Category Archives: Sustainabilty

"Beyond Fuel" at the Space Coast Green Living Festival

Green Living Festival

Tweet I am presenting “Beyond Fuel: From Consuming Natural Resources to Harnessing Natural Processes,” a discussion of the hidden costs, or “economic externalities,” of nuclear power, coal, and oil, and the non-obvious benefits of wind, solar, marine hydro and efficiency at the Sp ace Coast Green Living Festival, Cocoa Beach, Florida, Sept 17, 2011.

The festival is sponsored by the Cocoa Beach Surfrider Foundation and the Sierra Club Turtle Coast Group. It will be at the Cocoa Beach Courtyard by Marriott.

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Keynes, Reluctance to hire, & 21ST Century Energy

in black and white, because some ideas are.

Tweet During the Great Depression the Classical Economists said “Unemployment is voluntary. Business owners will not voluntarily keep the means of production idle.” While he had been a student of classical economics, John Maynard Keynes observed that the data didn’t fit the theory. And, he reasoned, if the observable data don’t fit the theory, the theory must be flawed. “Business owners are risk averse,” he saw. “A employee needs to be productive, needs to make widgets. But if no one is buying widgets, then contrary to classical theory, factory owners will fire workers and keep capital idle rather than hire workers to create excess inventory. That’s just common sense.”

We see this today.

When unemployment was low, for example in the United States during the tech boom of the 1990’s, people acted on the premise that “There is so much work that we could hire and good people and train them.” Today hiring managers seem to be acting on the premise that “There are so many people looking for work that they can wait for the perfect candidate.” Perfection being unattainable, jobs go unfilled. This is ok, in this context, because

“Budgets are tight.”
“The future is uncertain.”
“Money not spent on a new hire can be saved or used to pay down debt.”

Keynes also observed that the government is an employer that does not need to worry about going out of business. Building infrastructure is government employment that is investment for the future. These observations are as valid today as they were 80 years ago.

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Apple v Microsoft, 2011.

At a seminar on June 9, 2011, on securing the mobile worker, Apple‘s representative said “We truly did not understand what we built.” That’s a direct quote. He went on to say “Here’s how they use it at GE, and Hyatt, and in the pharmaceutical industry.” A few minutes later he said “When users tell us what they can’t do, what they need to do, we listen, so tell us what you need.” At seminars on Microsoft‘s products, their consultants describe their software by saying “This is what we built, this is what it does, and here are our best practices – this is how you should use our software.”

This is it. Apple’s “We truly did not understand what we built,” versus Microsoft’s “This is what we built, this is what it does, and here are our best practices – this is how you should use our software.” These statements define the corporate cultures.

Apple, at $325 per share, is a $300 billion company. With earnings of 21 per share, it has a price earnings ratio of 15.8. It has no debt. It is down slightly from it’s high of around $350 per share, reached a few weeks ago. There are 46,000 employees. Net income of 5.99 Billion on $24.67 Billion. Microsoft, at $24 per share, is a $200 billion company. With earnings of $2.92 per share it has a P/E of 9.44. There are 89,000 employees, $16.4 billion revenue and $5.2 billion net income.

Microsoft’s income per dollar of revenue is higher – but they don’t make hardware. Revenue per employee at Microsoft is $184,000. Revenue per Employee at Apple is $536,000. Income per Employee at Microsoft is $58,000. Income per Employee at Apple is $130,000.

These data are summarized below,

	Employees	Net Income	Revenues	Inc / Emp	Rev / Emp
		(Millions)	(Millions)
Apple	46,000	$5,990	$24,670	$130,217	$536,304
Microsoft	89,000	$5,200	$16,400	$58,427	$184,270

When I last looked at Apple and Microsoft, October 30, 2010, here, Apple was 305.24 per share, with an EPS, of $15.15 and a P/E of 20.147. It’s market capitalization was $279.59 Billion. Microsoft was $26.28, with an EPS of 2.11, P/E ratio of 12.48 and market capitalization of $227.42 Billion, $52 Billion less than that of Apple. Today Apple’s market capitalization is up 25% to $300 billion and Microsoft’s market capitalization is down about 12% to $200 billion. Apple’s market capitalization is $100 billion higher than Microsoft’s. Apple’s all time high stock price was a few weeks ago, and I expect it will bounce back and keep climbing as long as they keep selling hardware and software that shifts the paradigm. Microsoft’s was in 1999. I don’t expect Microsoft to go out of business, but it’s days of shifting the paradigm and tremendous growth are gone.

