Green Wombat

Abu Dhabi: The capital of green energy?

While the United States Congress hems and haws over extending relatively modest tax incentives to encourage renewable energy development, Abu Dhabi is spending $15 billion in a drive to make the oil-rich emirate an epicenter of green technology. Called the Masdar Initiative, it’s best known for plans to build Masdar City, a “zero-carbon, zero-waste” urban center.

But Abu Dhabi’s ambitions extend far beyond making Masdar City a showcase for sustainable development, as Masdar Initiative CEO Sultan Ahmed Al Jaber made clear when Green Wombat sat down with him on Tuesday when he was in San Francisco to accept the “Cleantech Leader of the Year” award at the annual Cleantech Forum. “We have decided to establish the Silicon Valley of renewables in Abu Dhabi,” says Al Jaber. “We want to cover the whole value chain - from research to labs to manufacturing to the deployment of technologies.”

To that end, Masdar is collaborating with European and U.S. universities - including MIT and Columbia - to develop a research institute. The Masdar Clean Tech Fund has invested $250 million in renewable energy ventures and Al Jaber says a second fund is in the works. “We’ll invest wherever the opportunity goes,” he says. “We’re keen on developing renewable energy infrastructure in California; we’re just looking for the right opportunity.”

Masdar City will be a tax-free zone in a bid to lure makers of photovoltaic equipment and other green energy manufacturers. When Al Jaber says Abu Dhabi wants to own the whole supply chain, he means that literally, beginning with polysilicon, the basic building block of solar cells. “We’re looking at manufacturing polysilicon, thin-film for photovoltaics, wind energy components,” he says. “We’re no longer interested in only being a consumer of technology or an off-taker of specific equipment. We want to transform ourselves into a more knowledge-based economy. “

He expects the renewable energy and waste-reduction technologies developed to build Masdar City - its expected population is 50,000 - to be exported to help retrofit existing cities. “A city of this size would require 820 megawatts of power, but we will reduce energy requirements to 220 megawatts from integrating new designs from day one.”

“This city is going to literally re-engineer urban planning,” he claims.

Abu Dhabi’s ambitions will create opportunities for U.S., European and Asian green tech firms and Al Jaber acknowledges that forming the right partnerships will be the biggest challenge in fulfilling the emirate’s green dreams.

But he says he sees no irony in one of the world’s biggest oil-exporting nations going green. The bottom line: it’s all about power and markets.

“Abu Dhabi recognizes that the global energy markets are evolving and are evolving with substantial growth in alternative energy,” Al Jaber says. “It’s only going to go up. Does that make it a threat or an opportunity? It’s a great opportunity if we invest in it now.”

IBM Moves into Carbon Consulting

With its Big Green initiative, IBM is parlaying its computing, data and networking expertise into environmental services. Green Wombat last week chatted with Peter Williams of the company's Big Green Innovations group, and Drew Clark of its Venture Capital Group, about Big Blue's burgeoning environmental business.

The company has its hand in everything from designing Stockholm's congestion traffic pricing system to deploying weather forecasting systems to help utilities better manage the electricity grid and make more efficient use of renewable energy like wind power. It's also creating data networks to monitor water quality and building better membranes for desalinization plants.

But Green Wombat was particularly intrigued by IBM's (IBM) move to add carbon consulting to its huge global business consulting operation. "We’re working with customers that want to take carbon out of their supply chain," says Williams, the CTO for IBM's Big Green Innovations group. "It’s like taking waste out of supply chain. We have a very large capability for computer modeling and we allow companies to optimize supply chains to take out carbon."

Demand for such services is being driven by competitive pressures to be seen as green as well as by all-but-inevitable caps on greenhouse gas emissions. IBM itself faces such pressures. "We had to submit a bid the other day where the customer requested the carbon content of our computers," says Williams, who works at IBM's offices in the Bay Area suburb of Danville.

Adds Clark, who is director of strategic insights at IBM's Venture Capital Group in Silicon Valley: "It becomes a competitiveness issue when everyone else is doing it and you look like the ogre of the block if you don't." He says the pressure is particularly intense in Silicon Valley, where companies like Google (GOOG), Advanced Micro Devices (AMD) and Sun Microsystems (SUNW) increasingly compete on carbon. "There’s incredible pressure to toe the line here and be more proactive by reducing the carbon content in product design or whatever you do."

The presents an opportunity for IBM to help clients calculate their carbon footprint and then re-engineer their manufacturing processes, supply chains and other systems to minimize their contributions to global warming. The goal is to manage carbon just as a company would manage the cost of electricity, raw materials or any other aspect of its business.

Williams says the biggest demand for carbon consulting currently comes from retail and consumer goods companies under the gun from consumers to be green as well as by the pressure Wal-Mart's (WMT) is putting on its suppliers to make their products more environmentally friendly.

"There are some humongous pitfalls in working out carbon footprints," notes Williams. "There is no agreed protocol for calculating carbon footprints. You’re going to have people make all kinds of claims." He says figuring out the carbon content of transportation and packaging is comparatively easy while calculating the carbon content of an individual product "is a tough nut to crack."

Says Clark: "We think the added value is being able to integrate carbon accounting with the rest of your business. You manage your supply chain to a set of parameters and one of those is carbon. And of course as you get carbon trading coming in, businesses want to know what their carbon position is."

"We see it as a huge growth area," he adds.

