Download Resiliency to climate change Cleantech's other value proposition

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Resiliency to
climate change
Cleantech's other value
proposition
March 2013
Resiliency to climate change
The resiliency imperative
Scientists and business leaders are increasingly warning that current rates of
global greenhouse gas (GHG) mitigation are an insufficient response to the
threat of climate change. PwC's research shows that keeping global
temperatures from rising above 2°C by 2050 would require at least a 5.1%
reduction in global carbon intensity per year for the next 37 years -- quite a
jump from the 0.8% a year average decrease of the last 10 years. 1 As PwC’s
own research suggests, “Governments’ ambitions to limit warming to 2ºC
appear highly unrealistic.”2
If some significant amount of climate change seems inevitable, then it is
imperative that society develops adaptation strategies to make the global
economy more resilient to the shocks, disruptions, and costs of climate
change impacts. Indeed, the US is already experiencing these costs. The
average annual costs of climate-related disasters and extreme weather
events like Hurricanes Katrina and Sandy have increased from a few billion
dollars in the 1980s to consistently over $200 billion a year. 3 Building more
resilient energy and water infrastructure to withstand these extreme
weather events will likely be critical to minimizing economic losses, keeping
critical power infrastructure
up and running, and
protecting human life.
We believe that the
cleantech industry has a
major role to play in this
initiative, and that this role
begins with developing a
new value proposition:
resiliency.
Clean
Smart
Resilient
The evolution of Cleantech's value
proposition
Resiliency: the new narrative
Historically, the cleantech sector's value proposition has centered on "clean"
-- on dramatically reducing emissions while providing superior performance
PwC, “Too late for two degrees? Low Carbon Economy Index”, November 2012.
PwC, “Too late for two degrees? Low Carbon Economy Index”, November 2012.
3 IPCC, 2012: Summary for Policymakers. In: Managing the Risks of Extreme Events and
Disasters to Advance Climate Change Adaptation [Field, C.B., V. Barros, T.F. Stocker, D. Qin,
D.J. Dokken, K.L. Ebi, M.D. Mastrandrea, K.J. Mach, G.-K. Plattner, S.K. Allen, M. Tignor, and
P.M. Midgley (eds.)]. A Special Report of Working Groups I and II of the Intergovernmental
Panel on Climate Change. Cambridge University Press, Cambridge, UK, and New York, NY,
USA, p. 7.
1
2
Resiliency to climate change
and lower costs compared to fossil fuel counterparts. An installer of rooftop
solar PV panels might, for instance, have discussed how its panels helped
customers cut their GHG emissions, save money through lower monthly
utility bills, and "do their part" for the environment. These messages stress
efficiency and savings.
In the last three to four years, the industry's value proposition has grown to
incorporate "smart". Smart products promise to both help the environment
and to improve users' experiences through new features, greater
connectivity, and more information. Smart meters in the home, for instance,
combine the advantages of lower monthly energy bills ("clean") with the
ability to identify how energy is consumed throughout the home, compare
one's energy use with one's neighbors, and other features ("smart"). These
messages stress better user experiences and greater insight.
While we believe that these two value propositions will continue to be
important for cleantech companies, we also believe the value proposition
should now include a third lever. Leading cleantech companies have already
begun to incorporate components of a "resiliency" value proposition -- such
as self-sufficiency, security during disasters, and adaptability -- into their
products and services. Below we will examine two case studies that highlight
the resiliency value in electric vehicles, small-scale renewables, and energy
efficiency.
Electric vehicles: an unconventional power source
Electric vehicles (EVs) are a prime example of a clean technology with
resilient attributes. In Superstorm Sandy’s aftermath, EV and hybrid owners
found they had two distinct advantages over conventional autos in
navigating the week-long blackouts and gasoline shortages.
First, it was easier to fuel up on electricity than gas. The storm’s blackouts
and flooding not only disabled the pumps at gas stations, but also shut down
two of the region’s six refineries and their fuel truck fleets. This shutdown
rendered 80% of New Jersey’s gas stations useless and left large areas
without access to fuel. People were forced to line up for hours, waiting for
their gasoline rations.4 In contrast, even though millions of people lost
power in the storm, the map for electricity outages resembled more of a
patchwork quilt of towns without power. While an EV owner’s home might
have lost electricity, (s)he could easily drive to the next town to “fuel up” at a
public charging station or a friend’s home.