The iPad (Apple site, here) is a paradigm shifting device. It has a dual core A5 processor, 16, 32, or 64 GB of flash memory, and no moving parts (other than electrons, which are hard to keep still). Treated properly, it should last for 10 or 20 years. It adds a layer of durability and obsolescence resistance to personal electronics. It puts us on the road from “disposable” consumer electronics back to durable, sustainable consumer electronics (click here).

And it’s selling by the millions. Apple has sold 200 million iOS devices – iPhones, iPads, iPods Touch, that’s one for two out of three Americans. It’s sold 25 Million iPads, 14 million in 2010 and 11 million in the first half of 2011. The sales projections from Wall Street are tremendous, (Florin at UnWired, Schonfeld at Tech Crunch, Elmer-DeWitt at Fortune). People buy multiple devices, e.g., iPhone and iPad or iPod Touch and iPad. These are driving sales of music, apps – by the billions – and the Mac. Microsoft is buying SKYPE, which is a great company with a great product but it doesn’t know how to make money. Apple is going up, both in terms of market capitalization and earnings. Microsoft is going nowhere.

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Earth Day, 2011, Where Are We?

Earth from Space, courtesy of the American taxpayer. Reto Stöckli, Nazmi El Saleous, and Marit Jentoft-Nilsen, NASA GSFC

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Earth Day, 2010, I looked to the future on Popular Logistics. In 2009, I wrote about water pollution and agricultural waste in the Chesapeake. Today I am looking at the present and recent past. While a comprehensive look at where we are can be found on the web pages of the World Watch Institute, the New York Times, and the World Factbook of the Central Intelligence Agency, I want to make a few points.

Our energy policy is “when you flip a switch, the juice gotta flow.” It ain’t magic. It’s engineering and classical physics, with an understanding of radioactive fission and decay and a profound lack of long term thinking. It ain’t magic, but it might as well be. But we really need to base our energy policy on an understanding of ecological economics and sustainability.

We’ve had a few problems with nuclear power and fossil fuel in the last few years. Yet, there’s some light on the horizon.

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21 Century Energy or Business As Usual?

NY Times Special (Business As Usual) Energy Section

Clifford Krauss’ “Can We Do Without the Mideast?” sets the tone for the “Special Energy Section” in the NY Times, March 31, 2011. “The path to independence – or at least an end to dependence on the Mideast – could well be dirty, expensive and politically explosive.” Is this an April Fool’s Day joke? The path to sustainable energy requires vision and hard work. a solar array on every roof and insulation in every wall and every attic. It will be better for the economy, better for the environment, and better for ourselves, our children, and our grandchildren. Continue reading →

Sustainable Investing

To paraphrase Warren Buffett and Charlie Munger, “Buying a good company at a good price is a good idea. Buying a great company at a bargain price is better.” But to note this in light of L’ Affaire Sokol – Lubrizol, “Buying a great company at a good price when a stick-picker on my staff just bought it for his account is a really stupid idea. And making excuses is even stupider.” (See this article by Joe Nocera at the NYTimes.)

Buffett claims to practice “Value Investing” as defined by Ben Graham, Phil Fisher, Ken Fisher, Joel Greenblatt, Bruce Greenwald, and others. I see “Sustainable investing” as a subset of “Value Investing.” Value Investing seeks to find companies that are currently undervalued by “Mr. and Ms. Market” but that are really effective at delivering Shareholder value. Sustainable Investing would seek to find companies that are currently undervalued but that are really good at delivering Stakeholder value. Continue reading →

After Fukushima, Wall Street Bearish on Nuclear Power

before the catastrophe

(Second in a series on the ecological economics, financial ramifications, logistics, and systems dynamics of nuclear power in the light of the ongoing catastrophe at Fukushima.)

