Enter the EPA who, rightly, asserts that we have to modify our vehicle efficiency rating system, and has proposed a new standard for 2012 (link the proposed standard and to a WSJ article on the topic). But instead of proposing a way to compare vehicles with different power sources, they appear to have decided that they already know the right answer, and are going to move to a new grade-based system and just give all of the electric vehicles an A or A-. All gasoline powered vehicles will start at a B and go down from there.

So why pretend that electric vehicles are “emissions free”? From the WSJ article:

The EPA’s (Gina) McCarthy said the agency was constrained by federal statutes that specify only tailpipe emissions, not upstream emissions, be included on the label.

Dan Becker, of Safe Climate Campaign, says that is not true, but more to the point, when has the EPA ever been unwilling to push the boundaries of their jurisdiction if they thought it was the right thing to do?

Please, EPA, spend some time and do this right. The current stickers are one of the most effective things you’ve ever done, and their brilliance is that they put real data into consumer’s hands. It would be a mistake to either try to a) dumb it down, or b) use some abstraction to push some agenda.

If you read the comments you’ll see that some people thought the whole notion was stupid, some said “doesn’t matter unless China reaches peak carbon also”, and others disagreed emissions were going to peak. I didn’t disagree with the China point, but felt (and still feel) like a true downward trend in US emissions is an important milestone.

Based on the latest numbers from the EPA, it looks like there is good news on two fronts (see chart from EPA’s carbon website). First, the data so far supports my theory – 2008 was lower than 2007, and 2009 took another good step downward. But even if you don’t care about my prediction, the other good news was that the 2009 drop was bigger than the economic downturn would suggest. This indicates some real decarbonization of the economy, which is encouraging.

Like my predication, the data suggests that the decarbonization wasn’t from a single trend, but from the accumulation of multiple shifts. Interestingly it was split between a reduction in the energy intensity of the economy, and a decarbonization of the energy supply itself. While the first is a mixed blessing since it usually indicates a further erosion of the US industrial base (and if those jobs just moved somewhere else, then the emissions just moved with them), but the second is a good sign, especially given the lack of momentum in federal energy and GHG emissions policy.

One thing that I think we need to start looking at more closely is the effectiveness of local, state and regional level efforts at clean energy deployment, coupled with new roadblocks to new coal plants. Evidence would suggest that there are some successes there that we should be paying attention to, and trying to replicate more broadly.

I also continue to believe that the 2009 experience will be representative of the general nature of the decarbonization of the US – the cumulative effect of lots of small and medium sized actions and policies, as opposed to a single big policy or technology which has a dominant effect.

So overall I’m gaining even more confidence in my prediction, and continue to hope that I was right on the money! If you want to vote for or against me, I’ve registered this as bet #436 at longbets.com. So far there’s 7 against and 0 for!

Speaking as someone who ran a CSR group at a F250 corporation (Sun Microsystems) for 5 years, I can tell you that it would be great if the real world were so simple, but its not. While he’s right that CSR and the business of the company need to always go hand-in-hand, the situations aren’t nearly so clear-cut, organizations aren’t as smart, and CSR professionals aren’t as dumb as he suggests.

Let me illustrate with a few points:

• Measuring project RIO is not cut and dry, just ask BP. Many CSR activities are grounded in a discussion of risk, as opposed to measurable items like parts cost. Skilled CSR professionals bring careful analysis of a new set of risks into the corporate decision process. In many cases the CSR input may not change a decision, but in some cases it does.

• Dr. Karnani points out the important role of legislation (or, as important, the threat of legislation) and the influence of NGOs, including watchdogs and advocates. But who represents these issues in the corporation? In my experience it is the CSR function which often acts as the interface between these activities and the corporate decision process. When designing products that will hit the market in 3 or 5 years, as is the case in many companies, speculating about the global legal and social opinion environment that the product will be sold into is now an important set of inputs to the design process.

• Companies have a finite bandwidth to take on new activities, so naturally lots of perfectly sound “win-win” projects don’t make the list unless they have an advocate. Energy efficiency projects have always “made sense” for companies to do – CSR and environmental awareness just made them more visible, provided a surer ROI, and got them higher on the corporate to-do list.