Second, enterprising EV owners used DC-to-AC converters to power
refrigerators and other critical appliances for up to three days from a single
charge of their vehicles’ batteries. This creative engineering made sheltering
Bradley Berman, “Electric Car Owners Unfazed By Storm”, The New York Times, 2 November
2012.
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Resiliency to climate change
in place more comfortable, and allowed the EV owners to store perishable
food that would have otherwise spoiled.
Small-scale renewables & efficiency: security during a crisis
There is also a resiliency value proposition in products that reduce
consumers' reliance on the electrical grid. Consumers can make themselves
more resilient either by developing their own supply of energy (renewables)
or by minimizing demand (efficiency).
The resiliency logic of distributed, local, small-scale renewables is quite
evident. Superstorms like Sandy may wipe out power across large areas for
long periods of time. Those consumers with small-scale renewables and
storage systems available, such as roof-top solar PV panels and microgrid
power management systems, can endure storms, floods, and other disasters
with minimal or no disruption to their energy supply.
Pittsburgh-based Consolidated Solar demonstrated the power of small-scale
renewables during Superstorm Sandy. The company teamed with Solar City
to lease a number of small solar generators that provided power to citizens
in blacked-out zones throughout New York and New Jersey.5 A similar logic
has been applied to larger facilities; New York City’s Co-op City, located in
the Bronx, used a combined heat and power (CHP) system to maintain
power in homes, schools and shopping centers during Sandy.6
Consumers may increase their resiliency by combining these small-scale
renewables with highly efficient appliances and demand-side resource
conservation. A highly efficient refrigerator, for instance, allows a family to
shelter in place longer and with fewer difficulties, even during intermittent
power outages. Similarly, the use of cisterns to harvest rainwater during a
storm can help conserve potable water for drinking -- or can provide more
drinking water with use of a filtration system. In the case of extreme
disasters, simple efficiency solutions such as these can dramatically improve
a family's ability to weather a disaster.
Implications for the industry
We are seeing leaders in the industry, such as Consolidated Solar, beginning
to incorporate resiliency themes into the value propositions of their
products and services -- and we believe it is now time for the rest of
Peter Kelly-Detwiler, "Mobile Solar Generators - One Man's Odyssey to Bring Power Back to
New York", Forbes, 14 November 2012.
6 William Pentland, "Lessons from Where the Lights Stayed on During Sandy", Forbes, 31
October 2012.
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Resiliency to climate change
the cleantech industry to assess how they may do so as well. The science of
climate change tells us that formerly "hundred-year" storms will likely
become more regular, so the market for comprehensive resiliency solutions
is likely to be great. Those companies that incorporate resiliency into their
value propositions could soon discover it is a key differentiator of clean
technologies from traditional energy generation and resource management
technologies.
However, incorporating resiliency into the value proposition is not simply a
matter of changing one's messaging. The message is important, but truly
investing in resiliency means looking into product design and innovation
(e.g., can an existing product be better designed to meet resiliency needs
and/or could a new product fill the need), customer needs (e.g., what the
latest climate science identifies as future resiliency needs), and go-to-market
strategy (e.g., are particular regions especially able to benefit from these
products).
Cleantech companies are ideally suited to provide the products and services
that will help humanity become more resilient to the challenges of climate
change. Those organizations that take a holistic view and incorporate all
these elements into their resiliency efforts are the ones that are most likely
to benefit from the value that resiliency provides to the marketplace.
Contacts
Clinton Moloney
Managing Director, Sustainable Business Solutions
(415) 498-8442
[email protected]
Tripp Borstel
Manager, Sustainable Business Solutions
[email protected]
(415) 498-7343
Jeremy Lardeau
Manager, Sustainable Business Solutions
[email protected]
(408) 817-5098
Ryan Mullen
Associate, Sustainable Business Solutions
[email protected]
(408) 817-4286
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