Cary Krosinsky, VP at Trucost, is once again teaching a course on Sustainable Investing at the Center for Environmental Research and Conservation, CERC, at Columbia University. At the March 10 seminar a student spoke about her recent 400% “home run” in a uranium mining operation. She bought in because the earnings were high, debt was low, yet the price was low. It was a classic “value” play of a well-run company undervalued by the market.

But would a “Sustainable Investor” buy a uranium stock? My goal, as a “Sustainable Investor” is “To outperform the S&P 500 index by investing in the top companies, from the perspective of environmental impact, sustainability, management and governance, in the sectors I hope will thrive over the next 25 to 50 years.”

After Tsunami, STR/AFP/Getty Images

Cary didn’t exactly write the book on sustainable investing. He edited it. In Sustainable Investing, the Art of Long Term Performance, copyright, (C) Cary Krosinsky and Nick Robins, 2008 (Earth Scan) he defines “Sustainable Investing” as “an approach to investing driven by the long-term economic, environmental, and social risks and opportunities facing the global economy.”

Jane and Michael Hoffman, in Green, Your Place in the New Energy Revolution, wrote that the nuclear industry was killed not by the protesters at Seabrook, and the environmentalists at Environmental Defense (EDF), Union of Concerned Scientists (UCS), or local groups like NY Public Interest Research Group (NYPIRG) who hired lawyers and scientists to force the utilities to build plants more safely. But it was bankers on Wall Street who, in the aftermath of Three Mile Island and Chernobyl, realized that their Million-dollar investments could turn into Billion-Dollar liabilities in seconds, and stopped investing in new nuclear power plants. Even though their liability was limited by the Price Anderson Act in the US and by corresponding legislation in other governments, they might never see a return on their investment. Despite promises by Presidents George W. Bush and Barack Obama of loan guarantees – government subsidies – to build plants, Wall Street is reacting to Fukushima with a mix of caution and skepticism. According to the Wall Street Journal, “The Street” is now, once again, bearish on nuclear power but it is looking again at solar and wind. (click here).

“The nuclear industry is on edge after last week’s quake caused serious damage to several reactors. Bank of America Merrill Lynch cut its stock-investment rating of Entergy ($69.76, -$3.93, -5.33%) and Scana Corp. (SCG, $38.54, -$1.51, -3.77%) to underperform from neutral, citing risks including delays and higher approval costs for relicencing of existing plants. Dahlman Rose says as many as 10 reactors could be affected, which consume the equivalent of 340,000 pounds of uranium each month. The firm cut its price targets for Cameco Corp. (CCJ, $30.90, -$6.48, -17.34%) and Uranerz Energy Corp. (URZ, $3.08, -$0.87, -22.03%).

“Renewable-energy stocks rose in the U.S. in the wake of the nuclear-plant concerns in Japan putting a fresh pall over that industry and some investors believing non-nuclear energy sources away from fossil fuels will get a boost. Solar companies are leading the way, including First Solar Inc.

“CreditSights and other analysts form a chorus that the “nuclear renaissance” of new plants in emerging markets and developed nations will slow, while the potential for new design and safety measures could challenge sector economics .

“Japan’s nuclear crisis is hammering shares in the U.S. nuclear sector, but investors should keep an eye on engineering-and-construction stocks that work in the sector as well, JP Morgan says, citing Shaw Group Inc. Babcock & Wilcox Co. , URS Corp. and EnergySolutions Inc. “We believe the safety features of newer generation reactors will be considerably more advanced” than the older Fukushima units causing havoc over the weekend, the firm writes, but still sees likelihood that renewed nuclear worries are a headwind for these stocks.”