• At the other end of the spectrum are projects which are CSR winners but financial losers. CSR’s role here is not to give up in a huff, but to keep the corporations major societal impacts on the front burner, for these are the company’s biggest long-term risks. If they really are major negative societal impacts, the company will pay for them in some way eventually, and in the meantime the company is horribly exposed to a competitor who figures out a way to lessen or avoid these impacts. CSR needs to drive the key questions: can we lessen the impact in a financially sound way? What can we do differently over time? Are we investing in innovation that may lessen our liability?

• In the last two points I’ve hit Dr. Karnani’s two big CSR project buckets, but he’s missed the most important one, the area where two choices have different societal impacts, but the financials aren’t that different. These come up all of the time, but aren’t visible in the decision process unless someone is keeping score of societal impacts. Vendor A and Vendor B have similar prices, but Vendor B has dubious employment practices in some of its factories. Or maybe Vendor A’s products use more energy for the same amount of work. Datacenter A and datacenter B may have a similar 5-year cost of ownership, but Datacenter B may use 30% less energy per year with lower resulting CO2 emissions. Or maybe Datacenter A has a major solar panel going in next door and will have no CO2 emissions from that point on. These are a couple of simple examples, but I could give many, many others. In my mind this is when the CSR function shines in a company, and where it can have the biggest impact.

In conclusion, if your company trivializes the role of CSR, as Dr. Karnani suggests, then CSR will not play a useful role in your organization, so you should probably just fire them all.

If, on the other hand, you recognize that societal issues are playing an important role in complex corporate decision processes, and that all evidence suggests that the role will increase going forward, then hire some good CSR folks and integrate them into your management team.

And, oh yeah, be careful of academics talking about real world corporate issues: they can be irrelevant, and in some cases even dangerous.

The WSJ recently ran an article which surveyed participants in the field test and found they were generally getting in the 100-110 miles per charge range, less than the advertised 150. The battery in the Mini E is 35 kWH (not 35 kW as stated in the article). Combining this with data from a standard Mini Cooper, we can start to get a look at the actual emissions and cost of driving of the Mini E.

On the emissions front, if we assume 35 kWH for 100 miles, we can calculate the emissions if we use grid electricity. Using the EPA’s eGRID data, we can calculate the emissions per 100 miles. On the gas-powered Mini, the average fuel economy is 32 MPG, and with 19.9 pounds of CO2 per gallon of gas, 100 miles produces a little over 62 pounds of CO2. I’ve attached a chart (pdf, xlsx) which shows the comparison on a state-by-state basis (the pdf is set to 100 miles of range for the Mini E, and the spreadsheet shows the same data, but lets you change the Mini E range and see the effect).

As we can see from the chart, with 100 mile range the Mini E has less emissions in 40 states, and has more in 10 states and the District of Columbia. Based on 12,000 miles of driving (a year’s worth for many people), the Mini E would save 0.85 tons of CO2 per car, assuming they were spread across the US. To see the effect of state electricity sources, we see that in Wyoming the Mini E would generate almost a ton more CO2 than the gas-powered version, and in California it would generate almost 2.5 tons less. (Note to electric car marketeers – please stop telling me your car is zero-emissions.)

By playing with the range of the Mini E in the spreadsheet you can start to see that it is right on the cusp of being either a carbon winner or carbon loser. At 70 miles range (as some claim they were getting on the highway), the Mini E is worse than the gas-powered vehicle in 26 states plus the District of Columbia, and the national average goes negative. But at 150 mile range it is better everywhere in the US, saving 1.7 tons/12K miles.

In addition to GHG emissions we can trivially use this data to calculate the relative operating cost of the two Minis. In general we see the Mini E being $2 to $6 per 100 miles cheaper than its gas-powered sibling, or $250-$700 per year assuming 12,000 miles. While we don’t know what the final price of the Mini E will be, we do know that the lease rate is about $500 more per month than the standard Mini, so its pretty safe to say that people won’t be jumping on the Mini E as a cost-saving measure unless we (the taxpayers) all pitch in with an amazing rebate program (which wouldn’t surprise me).

