promote eco-innovation and to expand the market for eco-technologies".

In the chapter on sustainable transport, it re-introduced the idea of promoting alternatives to road transport, a strategy that was presented in its 2001 White Paper on Transport as "modal shift" but that has not got off the ground in the last five years.

The communication is a bit clearer on responsibilities and ownership:

  • the Commission will submit a progress report every two years, based on the set of indicators adopted in February 2005;
  • Council and Parliament will discuss the progress made every two years
  • EcoSoc (the European Economic and Social Committee) and the Committee of the Regions will have to build support for action and organise regular stakeholder discussions;
  • the Commission will review the SDS again in 2009;
  • member states are to review their SD strategies and undertake a peer review process to identify good practices; they could also set up independent advisory councils.
The chapter on instruments and tools shows weaknesses again:
  • the tool of "sustainability impact assessment" of EU policies is mentioned in the background text but in the proposed action, the word 'sustainability" disappears and the text states that all policies need to undergo "impact assessments"
    the EU should use the "full range of policy instruments" but the idea of "getting the prices right" is mentioned in the background, not in the concrete actions proposed;
  • the Commission should also "integrate sustainability into its new communication strategy";
  • business leaders and stakeholders should start a process of "urgent reflection".

Green NGOs expressed disappointment over the Commission's review. The European Environmental Bureau called the document "a step backwards" compared with the 2001 Sustainable Development Strategy and called on the incoming Austrian Presidency to convert this Commission review "into the visionary, ambitious and concrete strategy that the European Council asked for half a year ago". John Hontelez, Secretary of the EEB said: "The Commission basically withdraws as leader for sustainable development".

WWF called the review "a set of hollow promises" and urges the Commission's DGs to include sustainable development "into their annual work plans and budget requests for all measures proposed".

Latest & next steps:

  • The European Council will have a first debate on the SDS review on 15-16 December 2005;
  • The EEB is organising a conference on the sustainable development strategy in Brussels on 20 January.

EU official documents

EU claims success at Montreal climate conference

EU claims success at Montreal climate conference, 12 December 2005 - The eleventh meeting of the parties to the UN Framework Convention on Climate Change (COP-11) was held from 28 November to 9 December in Montreal. Montreal also hosted the first Meeting of the Parties to the Kyoto Protocol (MOP-1) since the international agreement came into force in February.

Some forty different decisions have been adopted at the conference.


Kyoto Protocol

Negotiations to extend the Kyoto Protocol beyond 2012 were officially decided on the last day of the UN climate change conference in Montreal on 10 December. The talks, due to start in May 2006, will focus on future commitments for the 157 developed nations that have ratified the international accord to reduce greenhouse gas emissions.

The first week saw the adoption of the so-called Marrakech Accords, which provide the rulebook for implementing the Kyoto Protocol. The agreement has made Kyoto fully operational since it entered into force on in February 2005.

A decision was also taken to streamline the Protocol's Clean Development Mechanism which allows developed countries to earn greenhouse gas reduction credits from investing in clean development projects in developing countries.

Another Kyoto mechanism - Joint Implementation - was launched. This will be of particular interest to EU-15 nations as it allows developed countries to earn allowances from projects in other developed countries, "in particular central and eastern European transition economies."

Talks launched under the UN convention

A last-minute agreement was found to launch talks under the broader UN Framework Convention on Climate Change (UNFCCC) to which non-Kyoto signatories Australia and the United States are also parties. At the insistence of the US delegation, the decision states that the talks "will take the form of an open and non-binding exchange of views, information and ideas […] and will not open any negotiations leading to new commitments".

Under the UNFCCC, a five-year work programme was also agreed to advise vulnerable countries on how to adapt to the impacts of global warming that cannot be avoided.


"This has been one of the most productive UN Climate Change Conferences ever. This plan sets the course for future action on climate change," said Richard Kinley, acting head of the United Nations Climate Change Secretariat.

Environment Commissioner Stavros Dimas hailed the outcome of the conference as "a watershed in the fight against climate change". Dimas said the agreement to extend the Kyoto Protocol beyond 2012 will "reassure business that investment in clean technologies will remain worthwhile" and will give researchers "a sense that the demand for new low-carbon technologies will continue to rise". But he also added that "there is still a hard road in front of us and the harsh realities of coping with climate change."