Clean Cash: Technology Partners Raises $300 Million Fund

The green tech investment boom continues, with Silicon Valley venure capital firm Technology Partners announcing this morning that it has raised $300 million for its latest fund. The cash will be invested in clean tech and life sciences startups. "We think the convergence between life sciences and clean tech represents the next wave of opportunity," Ira Ehrenpreis, a general partner at Technology Partners, told Green Wombat. To Ehrenpreis, a leading green tech guru (or "cleantech" in the nomenclature preferred by some valley VCs), that means everything from bioengineering new biofuels to deploying advanced material sciences to develop new drug delivery systems. The new fund has already invested in electric car company Tesla Motors, NFocus Neuromedical, which is developing technology to treat brain aneurysms, and laser hair-removal startup SpectraGenics. The Palo Alto firm's lastest fund has also invested in a "stealth solar company" that Ehrenpreis declined to identify in any way. It's de rigeur these days to ask whether the big bucks being poured into such ventures herald a green tech bubble a la the dot-com bubble of yesteryear. Sure, some people will inevitably lose their shirts but the global warming-driven political and regulatory changes spurring such investments are unlikely to subside anytime soon. "I think this is just the beginning of another industrial revolution," says Ehrenpreis.

GE's Global Warming Solution: Charge It!

General Electric today is unveiling what just may be the ultimate expression of the inherent contradictions of green capitalism: a credit card designed to offset the environmental impact of the very consumerism it promotes. GE Money's (GE) Earth Rewards MasterCard (MA) takes 1 percent of all purchases and uses the money to invest in greenhouse gas reduction projects like capturing methane, planting trees and building wind and solar power plants. The Earth Rewards site lists "3 Easy Steps toward Reducing Your Climate Impact: 1. Choose Reward. 2. Shop. 3. Offset."

"It's important to keep in mind that we can't 'shop away' global climate change," GE cautions. "The most important thing for all of us ... is to use energy more wisely by being as efficient as possible in everything we do. It is also important that, whenever possible, we purchase renewable energy through our utility providers and use alternative fuels in our vehicles. The final thing to do is to offset those remaining impacts that can't be avoided. That's where the Earth Rewards Card comes in."

Yet shopping away your carbon footprint is the logical extension of the guilt-free carbon-offsetting trend. Sure, a lot of people these days use their credit cards for routine daily purchases and if some small part of that spending can be used to fight global warming, well, who's to argue with that. (And for GE, it's just good business as the conglomerate invests in renewable energy projects.) But given that American-style consumerism is one of the drivers of global warming, promoting plastic often used to buy things people can't afford and don't need isn't exactly a solution to climate change. Cutting up one of your credit cards probably will do more to reduce greenhouse gas emissions.

Saving the planet: Priceless.

Redwood Summer: BofA in First Private Equity Forest Conservation Deal

photo: green wombat
Bank of America CEO Kenneth Lewis appeared in a redwood grove in downtown San Francisco today - the urban redwoods are planted next to the Transamerica Pyramid - to announce a first-of-its kind deal: the bank is providing 100 percent financing to the non-profit Redwood Forest Foundation to acquire 50,635 acres of redwood timberlands on Northern California's Lost Coast. The acquisition is part of BofA's (BAC) $20 billion green lending initiative. What makes the $65 million deal unique is that the foundation will continue to log the Usal Redwood Forest in Mendocino County, albeit on a much reduced scale and in conjunction with the restoration of the forest ecosystem. The foundation, which is buying the land from the Hawthorne Timber Company, will sell a conservation easement to ensure the forest remains intact in perpetuity and to pay down the debt it owes BofA. "We think this is an exciting new paradigm," said Redwood Forest Foundation president Art Harwood (pictured above at the podium with Lewis at left and foundation executive director Don Kemp at right). "Thanks to the flexible financing, we can delay logging operations until the forest is silviculturally and biologically ready." Logging will be limited to a maximum of three percent of the forest a year and profits from timber sales will be reinvested into the local economy, Harwood said.

This is a landmark in enviro-capitalism on several fronts. During the 1980s and 1990s bitter timber wars raged across Northern California as environmentalists fought the timber companies' plans to log much of the remaining old-growth redwoods left in private ownership. Green activists took to the trees to block logging while their attorneys waged  legal campaigns in the courts. Green Wombat spent much of the '90s chronicling the timber wars as a newspaper reporter, and back then it would have seemed ludicrous that enviros and a timber company could reach an agreement to buy a forest while permitting continued logging - all financed by the nation's second largest bank.

But times have changed. These days the threat to redwood forests is not so much from clear-cutting but from subdividing, said Pete Mattson, a foundation board member and chairman of the Sonoma Land Trust. Timber owners increasingly are finding it more profitable to sell off pieces of their land to developers than to log. "I've been anti-logging for a long time," Mattson told Green Wombat. "But now I've come to see that logging is critical to preserving forests and keeping wildlife corridors intact."  The Usal Redwood Forest is second-growth timber land, meaning it has been logged over and probably would not be a candidate for preservation with public money. But by managing the forest for conservation and limited logging, the foundation will maintain a large redwood ecosystem while supporting local timber mills and permitting the land to regenerate.

"This transaction will stop fragmentation and allow the coastal redwoods to grow and provide carbon sequestration," said BofA's Lewis. He emphasized that the bank will make money on the deal, though it is giving the foundation a discounted interest rate on the loan. "It's a commercially viable rate of return," chimed in Don Kemp, the foundation's executive director. And as Lewis noted, a growing forest absorbs CO2, generating marketable carbon credits.

Wal-Mart: Red States Buy Green Products

What's the difference between a pickup-driving, Budweiser-swilling redneck and a Prius-owning, latte-sipping effete liberal? Not much, at least when it comes to buying environmentally friendly products, according to Wal-Mart. Since April the retailer has been tracking purchases of five eco-oriented products to gauge its 180 million customers' attitudes toward buying green. (The products: compact fluorescent light bulbs, organic milk,  concentrated or reduced-packaging liquid laundry detergents, extended-life paper products and organic baby food.) Today Wal-Mart (WMT) said its Live Better Index shows that 18.62 percent of residents in Republican-leaning states are making green purchases at its stores versus 18.68 percent of shoppers in Democrat-dominated states. (Of course, given the demographic of Wal-Mart's customer base, there's probably far more green blue-staters - those legions of Whole Foods shoppers who wouldn't step foot in a Wal-Mart.)