Finally, we don’t have to settle for standard grid power. If I were to generate 10kW of solar a day, I could cover the 12,000 miles with no driving emissions (for real, this time). The DOE says I’d need 1,000 square feet or more of solar area to do this, but that’s not out impossible (though it does dwarf the 30 sq ft area of the car itself!). The problem is that this would also raise the price of electricity over grid power, so would make the financials look even worse (unless, again, I can hit the rebate jackpot).

The other thing to keep in mind is that we assumed that we could power the car from the existing grid capacity. If we add lots of electric cars we’ll have to turn on some more electrical generation capacity (aka ‘non-baseload’), which is usually coal. We can see from the eGrid numbers that the CO2/kWh goes up from 1.29 lbs to 1.58 lbs when we use non baseload electricity, and the result (bottom row of the chart) is that we drop the Mini E emissions advantage from 0.85 to 0.37 tons per year.

In summary, its great to see the first electric cars finally hitting the road, and that we can start to get our first real data. For an initial pilot I consider these results to be quite good, assuming that you weren’t really expecting zero emissions. But as we’ve seen, government subsidies and overall energy policy will be critical in determining whether electric cars will be a financial and environmental success.

There is a drilled well that, at the seabed, enters a structure that is compromised. That structure cannot be fixed in a timely fashion or at all. Thus eliminate the structure (drag it away, underwater demolition, piecewise removal). Once that is removed, you can create a clean single exit point for the oil/gas. THAT is where you want to apply an engineering solution. Such as, a massive steel spike cylinder with an anchoring mass at the top, lower it in the hole. If you fail, raise it up a little and try again back down. It has to work.

What they are doing now is trying to recover to a state where they start getting oil/gas back out economically relatively quickly. My work has its own blast furnace and can make anything so if the Feds want to say Go there are about 2000 engineers who would volunteer to develop quick fix concepts. Main idea is keep management away and let the engineers fix it, and give us a liability waiver.

These are important points. Two comments:

1. This idea that BP is trying to take steps that would cap the leak while leaving the well in a state that it can be reopened, is unconscionable if true.

2. I still believe that its wrong that no one has created a forum for engineers who know how to fix this. The petroleum team at DOE should be running it. Somewhere out there there’s the analog of Richard Feynman following the Challenger disaster, who has the right idea how to fix this. I don’t know of the idea above is correct, but where is the discussion happening of ideas like this?

Having seen a number of proposed and implemented cap and trade systems over the last decade, I’ve come to understand that there are many of different ways to design such a system, and some of the choices more appealing than others. So given the expected release of the Kerrey-Lieberman Bill on Wednesday, I thought it might be useful to outline some of the possible features of a Cap and Trade system so that more people will be able to dissect the new bill and decide for themselves whether they like it.

Notes: 1) the new bill has been rumored to use a straight tax for gasoline, so some of the following may not apply to that part. 2) the new bill may not use the phrase “cap and trade” for a process that sounds like a cap and trade system. If they use different words, then the rest of us will have to decide if its really something different or not.

Cap and Trade is a Market-Based Solution….Sort Of

People often refer to Cap and Trade as “market-based”, but for most implementations that’s only true if you thought that the economy of the USSR was “market-based”. Sure people buy and sell things, but the government can have a very heavy hand in the process, with controls on supply, demand and prices, and the ability to put certain people or organizations in a very advantaged position in the market.

The situation is aided by the fact that there is no true “cost of goods” for a pollution permit, aside from the damage to society, which no one pays for directly. As a result, if the government wants to give someone a free permit, it bears no cost, so doesn’t require a budget line item or pay-go exception. If it wants to manipulate the price, it doesn’t have to worry about net margins or the like. Basically a cap and trade system is free of a key constraint of most markets, removing many of the downsides for market manipulation.

This isn’t, in and of itself, good or bad, but it just means that you need to look closely at the government’s role in the game, and you may see some mechanisms proposed (such as offsets), that are unfamiliar, and require some extra thought.