A tipping point came on the last day when former US President Bill Clinton said that the Bush administration's stated view that fighting global warming would hurt the economy was "flat wrong". With serious efforts, Clinton said, "we could meet and surpass the Kyoto targets in a way that would strengthen, not weaken our economies." He later told a press conference that Europeans should not try to force Kyoto-style targets on Washington but instead look to promote specific projects to reduce emissions that would have similar effects.

Environmental group WWF welcomed the "real progress" that was made at the conference. The agreement to launch talks under the UNFCCC, said the WWF, has "opened the door to broader participation from developing countries in the future". "Kyoto Parties must now redouble their efforts to meet their targets, as with 157 countries now signed up to the Protocol, carbon markets are a reality".

"Australia and the US are isolated as never before, and the overwhelming presence of US state governments, cities, trade unions, businesses, churches, youth and many other parts of civil society gave the rest of the world confidence that Americans do care about climate change," said Greenpeace.

Latest & next steps:

  • May 2006: first meeting of UN working group on extending Kyoto commitments for developed countries after 2012
  • Talks under the UNFCCC will also begin in 2006

Dupont, BP, Bayer Honored as Low-Carbon Leaders: Sponsored by The Climate Group, the awards were published in Business Week magazine.

Dupont, BP, Bayer Honored as Low-Carbon Leaders, 13 December 2005 - Bayer, HP, and Dupont are among the winners of the Low Carbon Leaders Award, which recognize emissions reduction and leadership on climate change over the last ten years. Sponsored by The Climate Group, the awards were published in Business Week magazine.

The awards range from big business to the individual, global to local. The Fortune 500 Company DuPont, for example, was recognized for its outstanding record on absolute greenhouse gas emissions (GHG) reduction. It achieved a 72% reduction of GHG between 1990 and 2003 and has saved $2 billion since 1990 by reducing its energy consumption. Meanwhile, the small town of Woking in the U.K. beat off competition from many larger cities. Its award is in recognition of its staggering 40% reduction of energy consumption in municipal buildings on 1990 levels in 2001. Woking reduced CO2 emissions 77% on 1990 levels in 2004 and saved £5.4 million in municipal energy and water bills since 1990 as a result.

"These awards are a clear recognition of how important leadership is in tackling climate change," said Dr. Steve Howard of The Climate Group. "These are the best examples of companies, cities, states and individuals who have taken a dynamic and pro-active approach to the issue. They have seen that the solutions to climate change are possible, available and cost effective. Our global future will be driven by a low carbon economy, and those already embracing this future are reaping the benefits."

The top ten companies honored with awards are:
1.        Dupont
2.        BP
3.        Bayer
4.        BT
5.        Alcoa
6.        IBM
7.        Catalyst
8.        STM Micro
9.        3M
10.        Iberdrola

The awards were decided by international jury of experts made up of representatives from politics, non-governmental organizations, and industry appointed by The Climate Group.

Unilever cleans up by learning how to sell to the poorest of the world

Unilever cleans up by learning how to sell to the poorest of the world

The Times, 10 December 2005 - Squeezed between tenements and a grinding dual carriageway, Unilever is building the future of its global business in the the biggest slum in Sao Paolo.

The building is a splash of powder blue in a drab world of corrugated iron and grime. The Omo Community Laundry is a temple of cleanliness in the middle of Heliopolis, a notorious favela, or slum, that is home to 150,000 Brazilians.

You could dismiss it as public relations, free washes for the unwashed. But it's a lot more than corporate social rigmarole because for Unilever the thousand or so women who register for free two-hour slots on the shiny factory-fresh machines are part of their core market.

This is about selling soap even if not a single packet is vended or given away at the Omo Laundry - the women bring their own powder. The mission is to sell a wholesome and desirable world of perfumed fragrance and pristine white linen, a world a million miles from the favelas and one that no slum-dweller could possibly afford.