Wal-Mart has undertaken a raft of environmental initiatives over the past year and it directed its survey results at the 2008 presidential candidates. "Live Better Index Reveals that Red and Blue States Cross Political Lines, Unite in 'Green' State,' " proclaimed the headline on its press release. "The high demand for our environmentally friendly products suggests that the environment will be a hot topic for next year’s election," said Wal-Mart chief marketing officer Stephen Quinn in a statement. In other words, the GOP-friendly company seems to be telling presidential contenders that brown is fast falling out of fashion, even in die-hard red states. "Sales ... reveal that red and blue states are embracing products that help the environment," the company said, "with blue states leading in sales of organic baby food, CFLs and concentrated/reduced-packaging liquid laundry detergent, and red states leading in sales of organic milk and extended-life paper products." 

GE to Invest $4 billion in Green Energy

General Electric is celebrating the two-year anniversary of its "ecomagination" initiative in Los Angeles today, and to show that its putting money behind its marketing slogans, the conglomerate announced a slew of projects designed to combat global warming. Its GE (GE) Energy Financial Services unit will double its investments in renewable energy to $4 billion by 2010 and kicked off that effort by saying it's putting $180 million in two Texas wind farms that will produce 321 megawatts of electricity. GE Energy Financial Services also will begin disclosing the greenhouse gas emissions of the power plants in which it holds ownership. The emissions revealed will reflect its ownership stake. The financial services division said it will double to $50 million annually its investment in green tech startups like A123, a Watertown, Massachusetts, electric car battery maker. Other initiatives unveiled in LA include:

• A collaboration with BP (BP) on hydrogen power and carbon sequestration projects.
• A deal with Wal-Mart (WMT) to install energy efficient LED display case lighting in more than 500 of the retailer's stores.
• A hybrid train locomotive for Union Pacific (UNP).

Oh, and the green governator is stopping by. Arnold Schwarzenegger will be chatting with GE chief Jeff Immelt at 2 p.m. 

Big Blue's $1 Billion Big Green Project

photo: IBM

As spring approaches, the greening of Corporate America continues
apace. First financial services giant Citi (C) this week unveiled a $50 billion green investment initiative and today IBM (IBM) said it will spend a billion a year to green energy-hogging data centers. The Big Green project will deploy 850 "energy efficiency architects" to evaluate electricity usage in its data centers and those of its clients and then use a mix of hardware and software technologies to cut power consumption by 42 percent. That will eliminate an estimated 7,439 tons of greenhouse gas emissions a year, according to IBM. The tech giant said the Big Green initiative will allow it to double computing capacity without spiking energy usage or increasing CO2 emissions. Meanwhile, California utility PG&E (PCG) said today it's working with IBM to slash electricity consumption in its West Coast data centers by 80 percent. The utility will accomplish that in part by replacing Unix 300 servers with six IBM System p5 servers. Use of IBM's virtualization software will increase the server's utilization from 10 percent of capacity to more than 80 percent while a water-cooling technology will cut heat emissions from the servers by 60 percent.

Citi to Invest $50 billion to Fight Global Warming

Citi, the financial services multinational formerly called Citigroup, has pledged to spend up to $50 billion over the next decade to invest in renewable energy and other green technologies. That pile of cash includes $10 billion Citi (C) previously promised expend on efforts to combat global warming. Upping the ante over Bank of America's (BAC) $20 billion green lending program announced in March, Citi says it will spend $10 billion to cut greenhouse gas emissions from its global operations by 10 percent by 2011. But the bulk of the cash - $31 billion - will go for investments in geothermal, solar, wind and other renewable energy projects and technologies. (Citi, for example, is financing Portuguese utility EDP's $2 billion takeover of Horizon Wind Energy, the largest wind farm company in the United States. Citi has also invested in Indian wind energy company Suzlon.) The willingness of banks to finance big renewable energy projects will be crucial to the success of current plans to build utility-scale solar power plants in California and the Southwest. California utilities, for instance of contracted for nearly 2 gigawatts of solar power, but financing the plants, which can cost hundreds of millions of dollars to build, remains a big hurdle.

Wal-Mart to Get Mercury Out of CFLs

In another sign of Wal-Mart's power to put the economy on a more sustainable path, the retail giant today said it is working with light bulb makers GE (GE), Royal Philips (PHG),  Osram Sylvania and Lights of America to slash the mercury content of high-efficiency compact fluorescent bulbs by an average 33 percent. Mercury is a toxic substance and its use in CFLs presents a conundrum for the widespread adoption of light bulbs that use 70 percent less electricity than traditional incandescent lighting: will using CFLs to lower greenhouse gases  create a hazardous waste nightmare? Others worry that consumers will be less likely to buy CFLs if they can't just toss them in the rubbish bin when they burn out - though the bulbs' lifespan is about 10 years. Wal-Mart (WMT) has committed to selling 100 million CFLs by 2008 and it also has launched a campaign to work with its suppliers to reduce the environmental impact of their manufacturing processes. The light bulb manufacturers will reduce the mercury content of their CFLs as much as 50 percent below the 5 milligram per bulb standard set by the National Electrical Manufacturers Association. “People concerned about the environment and their health can buy these CFLs with a clear conscience,” said Natural Resources Defense Council senior scientist  Noah Horowitz in a statement released by Wal-Mart. The retailer also cited U.S. EPA stats that found that a coal-fired power plant emits four times the mercury to power an incandescent bulb than a CFL.

