Let's Bring Back the Integrity of Green Energy
I have worked in the green energy industry for all my professional life (over 30-years). I started out as an energy manager for a military base; and was attracted to start an Energy Savings Performance Contracting (ESPC) career with Honeywell, Inc. in 1991. What attracted me to this career path was the “guarantee”. We’d retrofit our customer’s buildings and then guarantee a specific level of cost savings. This “guarantee” added the integrity that the green energy industry was lacking. Prior to guaranteed energy savings, there were all manner of exaggerated and false savings claims.
Building owners liked the energy guarantee so much that the ESPC market grew from $500-Million in 1991 to $10-Billion in 2022. Many large Energy Service Companies (ESCo’s) have grown their project offerings over this period. The global green energy market is estimated to be $1-Trillion. I participated in this growing industry myself by starting, growing, and selling my own ESCO called Ennovate Corporation. I’m happy that what I’ve valued all my life has become so successful.
I now coach small business owners participating in the green energy. While I love coaching my clients, I’m disappointed with the integrity of our current green energy industry.
History of the Green Energy Industry
In the 1970’s the crisis was the oil embargo that scared the west with their dependency on middle east oil. This prompted a decade of “smoke & mirror” energy conservation efforts. In the 1980’s, more practical energy efficiency and energy conservation measures were developed. By the 1990’s, Energy Performance Contracting or EPC used an energy savings guarantee to successfully implement many energy efficiency projects.
The industry has devolved in recent years. As a global society we are buying the same false promises that were made before the advent of guaranteed energy savings. Instead of achieving guaranteed results, we are chasing political promises, government grants, utility rebates, LEED certifications, and ESG scores. I believe that these are well-meaning attempts to make a positive difference for our environment that fall woefully short.
In 2009, the Obama administration funded many green energy projects with grant funds and increased funding of state energy offices. Many of my clients waited on viable projects because they hoped grant funds would reduce their costs. Ironically, rising inflation from 2009 to 2011 reduced the financial benefit of any grants. Grants that never came. In some cases, these clients continued with less of a project, or they did nothing once they realized the price tag had increased.
The new scare tactic today is the “Global Warming Crisis”. Like the oil embargo, this is a real crisis. Also, like the oil embargo, the global warming crisis is fueling irrational decisions on energy. In the Obama administration, decisions to loan Solyndra $535 million only to see this company file for bankruptcy two years later. Government subsidies to the fossil fuel industry are no better.
The latest fad is Environment, Social & Governance or ESG rankings. This idea has been around for quite some time but has now gained feverish momentum. Sadly, ESG rankings don’t translate into benefits to the environment, society, or equality. Sanjai Bhagat wrote a recent article in the Harvard Business Review entitled An Inconvenient Truth About ESG Investing. The conclusion: “funds investing in companies that publicly embrace ESG sacrifice financial returns without gaining much, if anything, in terms of actually furthering ESG interests.”
This isn’t new. The fad from 2006 to 2016 was LEED certification. The US Green Buildings Council promoted a registration program to achieve various levels of certification of a new and existing building based on certain criteria. A USGBC administrator would review that your project met that criteria and assign your building points. You would get a nice plaque you could put on your building rating it certified, silver, gold, or platinum. I remember attending a ribbon cutting ceremony for a new library constructed at the University of Denver (DU) in 2013. The architects were bragging about the LEED Silver certification. I asked, “What will this building consume in energy per year?” They didn’t know the answer to the question at the time. Since that time, the building has underperformed in energy consumption when compared with most older buildings there were retrofit under Energy Performance Contracting projects. Most building designers and builders have abandoned LEED because of its high cost and poorly performing buildings.
Measurements like ESG and LEED certifications are well-intended but are feel-good efforts that result in no environmental benefit. Sadly, they often result in creating economic damage. In the case of the library at DU, student tuitions could have been reduced instead of investing in feel-good rankings. In the case of chasing ESG scores or government grants, organizations could be making a positive difference in their core missions.
Stop the Negative Direction
As an industry, I believe we can make a real impact. Here are some things we can STOP doing.