Still, many Heliopolis women buy the product even though it is dearly priced. Omo sells for about 15-20 per cent more than Ariel, its main rival. But the Unilever brand, known as Persil in the UK, still dominates the Brazilian market. On supermarket shelves in Sao Paolo's rich and poor neighbourhoods, Omo packets are elbowing rivals into a corner.

No laundry brand in Britain could aspire to such pricing power but developing markets are different and, according to Patrick Cescau, Unilever's chief executive, they are the company's future. "Do the maths," he says. "In purchasing power terms, developing and emerging markets are already bigger. Every company sees it and everyone is going there."

Adjusted for purchasing power the dollar spend of consumers in Asia, Africa and Latin America was $15 trillion in 2000, roughly equal to the spending of North Americans and Europeans, Unilever says. By 2010, consumers in developing and emerging markets will have raced ahead of the developed world. Small wonder that the battle for consumer hearts and minds is getting nasty in Brazil, where Procter & Gamble, which makes Ariel, has slashed prices by 30 per cent in an effort to steal Omo's crown.

Unilever says it has held the line, retaining its 75 per cent share of the Brazilian market although at some cost in margin terms. It is a necessary cost, reckons the Unilever chief, and will have to be recouped in savings.

The cuts are likely to be felt in the old markets of Europe, where Unilever has started to outsource bureaucratic head office functions such as IT and human resources. Unilever's centre of gravity has shifted south and east, says Harish Manwani, head of Unilever for Asia and Africa. The move is not only in terms of markets but in ideas, where Unilever reckons it has an edge in its understanding of customers and what motivates them.

Faced with savage discounting, you might expect a soap merchant to cut the price but Unilever's Brazilian marketers did something unexpected. Working with the local office of Lowe, the ad agency, they worked up a campaign with the message that dirt is good.

Instead of stain removal at low prices, the Brazilian TV clips showed nice kids getting dirty, on the beach, in muddy fields, playing sports, all packaged with an airy-fairy message about freedom, learning and creativity.

It was a success and the Brazilian campaign did a world tour, recently arriving in Britain. It suggested that in Brazil, for the moment at least, Unilever seems to be winning the argument that local knowledge can head off a powerful American interloper. Instead of defending the price, Unilever reinforced its brand. It didn't matter that Omo was a bit dear if it played a tune that everyone enjoyed.

Janine Dodge, an Omo brand manager in Brazil, suggests that for Brazilians, poverty in itself is not such a stigma. How you look is what counts. "It's very important to look and feel attractive," she says. "People will say, 'I am poor but I dress well, I have clean clothes and I look good'."

Striking the right chord means playing lots of different notes, Manwani says. A typical developing country is a pyramid with a few very affluent at the peak and a mass of deprivation at its base but Unilever reckons that some of its best business is done among the poor. "Most of our competitors look at the top but our strategy is to work the entire pyramid," he says.

His business is not only about taking market share but building the market from the bottom. He gives as an example the development of the shampoo market in India, converting millions of people from cleaning their hair with a bar of soap. When Unilever launched Sunsilk in India, the take-up was modest until they switched from trying to sell $2 bottles of shampoo to 2 cent sachets.

It was a process of reverse engineering, Manwani says. Having established what the consumer could afford, Unilever then created a manufacturing process that could produce the sachets at low enough cost to yield a satisfactory margin. Hindustan Lever's local knowledge helped. Because many Indians oil their hair, they cut the cost further by removing conditioner from the shampoo, which only reduced the product's performance.

Manwani will not reveal the margin but insists that selling shampoo in tiny sachets makes good money. "It is not a fringe business, it is half of the business." He accepts that the return might be less than some top of the range products but Unilever is building markets, not parachuting in foreign products.

Nowhere is that more true than in food products, where local habits and tastes can make or break a product launch. Unilever itself learnt the lesson when it launched Slim-Fast, the diet drink, hoping to cash in on the body vanity prevalent among affluent Brazilians.

It fell at the first hurdle. The product requires users to adhere to a disciplined weight-loss programme. "Brazilian consumers were not ready to walk into that box," says Rick Andrews, head of the Latin American food business.

Still, Unilever reckons that the Heliopolis washerwomen are teaching them something that has relevance even in rich countries, where the market is polarising between premium-priced and deep-discount retailing.