Here are the data:

Company	Symbol	Quote	Change	Percent
Entergy	ETR	$69.76	($3.93)	-5.33%
Uranium Energy	UEC	$4.03	($0.82)	-16.91%

Shaw	SHAW	$30.92	($7.49)	-19.50%
Babcox	BWC	$31.58	($2.79)	-8.12%
URS	URS	$43.88	($1.58)	-3.48%

First Solar	FSLR	$145.13	$5.39	3.86%
(data from March 14, 2011.)

My analysis –

Peter Crowell, professor of Finance and Logistics in the Marlboro College MBA in Managing for Sustainability asked “What happens if you – we – take away all the subsidies?”

If we take away the subsidies from nuclear power, the industry would collapse. The same holds for the fossil fuel industry – if you factor in the hidden “externalized” costs of environmental cleanup. It makes no sense to build nuclear plants, or coal plants, drill for oil or use fracking for natural gas. These are more expensive to build, run, and maintain than solar and wind. Rather than keeping nuclear and fossil fuels on life support while fuel gets harder and more expensive to extract we need to put our best engineering minds to work on clean, sustainable power.

And I expect the vultures on Wall Street to buy Japanese stocks as soon as they sense the market has hit bottom, but only if they see investment in infrastructure.

Index to the series

Earthquake, Tsunami and Energy Policy, March 11-13, 2011. Here.
After Fukushima, Wall Street Bearish on Nuclear Power. March 14, 2011. Here.
Fukushima: Worse than Chernobyl? Here.

Offshore Wind Energy – Mitigating climate change

Offshore Wind Energy: Its potential to mitigate climate change

Sunrise

(For Webinar Click Here) New England Faculty Colloquium: Climate Change, Policy, and Energy Solutions Wednesday, March 2, 2011 – 2:30 pm

James Manwell, U Mass Amherst, Director, Wind Energy Center, (Press Release: Renewable Energy Research Laboratory)

Wind power in the United States has grown from 1,800 MW in 1990 to 35,000 MW by the end 2009. And off-shore wind farms are planned from Virginia to Massachusetts. The costs have dropped ten-fold. Electricity from wind is now less expensive than electricity from coal and nuclear – with none of the environmental costs.

Wind and solar are the opposite of fossil fuels and nuclear. With fossil fuels and nuclear it is easy to regulate the electricity the plant produces, but the wastes can be a problem. With wind and solar there is no waste, but we can not regulate the output. Or rather, we can easily turn it down, but we can’t turn it up. If we are to shift to a clean, sustainable energy paradigm we need to develop a more flexible grid and other technologies for a combined cycle system. The Wind Energy Center at University of Massachusetts, Amherst, is, in their words, “responding to the need for superior, cutting edge research solutions to these issues.”

Sustainability in Consumer Electronics

SONY EX 7

Apple, Blackberry, Dell, HP, Lenovo, Motorola, Panasonic, Sony, Toshiba and other consumer electronics companies can be less unsustainable than their competitors and less unsustainable tomorrow than they are today. However, given:

The state of the art in manufacturing,
Electronics are made with designs that are supplanted before they wear out, and
Recycling consumer electronics is expensive and releases toxins,

the consumer electronics industry can not, almost by definition, be “Sustainable.” For what they need to do, click beneath the fold.

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Earth Day For the Future

Earth from Space, Courtesy NASA

In 100 years our descendants will not be burning coal, oil, natural gas or using nuclear fission. They might be using terrestrial nuclear fusion. They will be using solar, wind, geothermal, marine current hydro, tidal energy systems – clean, renewable, sustainable energy systems. No fuel: No Waste. No mines, mills, wells, spills. No arsenic, lead, mercury, selenium, thorium – no fly ash to be contained or to leak.

We have started. California and New Jersey lead the U. S. Germany and Spain lead Europe. Boeing and Richard Branson’s Virgin Atlantic want to build aircraft that run on biodiesel. We need to move forward in a big way – to 100% clean energy in 10 years, to retrain coal miners and oil rig operators to build and run solar arrays and wind turbines, and dig deep geothermal systems.