The Greening of Wal-Mart Shoppers

How green are Wal-Mart (WMT) shoppers? We're about to find out. The world's largest retailer is launching a Live Better Index to track customers' purchases of five eco-friendly products: compact fluorescent light bulbs, organic milk, concentrated/reduced-packaging liquid laundry detergents, extended-life paper products and organic baby food. The idea is that the index will gauge Wal-Mart's 180 million customers' attitudes toward buying green by using those five products as proxies. "Wal-Mart recognizes that environmentally friendly products don’t do much for the environment when sitting on a shelf,” said Wal-Mart sustainability exec Andy Ruben in a statement. “Our role is continuing to drive accessibility and affordability for sustainable product to consumers who may have not thought about buying ‘green’ in the past.”  The Live Better Index site tracks purchases by state. Connecticut Wal-Mart shoppers, for instance, buy the most energy-efficient light bulbs while Californians spend the most on organic baby food. Overall, New Hampshire has the greenest Wal-Mart shoppers while Mississippi has the least. About 13 percent of the retailer's customers nationwide have bought CFLs, and 1 percent are paying a premium for organic milk. Love Wal-Mart or hate it, there's no denying the company's market power or its ability to use the enormous amount of data it collects to drive environmental change.

A Green Yelp

Go to eco-living sites like TreeHugger and Green Options - Green Wombat faves - and you'll find a plethora of posts about green products. Trawl user-review sites like Yelp and you can tap the collective consciousness about your neighborhood restaurants or the local hair salon. Now San Francisco startup SustainLane has re-purposed the Web 2.0 features of a Yelp to create a user-generated review site and directory for green products and services to tap the growing interest in sustainable living. "We really saw some traction on Yelp, with people sharing experiences about dining and local businesses, and we said we want to create a space for people to share experiences about green products and businesses," SustainLane senior marketing director Haru Komuro told Green Wombat. The company seeded the site with reviews collected at a Washington, D.C., eco- festival in October and launched the service last week. SustainLane.com currently has about 3,000 reviews on everything from organic insect repellent to earth-friendly diapers. The site also sports some 10,000 green business listings from a directory the company previously compiled. Of course, evaluating the environmental attributes of a new household cleanser is a bit trickier than a rating a cappuccino at the corner cafe. Komuro says SustainLane will guard against greenwashing by companies making unsupportable claims. "People might submit McDonald’s organic salad and its up to users to decide," she says. "We hope to build ratings and communications tools and moderation tools so any greenwashing will become obvious."

SustainLane was founded in 2004 by James Elsen, a Netscape veteran, and funded by angel investors. The company initially focused on developing a database of government sustainability policies and practices but has more recently morphed into a media company, producing a cartoon series called The Unsustainables. "We decided with all the trends going on in the Web 2.0 space it really made sense to give people a voice so they could contribute," Komuro says. "We struggled with what this information should be - should it be about sustainable cities or what - and then we had an epiphany that since around the office we're always talking about what green products to use it should be about that."  SustainLane plans to make money off the site through advertising and sponsorships and by connecting consumers to eco-friendly businesses. Komuro says the company has also been approached by green businesses that want to upload their inventories to the site. "Management believes this is the direction to go," she says. "It’s scalable and we've heard for years that this is what the community wants."

The site's success, of course, will depend on attracting enough citizen-reviewers to create a critical - and credible - mass of information to make SustainLane useful to would-be green product purchasers. Komuro says the company plans to get the word out through grass roots marketing and via the ever-growing green blogosphere.

Earth Day in Silicon Valley

Earth Day is April 22 and enviro mania is in full swing. The magazine racks are chock-a-block with special "green issues" - Vanity Fair, Outside (the cover boy is California Governor Arnold Schwarzenegger), Newsweek (Arnie again) and Time. (Always looking ahead. Business 2.0, where Green Wombat is an editor, did its green thing in February.) Meanwhile down in Silicon Valley, Earth Day weekend kicks off April 20 with Applied Materials (AMAT) CEO Mike Splinter talking about "Unlocking the Potential of Solar Energy: Silicon Valley's Next Big Opportunity to Change the Way People Live"  at Santa Clara University. The same day over in Palo Alto you can learn about "Options to Reduce C02 Emissions at the Electric Power Research Institute.

Yesterday, the Silicon Valley Leadership Group hosted an "Alternative Energy Solutions Summit" at Advanced Micro Devices (AMD)'s redwood-studded corporate campus in Sunnyvale. The event, which attracted some 300 tech execs, government officials, California Senator Barbara Boxer and Stanford University president John Hennessy, showcased the speed and fervor with which the valley has embraced green tech and the fight against global warming. (It wasn't all that long ago, after all, when the big environmental issue in Silicon Valley was toxic pollution from chip and hardware manufacturing plants, with tech companies facing off against green groups.) "Win not whine!" exhorted Carl Guardino, CEO of the Silicon Leadership Group, the main lobbying group for valley tech companies. PG&E (PCG) exec Bob Howard, who brought the utility's plug-in hybrid Prius to the event to demonstrate how such cars can power the grid, captured the mood in the valley these days: "Addressing climate change can serve as an economic opportunity, not an economic burden," he said. "There's no better region positioned to make a difference."

Companies like SunPower (SPWR) and Sun Microsystems (SUNW) obviously see a big opportunity to profit from the war on global warming as well as cut their own operating costs by going clean and green. Sun Labs executive director Mark Monroe said the computer company had saved $70 million in recent years as half its employees took advantage of its work-anywhere program that lets them telecommute from home or satellite offices near where they live. AMD senior strategist Larry Vertal said the chipmaker is building a new 2,500-person facility in Austin that will run completely on renewable energy. The valley's embrace of solar energy was also on display. "Solar is really the only big solution out there," said Charlie Gay, general manager of Applied Materials, which is retooling its chipmaking equipment to manufacture solar cells. "If we lower the cost of solar by a factor of 2 or 3, solar will be competitive with coal. This doesn't require any magical technological leap. We just need to scale up."