Stop Political Attacks – Believe it or not, Democrats and Republicans are against wasting natural resources that negatively impact our environment. When we make politically polarizing attacks, it pushes needed supporters to oppose beneficial projects by creating resistance from 50% of the population.
Stop Fear Mongering – There’s a problem with the build up of CO2 in the atmosphere. There are also natural trends in our earth’s climate that cannot be controlled. When we hear this constant “crisis” language, most rational thinkers ask, “Why am I being told to be afraid?” When exaggerated claims by alarmists turn out to be false, many people that the fearmongering is a hoax. Use rational language to describe real problems and real solutions. Be willing to discuss pros and cons of your ideas without getting defensive.
Stop Superfluous Ranking Systems – ESG is a well-intended program but is mixing objectives that create more confusion than clarity. If you want to sacrifice financial benefits by investing profits into environmental programs, then advertise that to your investors. If you want to improve diversity and equity programs in your company, then tell investors what programs you believe will improve equity and diversity. When you mix all these initiatives into one grand score, you are making your rating system confusing and political… not consequential.
Stop Feel-Good Global Agreements – I get it. CO2 emissions is a global problem. Sadly, the Paris Climate Agreement is a lopsided, feel-good agreement that will accomplish very little in the way of emission reduction; and will cause imbalance in world trade. This isn’t the first and it won’t be the last. These agreements give political leaders cover but accomplish very little.
Stop the Subsidies – We tend to subsidize what we want to grow. Ironically, we are subsidizing oil exploration at the same time we are subsidizing renewable energy projects. Subsidies attract poor investment, increase prices, and reduce innovation. Government’s job is to regulate. If we want to reduce damage to the environment, make rules that prevent such damage or taxes that require the damage be paid for by the damaging party.
Stop Nuclear Energy Bigotry – As an engineer, I’ve wondered why we are not more seriously considering nuclear energy. We have plenty of uranium. We have developed innovative ways to reduce risk of contamination from spent uranium. We have developed ways to limit nuclear plant catastrophes. Nuclear energy generates no carbon dioxide emissions. If we are truly interested in reducing carbon emissions, nuclear energy seems like the least expensive and most sustainable way to accomplish this end.
You can see that I’m proposing that we reduce or eliminate all control that we’ve worked so hard to implement over the past several decades. Why? In our brief history on this earth, us humans have tried to control other humans. This control may create temporary progress; but it often ends in massive bloodshed and widening the gap between the poor and the rich. Most libertarians see the green energy movement as another form of this control.
Start a Positive Direction
As you read this post, you may think I’m putting down the green energy industry. Quite the contrary. I’m encouraged that many people are concerned about our environment; and see an opportunity to reduce their energy costs by making smarter choices.
If we can’t control others, how do we collectively improve our earth’s environment and life for all humans? Here are a few ideas:
Embrace the Free-Market – Since the beginning of time, people have been fighting for their independence from oppressive governments. Free markets have demonstrated that they provide the least oppressive life for all. Industries recognize that they can profit from energy conservation, energy efficiency, and renewable energy. When these markets are allowed to be free, entrepreneurs will answer to call and help our environment without funding by the government.
Government Regulations – Each country has its own economy and its own type of government. However, we are all sharing the same earth. Governments can impose taxes, tariffs, and regulations that protect the environment where the free market fails to cover these bases. If a country is a large producer of cheap products that are negatively impacting the environment, tariffs can be levied on that country by other countries importing those products.
Guaranteed Energy Savings – At least 50% of the claims being made by energy efficiency vendors and contractors are false. In fact, many supposed energy savings measures increase energy consumption and increase costs. If we want to genuinely achieve savings, that savings must be measured, verified, and guaranteed. Energy Performance Contracting (EPC) is a mechanism that provides added financing with guaranteed results. Energy Service Companies or ESCo’s have created systems and processes to implement viable EPC projects.
As I write these ideas, I understand how these concepts repel green energy activists. However, all three of these items have worked successfully to promote liberty and improve our environment in the past. If you truly care about our environment and our world, I ask you to objectively review what has and has not worked in our collective effort to conserve energy in the past.