July 25, 2011
By Bob Graves
From his early founding of the Santa Monica BayKeeper in 1993, to his seminal work as chief policy advisor to Governor Arnold Schwarzenegger, Terry Tamminen has developed expertise in business, farming, education, non-profits, the environment, the arts, and government. During his service in state government, he was the architect of many groundbreaking sustainability policies, including the Hydrogen Highway Network, the Million Solar Roofs initiative and California’s landmark Global Warming Solutions Act of 2006. His latest book, Cracking the Carbon Code: The Keys to Sustainable Profits in the New Economy (Palgrave), illuminates ways to find low carbon products and services. In 2008, The Guardian ranked Tamminen No. 1 in its “Top 50 People Who Can Save the Planet.” In a conversation with Green Technology magazine, he discusses California’s place in the emerging global green economy and what must happen to keep the state in a leadership position.
Proposition 23, on last year’s ballot – my understanding is that this was the largest public referendum on clean energy in the world. What is the significance of last year’s defeat of Proposition 23, concerning AB32?
I am really surprised by the significance of it and how it has reverberated around the world. Just to be sure everyone understands, that was the measure that would have rolled back California’s Global Warming Solutions Act. It would have stalled our efforts to tackle climate change with green economic development, and it was soundly defeated.
Since November, when Prop 23 was defeated, I’ve been in India, I’ve been in the Middle East, I’ve been in Australia. It’s astonishing to me how many people cite this and mention that it was the first time people really had a chance to vote on a climate change issue. Certainly here in the United States it was. It really is reverberating in a positive way because it was such a resounding defeat; more than 60 percent of voters said no.
In a country where we’ve had a struggle with policy, at least at a national level, that’s a very important message. Not just here in the states, but because the U.S. has been one of the largest foot-draggers on international solutions to [climate change], it sends a message to the rest of the world. I can’t overstate how important it was.
Arnold Schwarzenegger, a very strong supporter of AB32, spoke at a recent ARPA [Advanced Research Projects Agency] Energy Conference. He stated that U.S. energy policy should move beyond a debate over global warming to sell a clean energy policy based on economic health and other benefits it can offer. Does this signal a change regarding climate change communications?
Schwarzenegger has always been about what’s practical and getting things done. He was, I believe, the first major leader in the United States back in 2005 to say [about climate change], “the science is in, the debate is over, and the time for action is now.” Certainly as a Republican that was controversial in his party, considering the backdrop of the Bush Administration in the U.S. at that time.
Of course, he saw the shrinking snow pack in the Sierras, one of the primary bits of evidence that this is already impacting California; our fragile levees up in the Delta area, under constant assault and eroding even faster because of higher sea levels; more intense storms; changes to our agricultural seasons and more people harmed, even dying, during extensive heat waves.
He saw records broken year after year. At one point, there were 2,000 wildfires in the state of California, absolutely unprecedented, and there are direct links from these to climate change. So he, in no way, is backing off of the fact that we have to solve that problem. He always is quick to move to, “what are the solutions?” And that gets you to energy efficiency, low carbon economic development of all kinds, renewables.
What he was saying at that speech was, just because we’re in a fight over these policies in Washington, why focus on the one thing that some disagree on – the term “climate change” – and using it as the driver for policy when there are 10 things that those same combatants all agree on? We should become more energy independent for energy security reasons; we should not just rely on limited fossil fuels which are running out or subject to geopolitics; we certainly want to deal with public health.
Your new book, Cracking the Carbon Code– The Key to Sustainable Profits in the New Economy, is directed to the business community. What is the carbon code and what’s your message to companies?
The carbon code is a new yardstick, a way of measuring efficiency or inefficiency. If we crack that code, we’re going to uncover all kinds of inefficiencies. Some are obvious – you can find ways to reduce energy consumption, and, in turn, you reduce carbon. Some may not be so obvious. For example, there’s a company, iGPS, where I sit on the board. It makes plastic shipping pallets. Now here’s a product that everybody uses in commerce. We ship goods all around the world on pallets, most of which are made of wood. The plastic pallets are about 50 percent lighter, so they save fuel – not just greenhouse gases, but energy and cost. They last a lifetime, and if they ever break you grind them up and make them back into another pallet.
The wooden pallets, when they break, end up in a landfill. And of course, they are contributing to deforestation, which has created more climate change problems. We’re running out of trees – literally 40 percent of the hardwood in this country is cut down for making pallets. So there’s a hidden cost by just continuing to do business as usual.
By using the carbon code you could have identified the options for shipping your goods, and while saving carbon, also saving money. The book goes through these kinds of examples and helps people figure out when the tipping point is coming in their industry – when might they actually be regulated and forced to do this? How can you get ahead of this and save money or make money ahead of that regulation? I take you through the steps to demystify that whole world of carbon and energy efficiency and turn it to your advantage.
Many of our readers are state and local government leaders. What do they need to know about this?