The valley's alliance with giant utilities like PG&E and powerful politico's like Boxer, the chair of the Senate Environment and Public Works Committee, is creating a new political dynamic to counter the influence of the oil, coal and auto industries. "This whole issue of global warming has taken on a life of its own," Boxer told the assembled tech execs, some of whom were to travel back with her to Washington, D.C., to lobby Republicans to enact a national cap on greenhouse gas emissions.

Greening the 10-K: Investors, Companies Press for Climate Change Disclosure

Investors controlling some $4 trillion in assets and their corporate allies this week launched a campaign to get the U.S. Congress to pass global warming legislation that would reduce greenhouse gas emissions 60 to 90 percent by 2050. Led by Ceres, a Boston-based alliance of investors and environmentalists, the group also called for the Securities and Exchange Commission to require public companies to disclose climate change risks in their financial reports. So-called green reporting has long been backed by environmentalists but now mainstream corporations like aluminum maker Alcoa (AA), oil giant BP (BP), Merrill Lynch (MER), utility PG&E (PCG) and Sun Microsystem (SUNW) are backing such efforts along with CalPERS, the world's largest pension fund. "We are hopeful that growing mainstream investor and corporate demand for SEC action will have an impact," Chris Fox, Ceres's director of investor programs, told Green Wombat. "This is not just socially responsible investors asking for this but mainstream fiduciaries asking for guidance." The investors and companies backing the coalition's Climate Call to Action want the SEC to clarify just what public companies must disclose about the risks and opportunities presented by global warming. Ceres is pushing for the SEC to modify reporting regulations to require corporations to disclose in their annual reports their current and historical greenhouse gas emissions; the physical risk climate change poses to their operations; the regulatory risk if greenhouse gas limits are imposed; and their strategy for managing climate change risks. (A growing list of companies have adopted "sustainability reporting" in recent years, including Bank of America (BAC), General Motors (GM) and Green Wombat's employer, Time Warner (TWX).) Fox says Ceres is continuing to meet with SEC officials about climate change disclosure but the agency has remained non-committal. "We think protecting American’s property and investments from climate risk is a winning issue," he says.

Wal-Mart to Consumer Electronics Suppliers: Go Green

How green is that Game Boy? Wal-Mart (WMT) wants to know. Beginning next year the retail giant will require its consumer electronics suppliers to fill out a "sustainability scorecard" listing various environmental attributes of their products, including energy efficiency, use of toxic materials and packaging size. The company will use the scorecard to help it choose which products appear on its shelves and will also make the information available to Wal-Mart shoppers. "The scorecard encourages improvements that are good for business as well as for the environment, reflecting Wal-Mart's view that being a profitable and efficient business goes hand-in-hand with being a good steward to the environment," said Wal-Mart executive Ross Farnsworth in a statement. "Many electronics contain hazardous materials and are disposed of improperly. The scorecard issues a better score to those suppliers who build products with fewer hazardous materials and offer electronics recycling opportunities to customers."

That means consumer electronics companies from Sony (SNE) to Hewlett-Packard (HPQ) and Kodak (EK) will have to disclose how some of their eco-marketing campaigns translate into reality. Assuming consumer electronics companies cooperate - and few can afford not to play ball with Wal-Mart - you'll be able to see if a Microsoft (MSFT) Zune is better for the environment than a Creative Zen MP3 player. Alas, just how green the iPod is will remain a mystery as Apple (AAPL) does not sell to shoppers seeking everyday low prices.  Dangling a carrot to consumer electronic companies, Wal-Mart on Monday also announced a design contest to create a green gadget that will rate high on the sustainability scorecard. The winner will be sold in Wal-Mart's U.S. stores.

BofA Exec: The Coming Green Banking Boom

Bank of America's (BAC) this week unveiled a ground-breaking $20 billion green lending initiative to finance companies creating low-emissions technology, underwrite loans for green building projects and create a carbon credit trading service for its customers.   Bank of America also is changing its underwriting criteria for commercial loans to favor companies that provide "sustainable products, services and technologies. For consumers, BofA will offer, among other eco-friendly products a "green mortgage" with a reduced interest rate or a rebate if their new house meets energy efficiency standards.

Green Wombat talked yesterday with James Mahoney, BofA's director of public policy, about why the U.S.'s second largest bank thinks fighting global warming is a huge business opportunity for the banking industry - and whether competitors like Citigroup (C), JPMorgan Chase (JPM), Wachovia (WB), Wells Fargo (WFC) will follow its lead.

Green Wombat: Bank of Amercia is not doing this just because it thinks it is the right thing to do. What is the business rationale behind the initiative?

James Mahoney: This goes beyond philanthropy and actually incorporates environmental considerations into the way we do business. It’s an initiative that cuts across our three major lines of business: Corporate and investment banking, consumer banking, and wealth management.   What we see, with the growing concerns about climate change, is that there is going to be an increased demand for both products and services that produce and use energy more efficiently. As efforts emerge to reduce greenhouse gas emissions, there will be new technologies to both produce and use energy. We see business opportunities arising as a result of climate change. This initiative is intended to support customers that want to take advantage of those opportunities. We definitely see this as a growth area in the years ahead.

Green Wombat: What type of commercial customers will be the biggest beneficiaries of the program?

Mahoney: I think technology companies with innovative products, utilities that are investing in green technology and green energy sources will benefit. I think for that matter, so will coal companies that are looking to introduce new ways to reduce greenhouse gas emissions in the years ahead. We think no matter what kind of business you have there are opportunities to produce and use energy more efficiently. As a bank we’re finding there are multiple opportunities to produce green business opportunities in commercial lending, investment banking, and carbon credit trading as that market develops.