Even in Europe it is about playing the right tunes to the right audience, Cescau says. "What consumers want is quality or value. They don't want what is in the middle. We need to drive quality at one end and introduce value at the other end."

News - California PUC to offer solar incentives

PUC to offer incentives for solar
By Matthai Chakko Kuruvila
Mercury News

State regulators unveiled a plan Tuesday to provide nearly $3.2 billion in incentives over the next decade to build solar panels on homes, businesses and other buildings.

If approved by the California Public Utilities Commission in mid-January, supporters say, it would be the nation's largest power investment program ever -- raising residential bills by an average of less than 25 cents a month over the next 11 years, according to advocates. The PUC, however, has yet to provide estimates on how much customers' bills would be affected. The release of the proposal begins a 30-day public comment period, after which the PUC is expected to approve the plan.

The plan is based on an estimate by the PUC that assumes the average residential solar system would produce 2.5 kilowatts, enough energy to supply about half the electric power needs of the average household. Barry Cinnamon, owner of Akeena Solar in Los Gatos and the president of the California Solar Energy Industries Association, said such a system would cost about $25,000 to install, although costs can vary.

For installing a 2.5 kilowatt solar system, the PUC proposal would provide a rebate of about $7,000 in 2006. In addition, a federal tax credit would lower the cost by another $2,000. Those rebates would decrease annually because costs to install solar systems are expected to continue to drop.

``It guarantees a smooth curve of 10 years of growth in the solar industry,'' Cinnamon said.

The PUC proposal comes just months after state legislators failed to pass a bill, SB-1, that would have required home builders to offer solar power as an option to buyers. The Senate bill was at the heart of Gov. Arnold Schwarzenegger's ``million solar roofs'' plan.

The PUC proposal won't require new homes to offer solar -- only legislation can make that happen.

But supporters say that the decade-long offer of rebates will make solar an increasingly viable option in California.

``It's a lot of money,'' Cinnamon said. But ``people should think about buying their own power and investing in it, rather than renting it forever from the utility companies. It's the difference between buying a car, and taking a taxi everywhere.''

The Senate bill faced stiff opposition on a number of fronts, including consumer groups. But even they say the PUC proposal looks promising.

The Utility Reform Network had raised concerns over SB-1, saying that it opened the possibility of removing consumer protections on residential electric rates that are written into law. The PUC plan wouldn't change the rate structure, which only legislators can do, so TURN isn't worried, said Bob Finkelstein, TURN's executive director.

In addition, the PUC proposal aims to set aside 10 percent of the program's funds to help low-income households or developers of affordable housing.

``That's evidence of good thinking,'' Finkelstein said.

The push toward solar power has come as the state has faced an increasing crunch on electricity costs. Nearly half of the state's electricity comes from power plants fueled by natural gas -- the price of which has steadily risen over the years. Coal and nuclear-powered plants are increasingly seen as cheaper options for electricity.

That worries Finkelstein.

``It strikes me as a no-brainer that we should be spending the money on solar and see where that gets us,'' he said.

Contact Matthai Chakko Kuruvila at or (408) 920-2722.


Energy & Climate Change: Sharpening the focus for action

Energy & Climate Change: Sharpening the focus for action - a business perspective

This paper, published in conjunction with UNFCCC COP 11, highlights the WBCSD's business perspective on energy and climate change and outlines key areas of short, medium and long-term actions. It welcomes the call for a "long, load and legal structure" and recommends elemets to be included in a long-term policy framework.

Energy is the single most important enabler of economic development and its production and use will surge in the coming decades. This represents a crucial challenge for society not only in terms of energy availability and affordability, but also as it may bring further adverse impacts on our environment. For example global temperatures could rise by a further one to four degrees by the end of the 21st Century, putting us on a trajectory where there is no clear understanding of the scale of climate impacts. The need to deal with the risks associated with climate change impacts is therefore essential.

