The Case for a Business-Environmental Alliance, Hint: It’s Very “Efficient”

Saving Energy Growing Jobs: How Environmental Protection Promotes Economic Growth, Profitability, Innovation, and Competition
(2007, Bay Tree Publishing)
By David B. Goldstein

The Case for a Business-Environmental Alliance, Hint: It’s Very “Efficient”

This is the most important book you will read in 2008, and it came out in April 2007.

Mao’s little book, Catcher in the Rye, the bible, and now Saving Energy Growing Jobs. Important books to carry with you as you go about your environmental world duties.
But beware, it gives evidence of a win-win situation for a Business-Environmentalist coalition. I know, "gasp!” But author, David Goldstein thinks that a dialogue between progressives and conservatives would help environmental protection, efficiency, the economy and the job market. Look, talking to my conservative sister-in-law about politics is like putting my head in a buzz saw, but that’s why we have Goldstein to thank. He gives us a reason for Americans, Red, Blue and Green, to join hands for the good of us all.

Goldstein is a Cleveland native who, since 1980, has co-directed the Energy Program at the Natural Resources Defense Council (NRDC).  He was named a MacArthur Fellow (a.k.a. the Genius Award) in 2002.  His title is “Energy Conservation Specialist” in the MacArthur genius class of 2002.

Goldstein started his career at the Natural Resources Defense Council by developing energy efficiency standards for household appliances. VP Cheney famously said, "Conservation may be a sign of personal virtue but it is not a sufficient basis for a sound, comprehensive energy policy." According to an oft repeated and admittedly very impressive statistic, Goldstein's work on energy efficiency standards for appliances is saving as much energy every year as the entire output of the U.S. nuclear energy program. It may not be sexy, but it’s powerful.
Look at this line from Saving Energy, page 26:

This book is an attempt, in part, to establish a mutually beneficial basis for improving trust and encourage collaboration between business and environmental advocates.

I know, “yuck.” Or this from page 229:

My experience is that efforts to find win-win solutions through negotiation are successful more often than not. In many ways environmentalists can help solve industries problems in a socially beneficial way if both sides recognize this as a goal.

Do we burn him at the stake or what?

This book really turns on its head the preconception of the environmentalists from the UN at the gates of the corporation with their hands out, raping corporate profits and killing jobs. In fact it’s just the opposite. Author David Goldstein, who has for 30 years been at the forefront of energy efficiency policy and such initiatives worldwide, shows conclusively that time and again governmental regulations to mandate efficiency turn out well for the environment and business.
Mr. Goldstein details how when he was in Russia in the 1990s, mulling over building standards with Russian “officials” (code word for officials), they determined that the Russian building methodology of constructing concrete sandwich panels crossed with connections that allowed heat to short circuit the insulation. Use of modern insulation materials to replace concrete was initially thought to add only modestly to the cost. As it turned out, the cost of the insulation was cheaper than the concrete it replaced and thus the cost of saving 40% on heating energy was achieved for a cost of less than zero. Cha ching!
Goldstein states:

My purpose is to suggest new approaches to political consensus on the environment-approaches that can make business more profitable, that will produce more and better jobs, and that will accelerate economic innovation and growth.

I know, I know, environmentalists talking to evil businesses about making them more profitable. What's next? Dogs and cats living together? This is real wrath of god stuff.

Further, he blames both sides for their lack of “reality,” or “results based” thinking, and preoccupation with being stuck in each other’s myths, preconceptions and prejudices, which have to date ruined the possibility of establishing a business-environmental alliance, if not consensus, that would actually be beneficial to both sides.
Goldstein shows how economic fundamentalism, basic economic theories that have for years served as the basis of much of economic theory, falls apart based on actual real world environmental data, and facts.
In terms of indirect, unanticipated benefits, Goldstein continues to shatter myths of energy efficiency and environmental regulation, by using data, and real world examples to disprove that even the basic equitation of: Invest $1 in energy efficiency, get 2/3 dollars of savings over time.