What is Covered

The very first feature to look at in a Cap and Trade bill is what is covered. While the obvious big hitters are electricity generation and transportation based on fossil fuels, many industrial processes also generate CO2 or other GHGs. The truth is that many activities at home, including breathing and some baking activities also release CO2. So just from a practical perspective, any GHG Cap and Trade system will have to draw the line on what is covered under the system and what is not.

This is an area where nothing really silly has happened in any of the proposals (though regulating methane from cattle does come up every once in awhile), but there may be fairness issues here. For example, if industrial output above 25K tons of CO2 require permits and below 25K don’t, that could make a big difference in particular industries and is worthy of some study.

Summary: look who is covered under the legislation and who is not, and understand what impacts that will have on energy and non-energy industries

Who is Required to Get Permits

Just because you emit GHG from your vehicle doesn’t mean you’re going to be required to get permits. In most cases it will be a large company upstream, the electricity producer in the case of electricity, and someone in the chain of refiners and distributors in the case of transportation fuels (any industrial emissions are typically paid directly by the emitter).

While every day logic would dictate that you don’t want to be the one who has to obtain the permits, there are two reasons why large energy companies might be happy to take on that burden: 1) if you believe that you can pass the full cost of the permits on to your customers (as most do), then the main reason not to do it goes away. But the reality may be even better — if your actual costs for permits are invisible to the market, you can actually pass on a higher cost to your customers than you pay, thus making money on the deal! 2) if you feel like you have good influence in Washington, then being the permit purchaser puts you in a position to bargain with the federal government over free permits, offsets, etc (more on these below).

These are important elements of the case for large energy companies to publicly support some Cap and Trade legislation.

Summary: look at the bills supporters and understand if they are required to get permits. If so, look for advantages they will get from it.

Where Does the Money Go

Most Cap and Trade systems will auction off at least some, and possibly all, of the permits every year. The government will get the revenues, which raises the question of where the money will go. In general there will be tendency to want to give some of it back to the citizens in order to offset the burden of energy price increases, and it is important to fund energy R&D and other GHG reducing programs (more on this in the next post). But this revenue is a windfall for legislators, and can be used for anything.

Summary: look at where the money goes and make sure it is either lowering the impact on energy users or supporting the reduction of GHG emissions through R&D and incentives.

Freebies

Since permits have no cost, its tempting to give some of them away in order to gain support for the legislation. And, as you’d expect, the most likely candidates to receive those will be the largest energy companies (who are, ironically, also the largest polluters).

The danger here is that if the amount of freebies is large, its possible to create a major barrier to smaller, innovative companies without the same political clout as the big entrenched ones. For example, if I’m a small energy company with a lower-emissions solution, I have to buy permits for my emissions and compete against the big old companies with lots of free permits. As a result, its important to look at the free permits and who is getting them, and to consider the effect on the competitive dynamics of the market.

Summary: understand who is getting free permits, and what the competitive implications may be, especially for small companies entering the market.

Offsets

Offsets are an interesting invention. The idea is that if you do something that will reduce GHG emissions, and that is not covered under the typical system, you can turn your emissions savings into an offset permit, and can be granted the right to sell that to a company as a real emissions permit. For example, if I plant a large new forest that will capture CO2 (and hopefully hold onto it), then I may can work through the offsetting process and turn those emissions savings into permits, which I can sell and get the money for.

The rationale behind offsets is that the CO2 savings are equivalent, and that this clever mechanism funnels money to organizations which are helping out, but are outside the Cap and Trade system. Furthermore, some strongly advocate for the use of international offsets, which can be cheaper than domestic ones, and which help funnel money to developing countries who will need financial assistance for their own GHG initiatives, whether reductions or adaptation.