The Corporate Carbon Offset Craze

Has the carbon offset craze jumped the shark? Dell (DELL) earlier this year began letting customers pay a small carbon offset fee when they order their computers. The money is used to plant trees, which absorb carbon and thus theoretically cancel out the planet-warming greenhouse gases emitted by the production and use of individual customers' laptops and desktops. Today Dell expanded its "Plant a Tree for Me" program to all customers - past and present - as well as, well, anyone who wants to go to the computer maker's site and donate $99 to offset a year's worth of their carbon emissions. Planting trees, of course, has environmental benefits beyond forests' role in reducing global warming - though just how effective they are has been in dispute, as have carbon offset programs themselves. And Dell, along with Hewlett Packard (HPQ), certainly has made significant progress in ameliorating the environmental impact of its products through recycling programs. But absolving the sin of one's personal greenhouse gas emissions via Visa or MasterCard is starting to become the environmental equivalent of slapping a bumper sticker on your car. Sure, it raises awareness and may be doing some real good but it does not require anyone to actually do anything to reduce their own contribution to global warming - like trading in the SUV, replacing light bulbs with CFLs or just saying no to paper and plastic. We'll know things have really gone too far when you see Apple (AAPL) launch a "Plant a Tree for Steve" campaign.

Bank of America Commits $20 Billion to Green Lending

In what could be a big boost for green tech entrepreneurs, Bank of America (BAC) this morning launched a $20 billion program to fight global warming over the next decade by financing companies creating low-emissions technology, lending money for green building projects and creating the ability for customers to trade carbon credits. The bank will spend $18 billion on commercial green lending and finance while another $2 billion will be spent on consumer programs and efforts to reduce the greenhouse gas emissions and environmental impact of its own operations. Green Wombat is waiting on a reply from BofA whether it will use its pot of green cash to finance solar power plants, wind farms and other utility-scale renewable energy projects. But the fact that the U.S.'s second-largest bank has decided there is money to be made off green lending is, potentially, a huge boon for startups that have found it tough going obtaining financing for capital-intensive renewable energy technologies. While Silicon Valley venture capitalists have pumped billions into green startups over the past couple years, they traditionally do not finance factories or 250-megawatt solar power plants. The bank's move also could create opportunities for green companies without access to Sand Hill Road VCs. "Today, we have a tremendous opportunity to support our customer's efforts to build an environmentally sustainable economy - through innovative home and office construction, new manufacturing technology, changes in transportation, and new ways to supply our energy," said Bank of America CEO Kenneth D. Lewis in a statement.

BofA will change its underwriting criteria for commercial loans to include environmental factors, such as whether a business creates "sustainable products, services and technologies." In other words, a company that makes less carbon-intensive widgets will score higher on a loan application than one whose production process consumes more fossil fuels. If other banks adopt green underwriting, the impact could be significant.

For consumers, Bank of America later this year will offer an "eco-friendly" credit card - a percentage of each purchase will be donated to an environmental organization to invest in greenhouse gas reduction projects. Home buyers can apply for a "green mortgage" with a reduced interest rate or a rebate if their new house meets energy efficiency standards. "Bank of America intends to commit its own capital to promote "green" investment solutions for its clients," the company said, referring to investments that promote reforestation, wildlife management, "responsible development" and carbon sequestration.

Ikea Bags Plastic Bags

Ikea, the purveyor of cheap chic modern furniture and housewares, said today it will stop handing out disposable plastic carry bags in the U.S. in an effort to radically reduce the tens of millions of bags its customers send to landfills every year or that end up littering the landscape. Starting March 15, shoppers who insist on plastic bags to tote their designer kitchen gadgets to their cars will be charged 5 cents per bag. Ikea will donate the proceeds from the "Bag the Plastic Bag" initiative to non-profit green group American Forests to pay for tree planting. The company will encourage customers to buy its reusable Big Blue Bag and is cutting the bag's price to 59 cents from 99 cents. "The amount of plastic bags we use and toss is overwhelming," Ikea said in a statement. "According to the Environmental Protection Agency, the U.S. consumes over 380 billion plastic bags, sacks and wraps each year. Each year, Americans throw away some 100 billion polyethylene plastic bags, and less than 1 percent of them are recycled."  Ikea said plastic bag use at its British stores has fallen 95 percent since the Swedish company introduced the program in the U.K. Ikea spokesperson Mona Astra Liss told Green Wombat the 5 cent charge represents the cost of producing a plastic bag. "We thought this was a fair price and a good hook into making a difference as we ease customers into thinking 'reusable' bags," she wrote in an e-mail. Ikea hopes the program will halve the 70 million bags its customers use annually in the U.S.

The Ikea program is notable in that it's one of the few initiatives by a distributor of plastic bags itself to discourage their use and and to pass on at least some, if a tiny, part of the environmental cost of consumers' "paper or plastic" habit.

Wal-Mart to Work With Suppliers to Make Products Greener

Wal-Mart (WMT) chief H. Lee Scott said today that the retail giant would work with suppliers to make their manufacturing processes less dependent on planet-warming fossil fuels. Scott announced Wal-Mart's "Sustainability 360" initiative at a speech in London. He also said Wal-Mart is collaborating with suppliers to shrink the amount of product packaging by 5 percent by 2013. "Think about the multiplier effect of more than 60,000 suppliers around the world," Scott told the audience in his lecture at the Prince of Wales’s Business & the Environment Programme. "The impact of this packaging effort will be equal to removing 213,000 trucks from the road, and saving about 324,000 tons of coal and 67 million gallons of diesel fuel per year. We believe this effort could save the global supply chain nearly $11 billion. Our supply chain alone could save $3.4 billion." As part of the company green offensive, Scott announced a new "ethical sourcing initiative."  The company will work with suppliers to help them use environmentally sound manufacturing processes.  He cited the case of a Brazilian candy maker that wasn't properly disposing of waste water. "So our auditors sat down with the factory’s management, explained that sustainability can be profitable, and made recommendations," Scott said, according to a transcript of the speech posted on Wal-Mart's site. "These managers were skeptical, but they took on the challenge. The next time we visited the factory, we saw a new waste management program." He said 200 Wal-Mart staffers are working on the initiative. Scott also noted that 45 percent of the toilet paper sold in the company's U.K. stores comes from timber certified as sustainable. "Eventually, we want to use only sustainable timber and pulp-based products to manufacture our brands," he said.