You know, the debate has raged on. Certainly Schwarzenegger was one of the key provocateurs during his time in government about whether issues like this should be dealt with at the national level or the sub-national level. Schwarzenegger’s point of view, my point of view, is that we didn’t wait for China to invent the motor car, and we didn’t wait for Eastern Europe to adopt clean air standards and improve the health of their citizens.
We, as leaders, have to lead. It doesn’t really matter what level you’re at – the city, the county, the state, national, international. Whatever level of influence you have. Living in Beijing today is the equivalent of smoking two packs of cigarettes a day, a scientifically proven fact. That’s what the air pollution used to be in Los Angeles. Look at how much better we’ve made things in most American cities because of thoughtful regulation. This didn’t just impose a cost, it also provided a benefit in terms of lower healthcare cost, greater productivity. Who wants to see their kid walking around with an asthma inhaler?
If leaders at any level of government can do something on these issues that will convey benefits on their constituents, then I say it’s incumbent upon them to do it. They can’t say, “oh gee, it’s some other country,” or “oh no, it’s my federal government that should do this or that.” If you can stimulate, for example, retrofits of buildings to save energy and reduce their carbon footprint, that means local jobs. You don’t need Washington to tell you that that’s a good thing for your local community.
On that subject, what other kinds of things do you see local governments doing to support this new economy?
Part of this is about leveling the playing field. Fossil fuels and business as usual have had a long head start, so it’s hard for changing technologies to get in there and compete. Certainly at the national level, part of the problem is that we continue to subsidize oil with foreign wars and huge tax breaks for an industry that hardly needs them. That keeps the price artificially low and makes the rest of us pay for it in other ways. It’s hard for an alternative fuel technology to break in when the price of gasoline is artificially low – even at $4.00 a gallon –compared to its true cost.
While local governments may not be able to change federal tax policies, they can certainly help level that playing field with their own buying power. Cities, for example, are some of the biggest consumers of things like efficient light bulbs or cars. They can put alternate fueling stations into city parking garages, give access to their buildings for ESCOs (Energy Service Companies) or others to do energy efficiency audits and then encourage upgrades or finance upgrades with revenue bonds or other kinds of creative financing products. They can partner with the private sector on that type of thing so that the taxpayers aren’t paying twice.
One of the best places to get started is for local governments to do energy efficiency audits of all of their buildings, schools, courthouses; it not only helps the city budget, but it puts money back in the pockets of the taxpayers.
How can companies profit from California’s early leadership in creating a low carbon economy?
I think companies have got to be leaders themselves, because in this age of tighter government budgets, government people who in the past might have had time to develop these projects and encourage companies to come in and give proposals and participate just don’t have the bandwidth anymore.
Companies need to be entrepreneurial and seek out those leaders in agencies and elective leaders, and say, “look we’re here to volunteer. Of course it will be good for us and for our business, but we want to do something we think is also good for the city.”
Don’t just put up a shingle and say, “Okay, I’m here for business. I’ve got an ESCO and I’m happy to do audits for energy efficiency and teach you how to retrofit your building.” You’ve gotta be more proactive; build coalitions, work through collaboratives, do some of that designing and proposing and help our elected leaders do what they want to do but just don’t have the bandwidth or the budget. The people working in the trenches don’t have the time to work this up themselves; they need turn-key solutions.
I hope they take that to heart. The opportunity goes beyond California in these coalitions. Innovative product and services development can then spread out across the United States.
It can, and even around the world. One of the things Governor Schwarzenegger kicked off when he gave a speech in Copenhagen at the U.N. Conference a little over a year ago, was the formation of the R20. We’ve been working on that ever since. The R, standing for Regions, is a collaboration of regional governments.
Businesses can become partners in the R20, and it’s a great way to identify those kinds of projects and those kinds of collaborations. These are regional governments, mostly states and provinces, and also some cities who are partnering with the R20. The idea is to get governments together to share technologies and policies that have been effective, so they don’t have to create from scratch.
Then we can aggregate these markets. Take, for example, energy efficient street lighting. That’s something that every government around the world needs. There are inefficient street lights or parking lot lights in government buildings and streets all around the world. Imagine if those levels of government got together and said collectively, “We need a million more efficient street lights over the course of the next two years. Here’s where the need is, and here’s how much we’re paying for electricity. We can figure out how to pay for upgrades of those lights from energy savings.”
Then that group, the R20, turns to the world’s financial markets and to the world’s technology providers. Because it’s such a large group order, you can incentivize mass production competition among the lighting providers to bring down the cost, and among the financial institutions to finance those projects.
There are other collaboratives like that, the C40 Cities and the American College & University Presidents’ Climate Commitment. They need the help of businesses to identify technologies and to participate in their work.
Getting a perspective on this moment in history is a challenge. Have there been previous transformations of this magnitude?