In addition to the organizations that sell the offset permits, the other group that likes this mechanism are the big emitters, since offsets have historically been cheaper than auctioned permits, and foreign offsets have even been cheaper. However, I believe there are three reasons to take a hard look at how offsets are implemented in a cap and trade system. First, offsets systems have, to date, been rife with fraud (here’s one recent example). Second, international offsets can result in large flows of money out of the US economy (see my analysis of foreign offsets in Waxman-Markey). Finally, if there is a limit on offsets per year (and there usually is), then the question is who gets priority to buy these cheap alternatives to auctioned permits.

Summary: offsets will have some champions, but they also have the potential to introduce complexity and risk to the system. As a result, any proposed use of them deserves extra scrutiny.

Market Distortions

One of the little discussed features of GHG Cap and Trade is that it doesn’t affect all energy consumers or technologies the same. Its important to understand this in the context of any given bill so that the resulting market distortions can be accounted for.

The varied impact on energy consumers results from the fact that the carbon content of electricity varies from location to location by over 3 times. For example, using EPA’s eGRID numbers, the amount of GHG per kWH of electricity varies from state to state as follows: CA – 0.54, CT – 0.80, AZ – 1.1, GA – 1.4, MO – 1.8, Utah – 2.1 and DC – 2.4. This is the result of the sources used – hydro, renewables, nuclear and natural gas make the numbers lower, coal and gas make them higher. As a result, someone in Missouri will be paying three times as much of a premium for their gas than someone from California.

On the technology front, the results are either from underlying price and carbon density differences, or from deliberate policy decisions. For example, a $10/ton price on GHG applied evenly to gas and electricity will raise the average price of residential electricity in the US by 8.7%, while it would raise the average price of gas by only 3.0%. Raise the price for GHG to $20 and both numbers double. A policy decision could have the same effect – we could decide to leave gasoline out of the Cap and trade altogether (an option which has been rumored for Kerrey-Lieberman), in which case we’d disadvantage electricity even further.

This isn’t to say whether these decisions are right or wrong, but its important to measure these impacts and consider what effect they have on the broader strategy. For example, the federal government has clearly made electric vehicles a priority, but either of the situations above appear to push in the opposite direction by increasing the cost advantage of gas-powered vehicles.

Summary: pricing of GHG emissions may not affect all locations or technologies the same. It is important to understand potential market distortions that may result from inequitable carbon prices.

Opaque Prices

Finally, many people argue that we need to get a visible price on carbon in order to cause people to make smarter decisions. Unfortunately, many Cap and Trade implementations offer so many ways for companies to get permits that the price reported by carbon markets doesn’t really reflect what the energy companies paid for them (for a more detailed explanation see my earlier post on this subject).

As a result, it is important to look at how companies get their permits, whether the bill contains reporting requirements, and whether you or other consumers of energy (including companies) will have any idea how much you’re really paying for your emissions.

Summary: since energy users don’t buy permits directly, in a complex Cap and Trade system it may be difficult, or even impossible to know the cost of carbon for a given amount of energy. It is important that a Cap and Trade system force this information to be transparent and available.

Conclusion

As you can see, there are many features of Cap and Trade legislation that can be complex, and can have interesting side effects on the overall market. That said, it is also possible to design a simpler system that is more transparent, less prone to fraud and abuse, and less likely to have unpredictable side effects.

When we see new climate legislation it is important to look at each of these features and understand why they are there, who might benefit, and what the consequences of it might be.

(Note: At this point an astute reader may say that I’ve talked a lot about side effects, but not about whether the bill will actually be able to drive down emissions without putting the overall economy at risk. I’ll cover that in a blog post later this week.)

Most frequently mentioned are the Apollo Project (“land a man on the moon by the end of the decade”), and the Manhattan Project (“develop nuclear weapons before our enemies”). They are attractive because they had urgent time tables, required outside-the-box innovation, and most importantly, as measured by their stated goals, were wildly successful. They provide some confidence that we (or maybe even just the President) need only to make the decision, and it will happen!

Many have also pointed out the flaws in these analogies. Characterizing them as self-contained projects that didn’t require deep changes to our national infrastructure, economy and behavior patterns, many have cautioned that we need to be careful viewing these as models for economy-wide energy transformation (for a good discussion check out the intro to “Technology Policy and Innovation” by Mowery, Nelson and Martin).

