In Alan Murray’s recent article entitled “Will ‘Social Responsibility’ Harm Business?: Are the capitalists abandoning capitalism?” I believe he made some serious analytical mistakes. For example, there is the matter creating an either/or scenario as it relates capitalism and environmentalism without admitting any middle ground. Then, there is the fact that his arguments are based on the fallacy of short-term returns as opposed to long-term economic gains.
As a friend of mine put it, Alan Murray seems to have “blind devotion to early industrial dogma.”
The fact that GE is making a commitment to a marketing, investment and energy policy program that addresses energy and environmental issues represents an important moment in the field of energy. GE has now confirmed what many of us in the energy efficiency marketplace have known for some time: the energy/environmental sector can be a significant new business opportunity with robust revenue and profit streams. In addition, there are explosive job creation possibilities for U.S. companies. It is not just another burden on existing businesses, but it identifies a way to control energy costs and improve global competitiveness.
Upon reflection, this new GE initiative hardly resembles an abandonment of economic principle, but in fact looks like a new enlightened level of capitalism whereby businesses can use an approach I call “practical environmentalism.”
In the current context, the U.S. has a cumbersome process for providing sufficient sources of electricity. On one side was the utility including the business community and on the other side was government and the various environmental groups. In addition, various media outlets including the Wall Street Journal have acted as intermediaries in the energy debate. There has been one problem: Few sources have been willing or able to discuss the economics of energy and environmentalism.
General Electric and many other publicly traded U.S. companies have realized that the next frontier for further economic competitiveness and environmental improvements can be found at their own facilities. This trend is especially significant since the U.S. business community are the largest consumers of energy.
In particular, GE has set a series of “green” goals for itself, which include the doubling of its research and development budget on new environmentally friendly technologies to $1.5 billion, doubling its sales of eco-friendly technologies and services within the next five years to $20 billion, reducing its greenhouse gas emissions by 1% in 2012 while growing its overall sales by 35 to 40%, improving its energy efficiency by 30% by 2012, and reporting publicly on its progress toward carbon reductions, better known as greenhouse gases, on an annual basis.
U.S. businesses – rightly or wrongly- have been branded as some of the country’s worst polluters, so who can blame them when they seize the initiative by reducing significant amounts of electrical consumption in order to cut energy costs and improve their environmental footprint at the same time. In GE’s case, they have promised a 30% reduction in electricity consumption by 2012.
There is one over-riding reason why the business community can have such a large effect on the economics of energy and the environment: They use approximately 70% of all electricity produced in the U.S. In practical terms, this means that the business community can employ large-scale energy efficiencies that would have the same effect as reducing the entire energy consumption of whole towns and cities.
In other words, the old “command and control” methodology used by governments and the utilities can be enhanced by a capitalistic marketplace created by energy efficiency providers like GE and individual businesses. The ultimate goal of this new economic model is to reduce enough energy costs to justify the purchase of the energy efficient products or services, with a good solid return on investment.
Once done, the most important economic development and environmental benefits to this capitalistic approach are as follows: (1) It is entirely voluntary; (2) It is by definition economically justifiable; (3) The decision makers are the ones who write the checks; (4) It will take tens of thousands of megawatts off the grid, thereby putting downward pressure on electric rates for both commercial and residential consumption; (5) It can be employed today without legal or political intervention.
Overall, GE has identified 17 products that significantly and measurably improve customers’ energy efficiency, operating productivity and environmental performance. The idea is that if any energy efficiency provider’s customers achieve energy savings, the provider also wins. Ultimately, everybody wins including all electrical rate-payers and the environment’s severe non-attainment zones throughout the U.S.
Is there anyone including Alan Murray who really believes that improving all U.S. businesses’ energy efficiency and at the same time their environmental footprint is anything other than capitalism at its best?
–Stephen Heins, VP of Corporate Communication, Orion Energy Systems