Climate change is one of a suite of inter-related challenges facing the world alongside economic growth, poverty reduction, and sustainable development. Addressing climate change challenges requires clarity on these interrelated issues. Development, economic growth, energy and climate change agendas must be addressed in an integrated manner with full consideration of other global development themes and priorities. No one single solution will deliver the large step changes required to achieve substantial reductions in greenhouse gas (GHG) emissions. These changes will also take time to implement and business, government and broader society must be engaged in the process now as well as focus on long-term solutions.

The WBCSD Focus

The WBCSD recognizes that action is required on several fronts.

Creating a factual platform for action

WBCSD seeks to create factual platforms for action by translating the scale and complexity of the energy and climate challenges into simple, illustrative pathways. In doing so WBCSD presents a much clearer picture of the scale of the challenge and the large step changes required to reduce GHG emissions. Our publications Facts and Trends to 2050 ( 1 MB) and Pathways to 2050 ( 2.4 MB) profile the changes required across power generation, mobility, industry and manufacturing, buildings and consumer choices. The WBCSD also recognizes the need for better, clear and reliable data supporting decision-making on the options for addressing energy and climate change challenges.

Key areas for action

  • Energy efficiency: is a win-win option for society, business and the environment. Energy efficiency offers huge potential that needs to be tapped as a first priority toward a sustainable energy future;
  • Energy mix: promote the use of all non-emitting technologies, including nuclear energy;
  • Carbon capture & storage (CCS): fossil fuels will remain a primary source of energy for several decades, and CCS is a crucial bridge to new energy systems;
  • Enabling energy technology research and development (R&D): at a time when energy R&D is most needed, one can observe the paradox that government spending has been reduced in many countries. Lengthy capital investment cycles mean it can take considerable time for innovative technologies to penetrate capital markets. Policies driving innovation and supporting the expansion of R&D are vital and should be open now to all modern technology options.
  • Support to developing countries: technology transfer is crucial to allow developing countries to leap frog to modern stages of energy technologies. Incentives provided by governments will have an important enabling role to this end.
The Kyoto Protocol

The Kyoto Protocol is a first step toward establishing a global framework, however it has failed so far to engage a number of major GHG emitting countries and to put in place mechanisms that are truly adapted to market realities. The current instrument for generating carbon credits in developing countries, the Clean Development Mechanism (CDM), has to be streamlined and simplified and its visibility over the longer term needs to be enhanced. Complexity and bureaucracy lead to high transactions costs that are barriers to action.

Establishing building blocks and deploying tools and best practices

In the absence of a global framework for climate change, there is a strong need for common building blocks to be deployed to measure, manage and compare performance in reducing GHG emissions. The GHG Protocol – A Corporate Accounting and Reporting Standard (Revised Edition) ( 3.5 MB) was released in 2004 by the WBCSD and the World Resources Institute (WRI) and is being widely used as such a tool. Our work on the Clean Development Mechanism and the new GHG Protocol for Project Accounting ( 3.4 MB) adds to this toolbox and provides further guidance in support of harmonized approaches.

The WBCSD’s activities and programs are designed and implemented to enhance the business’ contribution to the definition of framework conditions. For example, we are exploring opportunities for and barriers to emissions reductions closely linked to individual sectors’ core activities. This work is implemented through our sector projects (Sustainable Forestry Products Initiative, Sustainable Cement Initiative, Mobility, Electricity Utilities) and is key to understanding and designing the elements of a future framework. The WBCSD’s new project “Energy Efficiency in Buildings” tackles an area of high potential for energy savings and related environmental benefits across a variety of sectors and activities.

Longer term policy and framework

The global energy system, characterized by investment decisions over long time horizons (i.e. 20-50 years) where capital projects implemented now set an emission pathway long into the future, requires a coordinated, coherent global approach. A long-term framework must reach further than the Kyoto Protocol in terms of time horizon, participation, coverage, and overall reduction of GHG emissions. Emission reduction objectives also have to be combined with energy availability. Creating the right business and investment conditions to allow a cost effective transition that does not impede but rather facilitates the involvement of business in combating climate change is essential.

An early and open dialogue with key players has to start now to ensure timely decisions that lead to a next phase of efficient and wide reaching implementation.

An early and open dialogue with key players has to start now to ensure timely decisions that lead to a next phase of efficient and wide reaching implementation.