A Carbon-Neutral Company's Planet-Warming Swag

The white box from Salesforce.com (CRM) lands with a thud on my desk. More swag - corporate tchotchkes packaged in big dead-tree boxes and cushioned with piles of non-biodegradable styrofoam pellets. Usually Green Wombat swears an oath to Rachel Carson and recycles what's recyclable. But Salesforce.com - like a growing number of companies proclaiming their green cred - has just announced it's going completely carbon neutral by financing renewable energy projects to offset greenhouse gas emissions from its corporate operations. So I do a double-take when I spy the FedEx (FDX) label on the box: Salesforce's San Francisco headquarters is located one block - about 300 feet - from Green Wombat's abode at Business 2.0 magazine. (I can practically see Salesforce CEO Marc Benioff from my 29th floor perch. Google map above.)  The FedEx tracker, however, shows the box has traveled more than 40 carbon-belching miles to reach Green Wombat.

Let's follow the swag's sojourn: Last Friday - three days after the Web-based software company unveils its Earthforce carbon neutral initiative - a FedEx truck arrives at Salesforce's Market Street office to pick up the package - and half a dozen others sent to B2 writers and editors - and drive it over the Bay Bridge to FedEx's hub in Oakland.

On Monday, the swag gets trucked back to San Francisco to a FedEx facility. From there, it's driven to the Business 2.0 tower and delivered to Green Wombat. And what's inside the box, you may be wondering?
The contents: a Salesforce-embossed coffee mug, some Salesforce branded chocolates and a folder - with a photo of a polar bear, whose habitat is threatened by global warming, on the cover. The folder contains press releases, including one on the company's Earthforce program - irony noted - all sitting in a nest of styrofoam.

The point here is not to bash Salesforce - its commitment to being carbon neutral is ahead of the curve - but to note that if companies hope to reap the public relations, environmental and economic benefits of going green, it takes more than whipping out the checkbook and buying carbon credits. Increasingly, consumers and public watchdogs will want to know what companies are doing to directly reduce their greenhouse gas emissions. A good place to start is corporate marketing departments. Think of the greenhouse gases that could cut and landfill space preserved by just saying no to tchotchkes - or at least packaging them in appropriate sized boxes stuffed with old newspapers rather than styrofoam. So, if your company is in downtown San Francisco and insists on sending Green Wombat branded bric-a-brac, just drop me a line and I'll take a carbon-free stroll and pick it up.

ExxonMobil: The Future Looks Brown

photo originally uploaded by tjean314

Nobody will accuse ExxonMobil (XOM) of greenwashing. The world's largest oil company released its energy forecast for the year 2030 yesterday and, in contrast to the sunflowers-and-bears imagery promoted by competitors BP (BP) and Chevron (CVX), ExxonMobil predicted a fossil-fuel future marked by skyrocketing oil and gas consumption and soaring greenhouse gases emissions. Dependence on Middle East oil will grow. Not that there's anything wrong with that: "The progress of people around the world is driving demand for more energy," the report states. "We are a world on the move and liquid fuels are essential to meet those demands....By 2030, energy demand will increase by about 60 percent, compared to 2000. The global energy mix will look very similar 25 years from now. Oil, gas and coal will be predominant." ExxonMobil argues that solar, wind and other renewable energy sources will only provide 1 percent of the word's needs by 2030 - about the same as today - despite the hundreds of millions of dollars being pumped into renewable energy companies and projects as well as state and national mandates to sharply increase the use of alternative energies. While the oil giant correctly points out that China and India's growing middle classes will lead to an explosion of demand for cars, it assumes the vast majority of them will run on gasoline. (Meanwhile, the United Nations  warned today that deaths from air pollution are likely to spiral as car ownership increases in Asia. Some 600,000 people in Asia die prematurely each year from air pollution, according to the UN report.)  ExxonMobil's forecast report predicts that technological fixes - like capturing emissions from coal-fired power plants and higher efficiency vehicles - will reduce the impact on global warming. But it's curious that in an increasingly carbon constrained world, with efforts to limit greenhouse gas emissions snowballing, that ExxonMobil would so baldly stake its future on the status quo. Will it be a matter of time before Wall Street decides that such a strategy is just too risky and punish companies accordingly? Not just yet, apparently. ExxonMobil's stock is up 1.46 percent today.

China's Green Tech Boom

China's voracious appetite for energy, its growing contribution to global warming and gargantuan pollution problems present huge opportunities for green tech entrepreneurs and investors, according to a panel of venture capitalists and seasoned China hands who spoke this morning on the People's Republic's impact on energy technology. "China will be the driver for clean tech in the future, more so than Europe and the U.S.," said Bryant Tong, a managing director at San Francisco VC firm Nth Power at the event sponsored by The Women's Technology Cluster, a San Francisco-based incubator. Added Charles Wu, a partner at private equity firm TianDi: "The investment opportunity is enormous. One of my partners is involved in a company that went from $0 to $100 million in one year. You can't do that in the U.S. In solar, wind and clean coal, there's a lot of demand." The panelists identified wind power as a particular hot area for investment as China moves to build massive wind farms along its coasts. One overlooked opportunity: tapping China's cadres of chemical engineers and other highly educated workers to develop green technology for export. "China not only has large numbers of IT engineers but large numbers of chemical engineers," said Wu. "How many chemical engineers do you see running around here?"

