Should we "green up" dirty energy technologies?
The world of environmentalism is complex, to say the least, for both companies and their stakeholders. Despite the propensity of pundits, activists, investors and others to identify “good” and “bad” products and companies, it’s never that easy. “Bad” companies can be “good” in many ways, and “good” companies can do “bad” things. That flies in the face of those who want to boil things down to a few well-honed sound bites and certifications.
In that light, how does one think about recent efforts to improve the efficiency and reduce the impacts of “bad” energy technologies and techniques such as tar sands oil, natural gas fracking, “clean coal” and nuclear energy? All four are almost uniformly reviled by environmental activists. And yet none of these energy technologies, and the massive, multi-billion-dollar industries that have grown around them, is likely to disappear anytime soon.
Given that, what is our responsibility to minimize their impacts? Or should we hold the line, insisting that these technologies simply shouldn’t exist?
I’ve been pondering that lately as I’ve seen announcements from both companies and environmental groups seeking to make the best of what we’ve got while we continue to ramp up the next generation of cleaner energy technologies. They are well-meaning efforts to reduce the energy, water and other resources needed to produce fuels and electricity for the planet’s needs, and to minimize the pollution these technologies cause.
Are they the right things to do? Warning: If you’re looking for pat answers to that question, stop reading now. At best, I’ll only begin to illuminate the nature of the challenge.
First up is GE, whose ecomagination marketing strategy is now in its 10th year. Earlier this summer, it launched an open innovation challenge aimed at improving the energy efficiency, decreasing the greenhouse gas emissions and reducing overall the environmental footprint of tar sands oil (the company refers to it as “oil sands production”).
Extracting, refining and burning tar sands oil has been criticized for the potential to unleash gobs of greenhouse gases. The oil, contained in a mélange of sand, clay and water along the Canadian Prairies, is saturated with bitumen (sometimes called “tar” due to its appearance and odor), an extremely viscous form of oil. Extracting it requires burning natural gas to generate enough heat and steam to melt the oil out of the sand. That, combined with burning the actual oil, generates a lot of greenhouse gases. NASA scientist James Hansen, writing in the New York Times in 2012, said that if Canada is allowed to extract its tar sands oil, “it will be game over for the climate.”
Still, tar sands extraction could be less destructive. In announcing its recent innovation challenge, GE said it was “calling for the best global minds, within and outside the industry, to help develop solutions that can be scaled and commercialized within the industry.” There are two challenges, with an award of up to CAD$1 million in seed funding to develop and commercialize the proposed solutions. Winners will also be eligible to become a supplier or contractor to GE on future projects.
The technologies won’t reduce the impacts of refining or burning the tar sands oil, only of getting it out of the ground. “The approach we’ve taken is to look at technologies that will help [drillers] improve the efficiency of some of their operations by reducing the amount of natural gas that they are consuming to generate steam,” according to Brian Gregg, Manager, Global Research, Canada, at GE.
“The industry’s still rapidly growing and it’s been making good strides in reducing their GHG footprint over time, and we want to accelerate that,” he explained. “By targeting a couple of the really high-interest areas where natural gas is consumed, we think that’s how we’re going to have an impact.”
Some, like consultant and author Andrew Winston, have looked askance at GE’s efforts. “By stretching ecomagination into areas that many people clearly don’t consider very green, GE may be risking a valuable business and brand asset,” he wrote recently on the Harvard Business Review website.
I asked Deb Frodl, who heads ecomagination, whether the tar-sands initiative was, as Winston put it, a stretch. “This is not a departure at all," she said. "It’s always been about solving the world’s toughest environmental challenges.”
The tar-sands project is part of a natural evolution for GE. Since ecomagination’s high-profile launch in 2005, the company has certified a wide range of technologies under that moniker. It began with wind turbines and high-efficiency locomotive engines, things that comfortably fit with most environmentalists’ idea of clean technology. By 2009, when the company gave ecomagination certification to an Advanced Boiling Water Reactor nuclear technology and, later to clean-coal and fracking technologies, environmentalists’ collective eyebrows shot up. Even the Wall Street Journal noted in 2009 that, “The products GE has certified as part of the ‘ecomagination’ group include plenty of things that at first blush don’t sound very green, and the definition gets broader every year.”
But that’s almost beside the point. Ecomagination has long been a marketing vehicle for the company’s more efficient technologies. GE describes ecomagination as its “commitment to build innovative solutions for today's environmental challenges while driving economic growth.” GE products are certified by the company if they “significantly and measurably improve customers’ operating performance or value proposition and environmental performance or services that substantially enable such improvements.” In that light, a more efficient tar-sands technology fits.
Next up is the Environmental Defense Fund, which last week named five finalists in its Methane Detectors Challenge, an effort to bring to market “cutting-edge, new methane monitors that can help the oil and gas industry better detect, and ultimately reduce, methane emissions” in hydraulic fracturing, better known as fracking. That’s the controversial process of extracting natural gas from shale rock layers deep within the earth.
Fracking involves drilling into deep-seated layers of rock beneath the earth, then injecting a high-pressure mixture of water, sand and chemicals into the rock, allowing the gas to flow out to the head of the well. The process can create new pathways to release gas or can be used to extend existing channels.
Environmentalists have linked fracking to a number of environmental problems, including contamination of the local water tables. Another significant problem is that gas wells leak methane, a potent greenhouse gas with a long-term effect on global warming greater even than that of carbon dioxide.
EDF’s challenge is aimed at “surfacing, testing and then getting to scale the most promising approaches for low-cost, continuous detection of methane emissions in the oil and gas industry with a focus on well pads and associated equipment and compressors,” Ben Ratner, the group’s Corporate Partnerships Manager, told me. Through the challenge, he said, “We found some companies who are willing to help send a demand signal to the innovator community that there can be a market for more cost-effective.”
All Hail the Market?
So, how should environmental-minded souls think about the efforts of GE and EDF to “green up” dirty technologies? Should we beat them up or cheer them on?
It's a nontrivial questions with complex answers. It involves weighing the realities of climate change and unchecked greenhouse gas emissions with the need to provide the electricity and fuels demanded by a growing global economy. It means assessing how quickly cleaner technologies — efficiency, renewables, storage and others — can be brought to market; the government policies that provide incentives and disincentives to various energy technologies; the signals from the marketplace — business, institutional and consumer markets for vehicle fuels, electricity, natural gas and other things — that can shift demand.
And what of the immediate alternative — doing nothing to address the environmental impacts of fracking and tar sands? Does working to lessen those impacts somehow legitimize them? (And given that these are multi-billion-dollar industries, aren’t they already pretty legitimate?)
Should we let the market decide? As Winston aptly notes, “If through taxation or regulation, the world makes carbon-based energy more expensive, the economics of carbon-heavy energy sources get much worse.” And the growing conversation about “stranded assets” — what happens to shareholder value when market forces and climate regulation make some portion of a company’s carbon reserves (such as unmined coal and oil) unburnable — could play a major role in determining these technolgies' fates … some day.
For now, market forces are creating a seemingly insatiable demand for energy and fuels, and alternatives like renewable power and biofuels are only just beginning to garner market share. While it's easy to criticize GE or EDF for seemingly aiding and abetting climate-intensive technologies, it isn't as easy to tell them not to do it.
As I said, I don’t offer solutions, only questions. These are challenging and important conversations about our energy, economic and climate future — ones from which companies and their critics shouldn’t shrink.
Image by kimberrywood