Category Archives: energy

the carbon authority: part one

carbon-neutralIn a swath of green fury, there is a whole new market emerging which most consumers have heard of but for the most part, have no clue if it will ever become relevant to their daily lives.   To some degree none of us know what role our march toward a carbon neutral economy will play in our not-too-distant future yet there are signals locally and globally that the carbon market may ultimately play a significant role in our daily choices.  The question is  – who will guide us in the adoption of practices that will truly help us understand this market.

To a certain degree, it is probably too early to ask this question.  The early days of the mobile phone industry were governed by industry wide regulation, distribution and demand.  Demand drove consumers to purchase despite mass confusion over cost protocol and brand authorities didn’t emerge until the market had stabilized and penetrated the most sought after consumer – the teen.  It took us over a decade to begin to feel like we understood how to evaluate “Rollover minutes” against “Nights and Weekends Free” against “myFaves” (although one could argue we still don’t know why we’re locked into two year contracts).

So, it’s likely that we are ten even twenty years before we truly begin to understand what the outcomes of all the debate in Washington and abroad is about as it relates to understanding our role in neutralizing the carbon in our atmosphere.  This is an operational challenge that will be driven by regulation not demand.   Yet there seems to be market activity that signals this evasive concept-commodity could and actually is being productized at a mass consumer level.

Many airlines now offer individuals the opportunity to purchase carbon offsets at the point of their ticket purchase and online calculators such as Terrapass provide individuals and businesses the opportunity to purchase carbon credits to offset their output.  Termed “offsets” these credits are the product of a  financial mechanism created to regulate carbon output and including organizations naturally protecting sequestered carbon.  Most of us have begun to hear the term “offset” but will readily admit we have no idea what it really means, let alone starting to dig deeper to know what “standard” the carbon has been verified against to determine its true value.

The interesting question is,  who will emerge to be the (brand) authority in this new market?  What business and in what tier of the consumer eco-system will emerge to establish credibility and drive the standard to which we will make our assessments? And what industry can we look to previously that might shed some light on where this new market might be going?

electrical innovation

Changing consumer behavior can be a slow painful process.  Not only does it require educational efforts but often widespread systemic conformity is required. However innovation has radically altered some of our most fundamental behaviors.   Globally, we now access cash from a machine and we carry and use mobile phones for a significant percentage of our calling.  Its this type of basic change that will be required to have significant impact on socially and environmentally responsible consumption habits.

Shai Agassi has just such aspirations.  The electic car has been the talk of the town at the Detroit auto show this year but Shai’s concept is the most intriguing and well thought out.  In this week’s Newsweek, Fareed Zakaria talks to Shai about his idea for a Better Place in “Switched-On Highways”.    Shai does exactly what is necessary for radical innovation – he flips the approach.  Instead of framing the problem as “how to build a better car”, he frames it as “how to run a country without oil”.  He takes an ambitious approach that looks at both the infrastructure, the model of ownership and of course, the power source.

Return to electricity

Even with oil returning to under $50 a barrel, Shai’s new model is betting on the electric car to remove our dependency and make the switch to clean electricity.  With the required infrastructure in place, the cost ends up somewhere between six and eight cents per mile which is motivation in and of itself, even if oil got down to $25 a barrel.

The razor model

Taking a page from the razor, printer and video game model, he has also separated the car from its core function – the electric battery.   A truly radical idea when it comes to car ownership but one that makes a lot of sense.   The basis for this is the need to re-charge batteries after they drain all of their power.  This drops the price of the car and its operation even further and makes acquisition a lot more appealing.

Leveraging existing behavior

But what’s important about this model is that it leverages our existing and well-established behavior of stopping at the “gas” station.  For long haul driving – or even for convenience during a normal day of driving – it doesn’t make sense to have to stop and re-charge an electric battery when it’s run out of its juice.  So, Shai proposes switching stations where you just pick up a fully charged battery.

There are flaws in this model but radical innovation generally doesn’t happen perfectly the first time.  What is exciting about the Better Place concept is that it addresses consumer behavior from the get-go.   Plugging an electric car into your own garage sounds exciting but offering a car at a reduced price with the “benefit” of a switching station somehow puts the consumer at ease simply by offering them the comfort of a long-held tradition. Eventually we’ll get to fully plugged in at-home cars (cuz after all we all hate to stop at the gas station), but first Shai has to get them to buy the cars.

And the really exciting thing….California is already set to begin adoption of a Better Place this year!

image credit: Better Place logo by techpulse360 on Creative Commons