Reduce, Scrap, Retrofit: The Entrepreneur’s Challenge.
This is the fourth post of an eleven-part series on CSRwire that summarizes key lessons from the new book Cold Cash, Cool Climate: Science-based Advice for Ecological Entrepreneurs.
“No battle plan survives contact with the enemy.” – Helmuth von Moltke the Elder
Climate change is probably the biggest challenge modern humanity has ever faced. It’s bigger than World War II, because it will take decades to vanquish this foe. It’s harder than ozone depletion, whose causes were far less intertwined with industrial civilization than fossil fuels and other sources of greenhouse gases. And it’s more intractable than the Great Depression (or our current economic malaise) because financial crises eventually pass, assuming we learn from past mistakes and fix the financial system (again!).
Can we avoid the worst effects of climate change?
Will we be able to avoid the worst effects of climate change? Nobody knows for sure, but in the face of an existential threat to human civilization, that’s the wrong question. We must do whatever we can, as Winston Churchill said during World War II: “What is our aim? I can answer with one word: Victory — victory at all costs, victory in spite of all terror, victory however long and hard the road may be; for without victory there is no survival.”
We’ll give it our best, and if it’s not enough, we’ll have to live with the consequences, but it shouldn’t be because we lack understanding or fail to try. That’s why I spent so much effort in first few chapters of Cold Cash, Cool Climate explaining the details of the fix in which we now find ourselves: so we can face this challenge with clarity and full knowledge of how difficult it will be (as an aside, my use of this Churchill quote does not imply that I’m cavalier about economics, simply that when the alternative is catastrophe, the way we respond should be quite different from normal times, and these are quite clearly not normal times).
Meeting the Limits of the Safer Climate case
Let’s try to put this problem in context. For about three decades, starting in 2012, we’ll need to reduce global carbon emissions by on average almost 7% per year (compounded) to meet the constraints of the Safer Climate case that would keep global surface temperatures rising more than 2 Celsius degrees from preindustrial times, even as population and economic activity grow substantially, and poorer countries continue striving towards modernity.
We’ll also need comparable reductions in other greenhouse gases. This rate of emissions reductions is historically unprecedented, at least over decade long time-scales, but that doesn’t mean it is impossible.
Scrap Fossil Fuel Capital Stocks
At the start of World War II, the US auto industry took six months to transition from building a few million autos a year to building planes and tanks for the war effort. The shift wasn’t easy or cheap, but it happened, and this example illustrates one important point about such rapid emissions reductions: they will likely result in some capital being scrapped before the end of its useful life.
This is a problem from a political perspective, of course, but many modelers and analysts treat scenarios with premature capital retirements as infeasible. Based on the analysis in Cold Cash, Cool Climate, I suspect strongly that we won’t have that luxury, given the rapid reductions we’ll need to achieve (and it will be particularly likely if we continue to build high carbon infrastructure after 2012).
Retrofit Existing Capital
Given the constraints imposed by the natural rate of equipment retirements, it’s natural to consider ways of retrofitting existing equipment. For buildings, that might mean upgrading the shell and the heating/cooling systems at the same time as the internal space is improved to meet modern standards, as was completed recently for the Empire State Building.
It could also mean eliminating standard incandescent lighting in virtually all applications, which can be done very quickly (and cost effectively, given how inefficient such lighting is). For power plants, that might mean repowering coal plants with natural gas. For industrial plants, that might mean adding combined heat and power to replace an old boiler. When practical, renovations represent another way to accelerate the turnover of the capital stock and to repurpose existing capital towards a less polluting use.
Retrofit SOPs & Institutions
It’s not just the capital equipment that needs retrofitting, of course. Reevaluating how capital equipment is operated can yield big savings as well, because we need to retrofit our procedures and institutions in the face of new developments in technology and operational needs.
Such “commissioning” can result in very large and cheap savings in both dollars and emissions, and it’s a different and very effective way of repurposing existing capital stocks. A 2009 study reviewed such efforts in 300 existing US commercial buildings and found savings averaging 16% with a simple payback time of 1.1 years, just by operating the buildings differently (and making the buildings more comfortable as well).
The Entrepreneur’s Challenge: Make Existing Capital Stocks Obsolete
Since the constraints of the Safer Climate case will probably force us to scrap some capital stocks before the end of their useful lives, it’s your job to make existing capital stocks obsolete more quickly. That means developing replacement products (and ways to retrofit existing buildings and equipment) that are so much better than current ways of delivering energy services that people are willing to scrap or repurpose that equipment to gain the advantages your product provides. That approach will allow us to minimize and sometimes sidestep the difficult political choices caused by premature retirements of existing capital.
As one example, consider light-emitting diode (LED) lights that fit in those recessed ceiling cans that are so common in US homes. We installed almost 50 of these in our new house to replace our aging fixtures. We would have had to spend $20 to replace each fixture anyway, according to the contractor, and the LED fixtures we bought instead cost $50 each and fit right into the existing cans. Not only do they look better than what they replaced, they deliver bright and directional light, they come on instantly and dim just fine, their color rendition is so good that even my wife (who is a stickler in such matters) thinks they are great, and they will last 35,000 hours, which is probably 20 years at the rates that we use most of these fixtures.
The long lifetime (compared to at most a few thousand hours for incandescent bulbs and about ten thousand hours for compact fluorescents) was what put them over the top for us. We have relatively high ceilings throughout the house so the prospect of climbing a tall ladder more than a dozen times a year was not an enticing one. The LEDs eliminate that hassle, and in fact are so good that they will surely encourage others to replace their fixtures before the end of their useful lives, because they are so better than what they replace.
And did I mention that they cut lighting electricity use by more than 80%?
Next installment: I’ll explore the underlying drivers of emissions growth — the results may surprise you.