Toyota Recall: Instructions and Observations

2009 Corolla Sedan

If your car is accelerating out of control, whether it’s a Toyota, a BMW, or any car,

Put your foot on the brake – and press the brake with a steady pressure.
Put the car in Neutral. (Just like manual tranmissions, automatic transmissions have a “Neutral” setting. You shouldn’t drive if you don’t know this.)
Turn on the Hazard lights.
Pull over.
and Above All,Don’t Panic.

Putting the car in “Neutral” disengages the transmission from the accelerator, assuming there isn’t a transmission problem. Don’t turn off the engine: you will lose the ability to brake and steer. Don’t put the car in “Park.” It will slam to a halt, throw you and your passengers against the steering wheel or the windshield, damage the engine, and you will be rear-ended by the jackass tailgating you.

It also works regardless of what is causing the problem – and it might not be because of sticky accelerators. Writing in the LA Times, Jan 30, Ralph Vartabedian and Ken Benslinger, note that:

The pedal maker denies that its products are at fault. Some independent safety experts also are skeptical of Toyota’s explations. ‘We know this recall is a red herring,’ one says.

Federal vehicle safety records reviewed by The /LA/ Times also cast doubt on Toyota’s claims that sticky gas pedals were a significant factor in the growing reports of runaway vehicles. Of more than 2,000 motorist complaints of sudden acceleration in Toyota and Lexus vehicles over the last decade, just 5% blamed a sticking gas pedal, the analysis found.

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God, Keynes, and Clean Energy

Columbia University

NY. Jan. 25. Mark Fulton, “Climate Change Strategist” Deutsche Bank Asset Management, spoke at Cary Krosinsky’s class in Sustainable Investing at the CERC, the Center for Environmental Research and Conservation, Earth Institute, Columbia University.

Krosinsky, Vice President of Trucost, recently co-edited and wrote the book Sustainable Investing: The Art of Long Term Performance with Nick Robins of HSBC. He is an Advisory Board member of the Association of Climate Change Officers (ACCO) and founder director of InvestorWatch. Trucost has built and maintains the world’s largest database of carbon emissions and other environmental impacts as generated by the world’s largest public and private companies. Their data and expertise is used by leading global fund managers and asset owners to manage carbon risk. Continue reading →

The Nine Principles of Sustainability

The Brundtland Commission defines sustainability as “Meeting the needs of the present without compromising the ability of future generations to meet their needs.” How do you do it? Harnessing processes, not consuming resources. (click here). In Making Sustainability Work, 2008. ISBN 9781906093051, Marc Epstein describes how to do it; the corporate structures needed.

We’ll get there, if the Earth holds out. Continue reading →

Obama In Strasbourg, On Sustainability

At the “Town Hall” meeting in Strasbourg, France, April 3, 2009, (Washington Post, LA Times, NY Times, White House.gov, NY Times Video) President Obama spoke intelligently and well.

He summed up the challenges we face:

We also know that the pollution from cars in Boston or from factories in Beijing are melting the ice caps in the Arctic, and that that will disrupt weather patterns everywhere. The terrorists who struck in London and New York plotted in distant caves and simple apartments much closer to your home. And the reckless speculation of bankers that has now fueled a global economic downturn that’s inflicting pain on workers and families — is happening everywhere, all across the globe.

President Obama also made very strong statements on “Sustainability” and “Globalization.”

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Sustainability: Harnessing a Process

The classic definition of sustainability, “providing for society’s needs today without compromising society’s ability to meet those needs tomorrow” originated in the Brundtland Report, 1987 and can be found quoted by the Canadian Lawyers Abroad, Genentech, and elsewhere.

The authors of the Brundtland Report must have been lawyers not engineers. Their definition is good, but abstract. When you ask the canonical engineering question: ‘How do we make it work?’ The answer is:

Sustainable systems harness a process, rather than consuming a resource. Solar panels transform the energy in sunlight. Wind turbines transform the kinetic energy in wind. Geothermal systems use the heat of the earth.

The sun will shine and the winds will blow regardless of the presence or absence of solar panels and wind turbines. And the core of the earth will stay hot for a very long time – on the order of five billion years.