Why the Paris Accord withdrawal is still an opportunity for America to innovate and lead

By CARLA FLEMING

This article is reposted with the permission of the author. Here you can find the original article.

The water heater at my parent’s house just died. They had a choice-install another 50-gallon water heater with a larger footprint, or go tankless.

They went tankless.

What sold my parents on the tankless water heater was the time the plumber took to walk them through the economic trade-offs on their gas and water bills. He didn’t speak BTUs, he spoke in percentages of savings, both monthly and yearly. He spoke to their economic and quality of life needs. Yes, the tankless water heater was a more expensive installation. Yet, the long-term benefits of the tankless water heater are greater. Now my mother and father can’t imagine life without the tankless water heater.

In the U.S., climate change is a Rorschach test, but around the world, it’s settled policy.

The announcement that the United States is withdrawing from the Paris Climate Accord has created two different universes: Before Withdrawal and After Withdrawal. The transition is generating a variety of emotions ranging from joy and indifference to anger, bewilderment, to exasperation among Americans across the country.

I believe we have an opportunity to disrupt this decision by creating a land of innovation through sound leadership.

Embrace the technology revolution or be disrupted

Innovation is in the blood of this country, and it’s what we do.

Every industrial revolution has challenged the way we live our lives, moved the economy forward, and do business. It eliminated jobs and created new jobs. The leaders of iconic companies such as the C&O Canal, Ford (full disclosure, I’m a Ford shareholder), Intel, or Tesla, respectively, each represented an Industrial Revolution era. They understood the impact of the technology disruption and actively associated their companies as part of the revolution. It required them to pivot their businesses to compete.  What we can do is pivot our focus from the withdrawal to compete by doing the following:

• Innovate
• Collaborate
• Become better storytellers
• Be bold

Innovate

Set industry standards: If we were still part of the accord, the U.S. government would have a major say in setting the standards for clean energy technology and regulatory standards. By exiting, we lose the ability to influence and set the standards. To change the paradigm, U.S. companies in the clean energy industry need to set aside their desire to have a control point at the company level for the technology they develop. They’re going to have to come together, like companies in the computer industry did to establish the Open Source standards for software technology, and build on top of that technology to differentiate their solutions to smooth interoperability.

For clean energy companies, they will need to agree on one set of technology and regulatory standards. By establishing one set of standards for the entire country, it gives U.S. companies the critical mass necessary to leverage and to negotiate with the rest of the world.

Step up the pace of innovation: The global energy supply market will require $67 trillion dollars of investment between 2015-2040, according to the International Energy Agency. [1]  The breakdown of the investments includes: $23T, energy efficiency; $8.8T, renewables; and $8.8T, power plants. [2]

Quickening the pace of innovation will require thinking about clean energy like this country did when we went to the moon first. First mover advantage still matters. Companies first to develop technology solutions to solve customer problems set the standards. They can also charge a premium for their services and control the intellectual property (IP) built on top of the industry standards. According to the U.S. Patent and Trademark Office, for every two jobs attributed to an IP-Intensive industry, one job is created somewhere else in the economy. [3] The other jobs could include manufacturing, marketing, finance, construction, operations, and more.

Collaborate

Join alliances and organizations: The governors of California, New York, and Washington have established the U.S. Climate Change Alliance to continue to focus on addressing the issues of climate change. Sixty percent of the states have said they will continue to push ahead with the climate change initiatives by mandating utilities increase their use of renewable energy. Businesses should join the organization and work with the states as they build out the regulatory framework for the U.S. that reflects the flexibility of the Clean Power Plan, adheres to the Paris Accord, and provides stability for businesses to operate within.

States, cities, local governments, universities, and business should consider joining former New York City Mayor Michael Bloomberg’s initiative to submit their plans to the UN for achieving their clean energy goals as a group, along with other nations.

Sustainability professionals can make their voice heard through membership in Environmental Entrepreneurs (E2), an affiliate of the venerable Natural Resources Defense Council.

Because these initiatives may not be recognized as a national contribution in line with the structure and purpose of the accord, it will be essential to establish a coordinating and reporting framework. The framework needs to flexible enough to encourage collaboration between organization and stakeholders, while providing a rollup of the overall data and tracking of results to play a critical role in supporting the overall goals of the accord.

Create regional clusters of excellence: Regions around the country need to identify the capabilities and resources in their region that are actively developing clean energy solutions, similar to Silicon Valley. For example, in the Washington, DC Area, Potential Energy DC is an incubator for clean energy startups.