Former top Bechtel executive Cordell Hull, now chairman of Infrastructure World, said the fact that China is bringing online two 600-megawatt coal-fired plants every week and plans to build two 1,000-megawatt nuclear plants each year means that renewable energy's portion of the power grid will be relatively small. But that's a massive market, given China's pledge to get 20 percent of its electricity from solar, wind and other renewable energy by 2020 and spend more than $60 billion to make that happen. "China has a history of pretty much fulfilling its national planning objectives," said Hull, who has 30 year's experience working on China projects. "This is going to happen."  One growing opportunity: providing technology and solutions to alleviate the severe air and water pollution caused by China's reliance on dirty coal for energy. As the 2008 Beijing Olympics approaches,  the Chinese government is ratcheting up spending on pollution control, he noted.

Still, pitfalls abound for green tech companies contemplating the Chinese market, cautioned the panelists.

                                                                            

Sun Microsystems to Tout Green Products in Second Life

Sun Microsystems will build a virtual version of its Blackbox portable data center in Second Life, the online world. Sun is promoting the Blackbox - essentially a data center in a shipping container - as an energy efficient and green alternative to building massive power-hungry server farms. Dave Douglas, Sun's VP of Eco-Responsibility, mentioned to me last week that the company wants to introduce Second Life's 1.4 million residents to the environmentally friendly aspects of the Blackbox. As you've probably read elsewhere, First Life companies - aka reality-based enterprises - are increasingly opening up shop in Second Life to market their wares and cash in on its Internet economy, where denizens buy and sell a host of virtual goods using real money. Who knows, when Second Lifers begin to build their own tech companies they just may want to buy a Blackbox to power their businesses.

Wal-Mart: Jolly Green Giant or Global Warming Machine?

I just returned from the Society of Environmental Journalists' annual conference, where a hot topic of conversation was Wal-Mart. Like nearly everything the world's largest retailer does, its recent conversion to the green gospel will have an outsized impact on global warming efforts and the market for environmentally sensitive products and organic food.  When Wal-Mart (WMT) announces it favors capping greenhouse gas emissions and creating a carbon trading market, even flat-earth politicos tend to listen. The company sent its VP for corporate strategy and sustainability, Andrew Ruben, to the SEJ conference in Burlington, Vermont, to talk about the company's environmental initiatives. "We have a goal of using 100 percent renewable" energy, he said Friday at a panel on "Corporate Green," though he acknowledged Wal-Mart has no time line to achieve that target.

But it's clear that Wal-Mart sees going green as good for the bottom line. Ruben said the company has retrofitted its fleet of 7,200 trucks with a device that reduces the amount of diesel they consume while idling, saving $25 million in annual fuel costs and cutting many metric tons of greenhouse gas emissions. And there's no denying Wal-Mart's ability to influence consumer behavior. For instance, after the company increased the amount of shelf space devoted to high efficiency light bulbs from 5 percent to 20 to 30 percent, some stores reported an immediate 10 percent jump in sales of compact fluorescent bulbs. Ruben said Wal-Mart is trying to sell 100 million such light bulbs this year, which would reduce greenhouse gas emissions by 25 metric tons.

But prominent environmental author Bill McKibben said such efforts, while praiseworthy, do nothing to change the consumerist culture that's the root cause of global warming. "Climate scientists tell us we need an immediate 70 percent reduction in the use of fossil fuels" to avert catastrophic climate change, he said. Thinking that you can solve global warming by "taking the American middle class, high consumption lifestyle and rejigger it a little....is a fantasy. What’s the purpose of getting people to use energy efficiency light bulbs? So people will have more money to spend at Wal-Mart. That model won’t work."

 

 

Green bedfellows: MTV and Wal-Mart

There are days when it seems the current rage for all things green is about to jump the shark. Take today's deal between two brands not often mentioned in the same breath:  MTV and Wal-Mart. The former voice of youth culture and the merchandiser to middle America are teaming up on a joint venture called Everyday Green. The initiative is "designed to promote sustainability and demonstrate to consumers how to work environmentally-friendly products into their lives," according to the announcement.  MTV's New York City retail store has been turned into an eco exhibit where shoppers can ride a bike to power a wall of energy efficient light bulbs and learn about wasteful household appliances, recycling, etc.  Among the green products for sale alongside organic t-shirts and re-useable water bottles are LCD television sets. Hmmm. Now if they can just hook that bike up to the electricity-sucking TV.....For more on other companies jumping on the green bandwagon, check out Madison Avenue West, written by my Business 2.0 colleague Susanna Hamner.

Enviro Capitalism: Water Quality Markets

Attention Wall Street types and financial entrepreneurs keen to go green. The U.S. Environmental Protection Agency and the U.S. Department of Agriculture today announced they're hooking up to promote water quality trading markets.

The idea is to clean up rivers, lakes and oceans by letting those who restore wetlands and reduce agricultural runoff to sell credits to sewage treatment plants and other facilities required to maintain water quality levels under the federal Clean Water Act. In other words, if Big City Sewage Plant can't or won't meet its water quality targets it can buy credits from Farmer Brown who has gone organic and thus slashed the amount of contaminants running from her land into a nearby river. Pollutants such as nitrogen, phosphorus and sediment can be traded.

Here's the green to be made: while there are a few scattered water quality trading markets around, there's a business to be built in setting up and brokering these markets. That means opportunities for consultants, traders and software engineers. The feds hope to provide $3 million in funding for such markets in 2007.