We welcome the call by some governments for a “long, loud and legal” structure, and believe that a long-term policy framework should include the elements outlined below:

1.        Predictability and Objectives
  • A predictable long-term framework will reduce uncertainty and facilitate the re-routing of investment into low-carbon infrastructure and deliver cost effective solutions.
  • Achieving substantial reductions in global emissions requires alignment of international policy objectives on climate change, energy, economic development and trade.
  • Long-term objectives should be efficiency-based rather than represent absolute.
2.        Wide Participation
  • Building an international framework to address climate change requires the commitment of all major emitters to succeed, including large developing countries.
  • Wide participation by governments will lead to the establishment of coherent, uniform and efficient policies that reduce uncertainty for business and serve as a strong indication of long-term government commitment.
  • Fairness and equity should be key themes with consideration given to past and future emission levels of countries.
  • Common but differentiated responsibilities allow economies to benefit from participation including technology transfer, financial capacity and an enhanced ability to meet rising energy demand.
3.        Use of Market Based Mechanisms and Instruments
  • Framework conditions must create market forces that allow the establishment of a long-term value for carbon.
  • A broad range of innovative mechanisms, policy interventions and voluntary measures should be used to remove barriers to investment for, and deployment of, new technologies.
  • Policy tools and fiscal incentives should focus on providing the greatest flexibility to investors.
  • Policy reforms incorporating quantified objectives for low GHG emission technologies, should be considered to stimulate capital flows toward energy efficiency, renewable energy and low emission energy sources. Effectively addressing affordability and investment capacity issues is particularly important in developing countries where energy demand is high and growing.
  • Properly designed and interlinked emissions trading systems will steer demand for cost effective emission reductions. Global companies need to be able to invest in carbon emission reductions where they achieve the greatest leverage. A reshaped CDM can play an important role in achieving this.
4.        Engaging the Capital Markets
  • Establishing a long-term value for carbon is increasingly the subject of discussion and has become a key element to influence the allocation of capital.
  • Mechanisms and instruments must send economic signals strong enough to engage capital markets, the means by which business and government can finance the transition to a carbonconstrained future.
  • Investors and financiers must be enticed to allocate capital to low carbon infrastructure, products and services including support to adaptation strategies. Investments must be engineered to generate sufficient returns through the introduction of innovative financial structures.
5.        Changing Consumer Behaviour
  • Incentives for actions by consumers are needed if we are to change consumer behaviour.
  • Increased awareness and access to transparent information through expansion of education tools and product certification programs will also play a role.



Don't despair: Most of the news on the climate change front is bad, but not all of it

Don't despair
Dec 8th 2005
From The Economist print edition

Most of the news on the climate change front is bad, but not all of it

Get article background

IT SEEMS a shame for the blameless Japanese city of Kyoto that its name should forever be associated with failure. Still, it's stuck with it, for that's how the global agreement on cutting carbon emissions that was agreed on in the city in 1997 has come to be regarded. It's a shame, too, that this flawed treaty should cast a pall over the effort to get a global agreement on climate change. For, through the gloom, there are some encouraging developments.

Kyoto's failure is hardly surprising. Agreeing on how to control carbon emissions is even harder than agreeing on how to promote free trade. Both issues require lots of countries to make political sacrifices to achieve a collective good; but at least in the case of free trade, the benefits accrue swiftly. The costs of cutting carbon emissions, by contrast, pile up in the short term, while the benefits are far-off and uncertain.

Given those difficulties, the fact that Kyoto was signed at all looks like an achievement. So is the fact that it established the right goal—binding targets for cuts in greenhouse gas emissions—and got 150 countries to sign up. The International Energy Agency reckons that the industrialised signatories look like hitting their target of cutting their greenhouse gas emissions to 5% below their 1990 level by 2012. But the holes in the treaty are so huge—America didn't sign up, and developing countries do not have targets—that even with Kyoto in place, at their current rate of increase, global emissions look like increasing by 50% between now and 2030.

In consequence, the global environment ministers' meeting in Montreal this week to discuss better ways of implementing Kyoto was a rather cheerless affair. As The Economist went to press, there was some discussion of whether America would deliver a last-minute concession; but nobody expected much of real substance to come out of the meeting. However, while Kyoto is stuck, the world is moving on.

