Thursday, June 18, 2009

Clean Tech: Call It Like It Is! .................... (part 2 of 3)

This thread started by asking:

1) What's the problem with the term clean tech?

2) Why can't the intelligent, articulate, and passionate people who care about this issue come up with a better term?

3) Should we fix it, and if so, how?

So far I suggested that the term CLEANTECH is intentionally confusing. Now let's see what we can do about it.

The Solution

To properly frame and tackle the so-called clean tech space, we have to recognize that it consists of distinct segments.

Let's go to first principles. Say we use a product which requires a lot of some natural resource. This raises concerns for near-term and long-term sustainability. In principle, there can be only three ways to fix the situation (in order of difficulty):
  1. Continue to use the product, but find ways to reduce the waste and loss involved in our consumption, so that fewer resources would be needed. Let's call this Efficient Resource Utilization.

  2. Continue to use the product, but develop methods to utilize other resources, which have a lesser effect on the environment (for example, renewable sources). Let's call this Lower-Impact Alternatives.

  3. Finally, we could somehow reduce our rate of demand for the product, so less resources would be required. Let's call this Primary Demand Suppression.

For example, let's look at transportation's need for fossil fuel:

  1. Efficient Resource Utilization (ERU) approach would suggest hybrid cars, smaller vehicles, and other high-MpG solutions.
  2. Lower-Impact Alternatives (LIA) approach would promote biofuels, electric vehicles, and fuel cells.
  3. Primary Demand Suppression (PDS) approach would prefer reduced travel and may promote that via gas taxes, high-occupancy-vehicles lanes, subsidies for public transportation, congestion pricing, high parking and vehicle license fees, car sales tax, etc.

Did you notice something? While ERU and LIA approaches were generally market-based (and technology-driven), PDS resorted to taxation and incentives. In general (without taking you through all the examples), the pattern is:

  1. ERU (efficiency) solutions are likely to be market-based: good business rationale, solid ROI, acceptable payback.

  2. LIA (alternatives) solutions may be market-based: They presumably offer longer-term ROI; for the private sector to pursue them, some intervention through pricing and incentives may be necessary.

  3. PDS (demand suppression) solutions are unlikely to be market-based: They entail significant sacrifice and change in behavior, and the payback may be quite distant; as a result, they often require major government intervention, via regulation, taxation, or even shift in property rights.

I tried to capture the distinctions in this nifty PAIN-GAIN matrix. The farther one is up and to the left in this matrix, the higher the likelihood is for market-based solutions; conversely, the farther one is down and to the right, the lower the likelihood.

So you're beginning to see the problem: When the term Clean Tech casually combines these three segments into a single "space," it does a major disservice to their distinct needs. The mix of approaches, decision makers, and decision criteria should be quite different across these segments.


1 comment:

  1. Good analysis on the pain/gain of various strategies-- they do vary, both in what they demand of the consumer and in which entity will drive transformation. But as an American civil engineer living in Poland, the sixth biggest economy in Europe, and a huge polluter and emitter of CO2, cleantech stakeholders need to sing with one voice to attract investors. Just like, say, the term natural capitalism, Amory Lovins terms intended or desired to replace traditional capitalism. For whatever reason, the term environmental sustainability won the day, both to describe changes to the environment and economy. It was simpler perhaps, easier to remember. But the expression, whatever its merits, was agreed upon and stuck to... So what I'm saying is this -- regardless of its merits -- now that it's in vogue, let's support it.