Not only are there other benefits greater than the 2 or 3 dollars, the $1 additional cost in many cases does not ever come to pass.

According to Goldstein:

Such nonenergy benefits come from the ability of environmental polices to promote innovation and competition.

Examples include efficient washing machines. Since 1992, these washing machines have been marketed for their stain removal ability and size options. In reality, they don’t require an agitator, and produce water savings that reduce expenses even more than the energy efficiency. Additionally, the gentler cycles make clothes last longer. Compact fluorescents use 1/3 of the energy, put off a lot less heat, and, because they are cooler, attract less dust. Light fixtures need to be cleaned less often, saving consumers on maintenance costs.

In the last 30 years, refrigerators have became 50% cheaper despite six rounds of energy-efficiency standards and two rounds of ozone depletion phase-out regulations. Each regulatory upgrade was supposed to have a $30 to $80 per unit cost, but these never materialized. Page 73:

The need to provide continuous improvement in the environmental performance of refrigerators provided manufacturers with the motivation to improve technologies throughout the production process . . .

So often ROI (return on investment) for energy efficiency is based on delta cost, which many times goes down to zero or less.

In discussing "strong form” of the growth proposition, Goldstein argues:

Environmental protection policies promote innovation and creativity as affected companies find new and better ways to comply with environmental performance goals, and these innovations generally produce gains that are unrelated to the expected improvements – and usually much larger.

(Companies redesign products to meet energy efficiency goals) . . . the company uses such an opportunity to redesign for a number of other production issues that can cut costs or improve quality. These energy-efficiency improvements might cost extra is they had been taken on their own, but this is rarely the case.

The author quotes:

'Regulations to improve vehicle safety and environmental and energy performances do impose additional costs, but these costs are neither permanent, nor cumulative.'

In other words, all environment regulations imposed after 1980 achieved their smog-reducing benefits for free.

In short, the need to comply with environmental policy helps shake industry out of complacency and encourages more innovation and competition. 

The new business opportunity exists when readers realize there is business to be done here, and indeed Goldstein points this out:

The economy is full of unexploited business opportunities to reduce energy use or otherwise improve environmental performance at a profit. This is both a business opportunity that corporations can implement on their own and one that they can implement through advocacy and organization.

(Business seeking efficiencies in their own operations) . . . their actions will create opportunities for the broader economy – for other businesses that sell the efficiency services or the equipment needed to enhance efficiency or reduce pollution. The other opportunity is for businesses to advocate for government policies that will help them to identify the opportunities and help finance them, or to create new markets for business that sell efficiency/environmental services or products.
There are no diminishing returns for efficiency investments, as evident by Goldstein's example of the period after the CA 2001 energy crisis, when California quadrupled its previous statewide energy efficiency program from $250 million to a billion dollars, and savings were four times as much as at previous year's levels, while at the same cost per kilowatt (i.e. – there were no diminishing returns, it didn’t get more expensive the higher amount of efficiencies).
The shocker on the Kyoto compliance price tag occurs when, according to the author, many books detail the huge costs of complying with Kyoto, but most do not address the benefits of energy efficiency at all:

The US Government and the energy modeling community has largely ignored analysis of energy efficiency. This is a shame because the majority of these analyses illustrate what America’s Energy Choices shows: that the actual cost of compliance with the Kyoto Protocol is less than zero for the United States.

Further, Goldstein includes a full two page bibliography for a single note, titled:

”A large number of books and articles documenting the large efficiency potential that can be realized at no cost has been published over the past thirty years.”

Who has been doing PR for these guys? What follows is a single spaced listing of 23 books articles, studies, etc.

We are all shocked that "the Corporations" and "the Environmentalists" should be working together toward mutual benefits.  David Goldstein is one of the few among us who, for decades, has lived in the reality, results-based world. He has the proof in the pages of this book. We should all read it and get to work.

Joel Baral is a Principal at Modern Earth Finance, a "gasp" Mortgage Brokerage in Los Angeles, focused on integrating energy efficiency, environmental awareness, and green building to protect and maintain clients values and to keep ice in Antarctica.