The best entrepreneurs build things out of their own experience. Maybe that’s why Silicon Valley hasn’t dominated clean tech the way it dominated IT and the Web. We’re aware of the energy crisis, but it doesn’t really affect us enough to do much about it. Look at how companies run things in their own houses: A study showed that while nearly 80% of executives believe that sustainability is a business benefit in the long term, only 30% require their businesses run in a sustainable way.
Are we waiting on magic fairies to take care of this? Or maybe just entrepreneurs in the emerging world who see and struggle with the problem everyday. Usually being close to a globally threatening problem is bad, but sometimes it can be an advantage. To wit, more than 40% of investments in renewable energy took place in emerging markets in 2009– most likely because those are the countries that can’t continue to put the problems off.
The theme of this past week’s World Economic Forum “Summer Davos” conference was sustainability. Like a lot of Americans, when I hear the word “sustainability” I think climate change and alternative energy—not a bad topic for a conference held in China, just as it surpasses the United States in energy consumed, much of it coming from extremely dirty coal. But there are more pressing problems of sustainability in the emerging world, that in America we just don’t see.
The vividness of the problem is something I’ve seen up-close during some-forty weeks of reporting in emerging markets. In China bloody fights are breaking out for water. In India, cities and roadways are crumbling under a crush of people moving to cities that the infrastructure and social services cannot support. And in Africa, fertile countries still struggle to feed their populations. These are problems most Americans know are out there, but we don’t think about them, because we’re not faced with them. Would someone who’s never used the Internet be able to build a competitive new browser? Probably not. That’s why my money (figuratively, because as a reporter I have no money) is on the emerging world to solve these big—and potentially lucrative—problems.
Some stats and commentary I heard at the Forum last week that have me thinking about this long after I left China and my jetlag has subsided:
- Just how bad the water situation is. Lack of access to clean, safe drinking water plagues nearly 2.5 billion of the 6.9 billion people on earth, and the situation will only get more dire as the world population expands to 9 billion by 2050. At the World Economic Forum meeting, the global water crisis was talked about almost more than the energy crisis. “Water is the new oil,” said one CEO. Much of the story is about the waste of water. A sad fact I learned: The US is indirectly the number one exporter of water because we use it so heavily and wastefully in our food production.
- We’re not talking about shortages; we’re talking about management systems. There’s more than enough water on the planet, the sun provides two times our energy needs if sourced and stored properly (a massive if) and there’s plenty of food to go around. It’s all about how we route it. Smart grids could reduce emissions by 2.2 gigatons per year. The world’s best energy companies are likely going to turn into software companies. This is an opportunity made for systems and software geniuses of Silicon Valley, particularly the enterprise software and supply chain crew markets that have mostly been in a slump for the last ten years. This is actually good news, because it’s a solvable problem through software and logistics. That we can build. New sources of water and fossil fuels? Not so much.
- So much for that American ideal of “urban flight.” Half of the world’s population lives in cities right now, but in the next forty years that will increase to 70%. For China and India that means more than 800 million people will be moving to cities by 2050. I heard few answers on the plight of emerging market urbanization, and I still think this is one of the biggest problems the world faces. The panel on sustainable cities was one of the more disappointing. Public transportation seems the best answer to de-clogging roadways, but that doesn’t solve the aspirational needs of people who want cars, nor does it answer how poor countries get the funding to build these systems. Already in China there are traffic jams that last days, and a small percentage of migrating urbanites have vehicles. In India the urbanization is messier, with millions moving to the cities in hopes of a better life and falling off the grid, living in slums, toiling in the informal economy with no way out. Problems of sanitation, air quality, water quality and energy all get compounded as the problem grows.
- A huge question is whether access and affordability can go hand in hand when it comes to energy, water and food. We can engineer solutions, but can the people who need them most afford them? Several experiments around the emerging world have proven you don’t necessarily need huge budgets to solve these problems just willingness to experiment and innovate. Sometimes working within constraints forces the most elegant solutions to a problem. One panelist at Davos spoke of a program in the Middle East where the Dead Sea was desalinized, using that salt to salinize the Red Sea and generating energy during the process that could be used elsewhere. In Rwanda, private companies are extracting dangerous methane from the bottom of an “exploding lake” turning a potential natural disaster into something that can potentially power the tiny country for forty years. In India, I visited a tiny village called Hiware Bazar that has turned itself from a drought ridden wasteland to a lush, clean oasis in the middle of nowhere that sells its produce at a brand-premium and boasts more than fifty rupee millionaires. There was no one secret for Hiware Bazar’s success, rather decades of experimenting with various techniques to make the most of the rain they got, save it and allocate it more wisely.
- With a problem that has dire consequences for private sector economies, national governments and local governments, it seems a lot of the stalling on the solutions are centered around deciding whose job is what. Along these lines, there’s a lot of debate about the role of government subsidies. Most governments and private sector leaders at the Forum felt they were essential, but one man phrased it best when he said the trick was making sure subsidies were a “feeding bottle” not an “addiction.”
- Electric car production is forecast to reach one million vehicles in the next four years and Asia is on pace to do more than Europe and North America combined. There’s some debate about whether that’s the right solution, given that those cars are powered by the same dirty coal plants. Energy experts at the forum said those arguments were a straw-man, and if cars can charge during off-peak night time hours billions of cars can recharge without the need to build a single new plant.
- Aside from building new management and software systems for water, food and energy, there’s a lot of room for company building and innovation on the product end. Designing products that use sustainability as a feature, not a problem to be solved. The example that jumps to mind is VNL, the solar-powered base station company I wrote about during my last trip to India. By making the base stations cheap enough that mobile operators could still make money of people who can’t pay $6 a month for service, the company solved a lot of the other problems base stations have. For instance, there’s no maintenance cost, because it’s simple enough that it can be installed by illiterate villagers. And the simplicity also means it needs less power, so it can run on just one solar panel. Sometimes it’s about under-engineering to solve these root problems, not over-engineering.
When you are talking about remaking the way we get the basic building blocks of life– and learn to share them with the 9 billion people that will be on the planet by 2050–it’s clearly not an issue for just government or just large incumbent companies or just entrepreneurs, any more than it is an issue for just Western developed countries, or just smoggy emerging markets. To have any optimism that all these groups can work in concert to solve these big of problems you have to either be a big believer in the goodness of humanity or a big believer in the power of long-term business greed to motivate short-term actions. I respect the World Economic Forum for pulling together so many powerful people to spend a week in China discussing the nuances of these issues, but I can’t say I left hugely optimistic on either count. Like an alcoholic, I fear the world hasn’t hit rock-bottom on its wasteful resources addiction yet.