Thinking broadly, if you go back a couple of hundred years when slavery was abolished, that was such a time. During slavery, there was no need for innovation in the workplace because labor was free. You didn’t need machines, you didn’t need innovations, you didn’t need efficiency. But when slavery was abolished, it forced those who had control of resources, to think about machines and innovation, and that lead to the Industrial Revolution and unlocking all kinds of value.
If you go another 50-60 years forward, around 1900, just 100 years ago, the predominant technologies were horses and buggies and gas lamps for lighting and maybe carrier pigeons or telegraph, at best, for communication. Within a decade, because of the transformational technologies that were so much more compelling – and upsetting the applecart of very entrenched incumbents – you got to electric lighting, motorized transportation and the telephone. Then other things came along, like transitioning from iceboxes to refrigeration.
Greater efficiency is really the mother of invention, and I’m optimistic that it’s happening now. What we’re seeing play out in the Middle East with oil leading to higher prices for a basic commodity are making people rethink business models and look for alternatives. We are at that tipping point.
There were motorized cars going back to the 1860s, and yet it wasn’t until the early 1900s that they suddenly upset the horse and buggy apple carts. Same thing here – we’ve had years and years of development of alternative fuel technologies and energy technologies and efficiency. As the collar gets tighter around our necks with respect to climate change, running out of fossil fuels and other natural resources, and realizing that our kids are literally dying if they live near a polluted freeway or city, that’s beginning to help us move that needle and get to the same tipping point.
It’s certainly a strong call to action. When you look back, we had the Industrial Revolution, the Digital Revolution. Will this be known as the Sustainability Revolution or is there another term that fits better?
That’s a good question, and I’m sure there are marketing professors, sociologists, anthropologists and public affairs people who will look back on this and will coin phrases for what this period is.
Shaikh Yamani, one of the founders of OPEC, the oil collaborative, famously said, “The stone age did not end for a lack of stones, and the oil age will not end for a lack of oil.” We’re not going to dig it all up and use it before we transition to something else. He actually calls this the “Oil Age.”
Whether it’s characterized as the “Clean Tech Age” or the “Sanity Age” or the “Post-Industrial Age” or the “Third Industrial Revolution,” as Jeremy Rifkin likes to call it, I think there are a lot of people laying claim to the title. Future historians will have to figure that out.
What are California communities going to look like in the new world of a low carbon economy? Are we going to see changes that will be significant, or will this be a gradual transition to new models of development and transportation?
That is a great question and one I tried to answer in my last book, Lives Per Gallon: The True Cost of Our Oil Addiction. One of the chapters is, “Postcards From the Year 2050,” where I lay out a postcard that says, if we keep on business as usual, with an oil-based economy and the levels of pollution we have globally and the geopolitics that are causing all kinds of heartache, our world in 2050 will look a certain way. I think you and your readers can all guess what that is.
Or, if we’re smart enough now and really push to change these technologies and become more self-sustaining, realize there’s an environmental price to pay for business as usual, a public health cost to pay for business as usual, and that we really have lots of reasons to make these changes, then that’s a very different vision.
There’s one thing I like to point out that is a little humorous. In the Post-oil Era and the more enlightened view of the 2050, oil tankers are used to move water around the world instead of oil because it’s a much more valuable commodity. Of course, if they leak a little bit, nobody cares!
But getting back to your question about California, I’m actually optimistic that most, if not all, California communities will certainly be harbingers of the 21st Century because we always have been. We have the Santa Monica’s and the Berkeley’s and lots of places that have been the leaders in incentivizing and deploying renewable energy and efficiency and zero waste. I remember 20 years ago, the Santa Monica City Council – and I live in Santa Monica – had a sustainability initiative and set metrics for what it means to be a sustainable city. They set waste production goals and energy efficiency improvement goals and greenhouse gas reduction goals, even back then, and they’ve actually met most of those.
In 1990, the state of California passed a law that said by 2005, we would have diverted at least 50 percent of the waste that was going to landfills, either by reducing, reusing or recycling it. I was the Secretary for the California EPA in 2005, and the Waste Board was in my jurisdiction. I had to actually certify whether or not we met that target. Low and behold, we actually did, right on schedule, in the middle of 2005. All the reports showed that we had made it, and so we could move towards thinking about a 75 percent reduction, or even zero waste, dare we utter the word zero waste.
California continues to innovate at the state level and at the municipal level. I’m very hopeful that these communities in the future are going to be much cleaner, much more connected, much more walkable and [bike friendly]. They will be using technology, like video conferencing and other things, to avoid excess trips. We’ve got a hydrogen highway, we’ve got a lot of plug-in cars already, we’re 40 percent more energy efficient than the rest of the country already, thanks to a lot of our policies. Yet, we clearly lead a great lifestyle. I’m optimistic.
Thank you.
* A proposition on the fall 2010 California statewide ballot to delay the implementation of AB 32, California’s Global Warming Solutions Act, until more favorable economic conditions prevailed. It was defeated by a 61 percent to 39 percent vote of the electorate.