As an alternative, Prof. John Sterman at MIT has pointed to the Civil Rights movement as a better analogy, especially related to the climate change . While it offers some important lessons of the interplay between shifting public sentiment, leadership and government policy, it doesn’t offer us any guidance on how to address the underlying energy innovation challenge.

While we could start a process to catalog the problems of every historical precedent, its probably simpler to step back and observe that as a nation we’ve never before consciously undertaken an effort:

• to overhaul something that touches every part of our economy
• on a fixed schedule
• lacking the required technology

So we’re left with looking for guidance from imperfect matches, which is OK as long as we understand that’s what we’re doing. And since we’re in uncharted and dangerous waters, I believe its still important to take any help we can get.

Tom Friedman has talked about needing a “Million Manhattan Projects”, capturing the need to invest in a many technical approaches in parallel. And this mental framework nicely complements the work done by many groups to analyze historical US innovation successes in agriculture, health and IT (again, see Mowery, et al for a good summary). In other words, lets not think of this as a single thread from R&D to production, but a number of parallel threads, each of which needs to be optimized.

Interestingly, this mindset brings us back to WW II, where the US government pursued a wide array of approaches to different innovation challenges. An amazing collaboration with the auto companies produced new airplane designs, which were produced at record rates. A public-private-university collaboration housed at MIT developed RADAR, fundamentally altering the effectiveness of German submarines. Partially backed by public funding, Goodyear created the first high-volume, low-cost synthetic rubber. And with the US military as a driving customer, Merck and other private pharmaceutical companies massively improved the effectiveness of penicillin, while ramping production over 100 times previous levels. What’s nice about these example is that they each use a different model of public-private partnership, and that they run the full lifecycle from R&D through large-scale production.

And, of course, we return to the Manhattan Project, which, viewed through this lens, is no longer an innovation strategy unto itself, but is a specific approach to one innovation challenge in a broad portfolio of approaches and challenges.

The suggests an interesting approach to our situation, where we have a large number of separate technologies, each with their own innovation lifecycle. Instead of looking for a historical analogy to the whole problem, we can take each technology and look for historical guidance on how to move it forward. We can look at solar, wind, smart grid, CCS, electrical storage, nuclear, automotive power, jet power, etc, and for each one examine the state of the technology, public and private investment, and hurdles to broader production and adoption. We can look for similar historical situations and what worked or didn’t, or we may decide that some are without historical precedent.

The result wouldn’t be a million Manhattan Projects, but maybe something like two Manhattan Projects, four Polio Eradication Campaigns, three IT Revolutions, a WW II Aircraft Miracle, and a few hundred thousand Internet Startups, four of five of which might hit the big time.

Through this process we can approach the type of roadmap that Weiss and Bonvillian describe in Structuring an Energy Technology Revolution. With such a roadmap our policy and public investments can become more direct and organized, and we will have a better framework for measuring our progress. In an upcoming post I’ll give some examples of how this might look.

So what’s next? First, we’ll hopefully see some innovative folks perform some engineering miracles and stop the release of more oil.

But after that task is complete, there’s a bigger question: what about the rest of the offshore well? Is it possible for this to be repeated many times over? Are other wells the same? Safer? Less safe? This is one of the important cases where its not going to be good enough to get the data filtered by BP’s PR department – we need and deserve to get real, engineering facts from people who understand them.

So who are the engineers that are going to help us understand what we’re up against? Can we take an engineering disaster and gain some good from it in the form of a new level of communication between the engineering community and society?

At any point in time we can point to past innovations as the root cause of our environmental issues, but we also have a history of being able to innovate better solutions once we understand these impacts. We’ve gotten lead out of paint, CFCs out of a variety of products, created increasingly efficient internal combustion engines, and on and on.

And looking forward from the 40th Earth Day, we have some big innovation challenges in front of us. We need come up with product designs and packaging that use far less material and are far more recyclable. We have an increasing potpourri of chemicals and nano materials that we need to understand better, use in very controlled ways, or in some cases not use at all. And our critically important challenge, which is to overhaul our energy system so that we can fuel our economy with domestically produced, cheap, clean energy. While this list seems imposing, its only a small sample from the master list.