First the bad news

In the seven years between Kyoto's signing and its implementation earlier this year, much has changed. The news from the scientists is mostly bad (see article). The news from business and from politics, though, is more ambiguous. Business, which was once solidly against controlling carbon emissions, is now divided. In June, the chief executives of two dozen multinational firms, including American companies such as Ford and Hewlett-Packard, met Tony Blair to argue for the G8 rich-country group to adopt a global carbon-trading system.

Business's growing interest in greenery is partly public relations, but there's solider economic self-interest involved, too. Companies are investing in renewables because the gap in cost between them—solar and wind power in particular—and conventional energy sources is shrinking (see article). And it's not just small companies run by idealistic greenies that are betting on environmentally-friendly technology. GE, the world's largest energy-equipment supplier, is convinced that there's money to be made from technologies such as clean coal (see article).

The more companies such as GE invest in green technology, the greater the chances that their customers, such as electricity utilities, will buy the stuff and thus cut their emissions. But the two main determinants of whether or not this will happen are oil prices and governments.

Don't rely on the oil price

High oil prices are certainly doing their bit for greenery now, but they cannot be relied on to constrain hydrocarbon consumption. Although they are partly the result of higher demand, especially from China, other factors influence them too. An increase in supply, for instance, as a result of new investment and new finds, could push prices down again. So, for that matter, could peace in Iraq, believe it or not.

What companies like GE are betting on, therefore, is that big-country governments will accept the need for a workable system of global targets for cutting emissions. Any such system must do two things. It must include America, China and India, and it must have the flexibility and efficiency that only a market-based system can provide.

America's government must take much of the blame for blocking global action so far. But Europe's governments have also been at fault. They originally opposed the market-based carbon trading system that America wanted. But things have changed on both sides of the Atlantic.

European governments soon realised that the command-and-control system of emissions targets they planned would impose insupportable costs on business, and that they would have to use market mechanisms to ensure flexibility and efficiency and thus keep costs down. The result was the launch of a pioneering pan-European carbon trading system this year.

In America, meanwhile, George Bush shows no sign of tempering his opposition to targets, and the federal government's attitude is what matters most. But at lower levels of government, there's some movement. Over a hundred cities and around two dozen states (including New York and California, which both have Republican governors) now have some form of curb on greenhouse gases, and a group of north-eastern states is due to launch a carbon-trading system next week. Several dozen of the country's leading industrial firms, now including GE, have taken voluntary steps to curb emissions.

There are grassroots forces pushing for change as well. A noisy movement among evangelical Christians, led by Billy Graham, argues that God has given man “stewardship” of the Earth; and thus it is man's responsibility to act on climate change. Mammon is upset too: insurers are pushing for change and a growing chorus of American pension funds and other investment managers see climate as a potentially huge undisclosed risk to their investments.

Most importantly, voters seem to be changing their minds. Opinion polls show that more than half of Americans believe climate change to be a real problem, and over a third believe (rightly or wrongly, it is too early to tell) that it was a major factor behind the recent deadly hurricanes in the Gulf of Mexico. Four years ago, half of Americans thought Mr Bush was doing a good job on the environment and just over a third thought he was doing a poor job. Now the position is reversed.

China's government is not as susceptible to opinion-poll shifts as America's, and its people are likely to be preoccupied with more pressing economic concerns than with distant questions of climate change. Yet even in China there are signs of real concern. The country has just enacted tougher fuel-economy laws than America's, its current five-year plan calls for more investment in fuel efficiency and it is planning to build 30 nuclear-power stations over the next two decades. China seems willing to talk about post-Kyoto commitments; India, by contrast, insists that America must move first.

These shifts do not amount to an earthquake in global politics. Attempts to get agreement on whatever replaces Kyoto will face the same fundamental difficulty as Kyoto did: how to get the world's biggest polluters to sign up to a deal that will require them to agree to bear short-term costs in return for uncertain long-term benefits which will accrue only if other big polluters do their bit. Yet to dwell on the gloom that the difficult Kyoto process cast over the world would be to ignore the real signs that things are changing.