Through identifying the clusters, whether in rural regions or cities, regions can build out the gaps in their geographical areas. They can also link with other clusters to address gaps and create new jobs. This will create the critical mass to enable the U.S. to compete with the rest of the world.

Leverage partnerships with U.S. companies with overseas branches: Again, critical mass will be key, since U.S. companies operating overseas will have vital insights that companies that do not have overseas operations will find useful to enable them to influence technology and regulatory standards globally.

Become better storytellers

Sell people on the mission: Fifty-four percent of Americans lean towards supporting regulations to increase renewable energy, according to Pew Research Center. Also, 65% of Americans would prioritize investing in renewables over fossil fuel. These two points, combined with the reaction of citizens and business leaders to the U.S. withdrawal from the Paris Accord, indicate that the majority of Americans and businesses are sold on the climate change mission. What they want is information on how they can do their part, take action, and do so within their budgets.

Speak the language of business: States, municipalities, and businesses are focused on their core area of expertise for their citizens and customers. They need information they can understand. For their part, consumers want the information on the short and long-term benefits. They want clear and concise explanations of the differences between current technology and new technology in a language they understand to empower them to weigh the trade-offs and make the decisions that are best for them. Buy-in for making the transition to clean energy will center on understanding the impact to their bottom line.

This may mean helping companies reengineer their supply chains and the materials they use. Companies must think about the end-of-life for their products before producing them. And once a product reaches end-of-life, how does the company help their end customer dispose of the product at a recycling facility that can break down the product for use in future products?

Out of this effort can come new jobs and capabilities that lead to reduced costs, protect the environment, and improve the bottom line. Our ability to tell these stories in business terms, provide information, and supply solutions will accelerate the adoption of clean energy and sustainability solutions.

Be bold

Impact investing as shareholder activists: After 146 years investing in oil, the Rockefeller Family Fund, created by the heirs of the founder of Standard Oil, decided last year to move its investments out of oil. This past week, the shareholders of ExxonMobil voted against the board of directors and instructed them to study and mitigate climate change. Two different organizations, two different approaches to accomplishing the same goal.

With the rest of the world supporting the Paris Accord, businesses and organizations can no longer dismiss climate change. ExxonMobil shareholders Fidelity, State Street Investors, and BlackRock got it. They helped ExxonMobil get it. Whether you’re a business leader, government, or nonprofit, how you respond to climate change will determine the type of leader you are perceived to be.

A new industry has arrived: With $67 trillion in new investments required between now and 2040, this is an industry that touches every aspect of people’s lives. Whether it’s powering your smartphone, traveling to work or on vacation, heating and cooling buildings, to providing affordable and reliable energy to power the economy, climate change solutions represent an investment opportunity.

Recovering from the devastation of Hurricanes Katrina and Sandy over the past 10 years or the droughts experienced for the last four years in California, clean water has also become a topic of concern. People have the opportunity to invest in funds that address the scarcity of clean water, such as the Allianz Global Water Fund, with 8.5% returns over five years, or the S&P Global Water Index, with returns of 10.5% over five years. [4]

The sleeping giant has awakened

Average citizens like my parents are leading by addressing climate change through the purchase of a tankless water heater. Companies like Ford and GM are leading through their quickness to embed clean energy technologies into their products because their credibility and viability in the Fourth Industrial Revolution requires it.

States, local governments, and universities are leading by intensifying their efforts to reduce their carbon footprint.

And we’re disrupting the energy industry by expanding it with clean energy solutions. The overall energy industry investments required are expected to exceed by 23 times the size of the technology industry, the economic engine of the 1990s.

In short, a sleeping giant has awakened. Instead of looking at the withdrawal as a negative, look at this as the passing of the baton to American businesses and citizens to do what we do best—innovate and lead!   

Carla A. Fleming is the Founder and Chief Strategist for Renewable Marketing, a marketing strategy firm. Contact Renewable Marketing to set up a 30-minute Discovery Session and learn how they can help you cultivate your business.

[1] “World Energy Outlook 2016,“ International Energy Agency, March 2016, Page 2.

[2] Ibid.

[3] “Intellectual Property and US Economy: Industries in Focus,” United States Patent and Trademark Office, Page vii.

[4] “Global Scarcity of Water: First Quarter 2017,” Allianz Global Investors, Page 45.