In the United States we’ve led in some forms of environmental legislation, and legislation and innovation are often complementary tools in tackling environmental challenges. But as we look at the next waves of environmental legislation, we also need to consider the critical policies that support our innovation system. For environmental legislation can mandate what needs to be fixed, but innovation is required to do the fixing.

Fortunately for us in the US, we have a world-class innovation system. But others are coming on strong, and advancing technologies require us to keep tuning our system. We need to keep making progress in our approach to education, broadband access, intellectual property, immigration, and angel and venture investing, just to name a few. As Greg Papadopoulos and I have written, we need to lay the groundwork for the next generation of Citizen Engineers – those who we will be calling on to address our environmental challenges.

So today, on Earth Day, let’s celebrate American ingenuity. We have it within ourselves to lead the world to a better place based on our dreams, our engineers and our innovation system.

“The package represents major victories for the business community, which was virtually shut out of House deliberations on an energy reform bill that passed last year. …. But the partisan atmosphere in Washington could wipe out those gains if the corporate world doesn’t stand behind it, Graham said.”

So the question is, what is their pitch to the corporate world? Ignoring large energy companies for a minute, since it sounds like their needs are being taken care of explicitly in the bill, how is your average company going to benefit from this bill? This is the question they need to have a good answer to when they roll it out next week.

From what I’ve heard they are banking on the idea that this bill is more “business friendly”, but I’m not sure that resonates with your average business. Cap and trade will now be limited to utilities (though it sounds like they’re going to rebrand it) and there’s limits on the EPA. But a vast majority of US companies would not have been governed directly by the House bill, so this won’t be a big sales point, unless there are folks out there who are really worried about what the EPA might do, but, again, unless you’re in the energy business or one of a small number of CO2 producing industries, this probably wasn’t a huge worry.

So based on my experience in the corporate world, here is my advice to the team on how to sell to the US business community:

1. Don’t dwell on details between the House and Senate bills. If you aren’t in the energy business the two bills won’t look that different – a cap and trade system coupled with long, long lists of energy company and efficiency incentives and programs. Dwelling on the details is not going to be motivational.

2. Lay out an energy vision and/or strategy. Here’s the key line in the interview:

   “If our country doesn’t get an energy vision and start incentivizing alternative sources of energy, this whole international movement to clean up the planet is going to pass us by, and we’re going to be following China instead of leading China,” he added.

   Great, so what’s the vision? What will our energy landscape look like in 2035? All nuclear? All solar? Half solar, half biofuels? 10% coal, 50% natural gas, 20% wind and 20% nukes? How about transportation? How much can we really get with efficiency long-term? Without this vision its hard to decide whether the bill will drive us toward the vision or not. Maybe the answer is that we’re going to bet on 4 or 5 clean approaches plus nuclear and hope that 3 deliver to give us a majority of clean energy by some date. That’s fine – lets just state what the vision is and how the bill gets us there.

3. Address the two big business questions. First, business is going to want to understand the potential impact to the economy in the near term. They know this isn’t going to be free, but a lot of companies are just starting to get their feet back under them and they don’t want to turn the clock back twelve or twenty four months. Second, businesses want to understand the long-term benefit. They’ll be pleased with the climate risk reduction, but what will really get their support is a clear message of “cheap, clean energy”. They’d love to hear that there’s a point in the future where the latest Mideast uprising won’t spike their energy prices; a point where they don’t have to factor in annual electricity increases into their budget; a point where they can design energy-using products that will be cheaper to use for their customers than the year before; and that there’s a point in the future where the energy required to run their business isn’t based on some dwindling resource, or environment-scarring process.

All business want these things, and when you combine them with the climate benefits you can generate some excitement for the bill.

Through the climate bill process the energy companies have been front and center in the discussion. That’s important, since they have to help implement our future energy system. But if we want to get the broader business community on board now, we have to step back from the details in those months and months of discussion and deliver a message that has broader appeal.