THE BLOG
10/07/2010 06:10 pm ET | Updated May 25, 2011

The Clean Economist: Clean "Corruption"

According to the World Bank; "corruption is not a one-dimensional problem, but encompasses a range of interactions within the state and between the state and the society, each with its own dynamic."

I know that the characterization of "clean corruption" will raise eyebrows, as intended. And I will begin this installment by acknowledging that it is the best of intentions in both the public and the private sector that are balanced with the unintended consequences of political process and decision-making. That said, the literal translation of the word corrupt when used as an adjective literally means "utterly broken." And I'm afraid that if we don't begin to look at some very real challenges, the promise of clean economic development will only ever be applicable in niche markets with niche applications.

Much as it has been argued the intermittency of renewable energy sources creates a barrier to mainstream adoption, and that the "context" of available energy storage technologies and/or grid infrastructure that can handle the ebbs and flows of these clean electrons needs to be built (see this report for a great primer on the Smart Grid) to truly realize the potential of renewables, clean economic development will only achieve its promise if we begin to tackle the complexity of relationships between and within the public and the private sector.

I have had a discussion recently with someone who creates curriculum for renewable energy and energy efficiency education. They do not think that climate science is "real." In fact, this engineer goes so far as to say that since we have a limited supply of hydrocarbon feedstock, once we have exhausted these supplies, humans will no longer be contributing to the climate problem because there will be no hydrocarbons left to burn.

Of course, while this represents a reductionist perspective that adolescently puts humans in a vacuum within our global ecosystems, assuming that we have no real lasting impact on the mystery and humbling web of life on our world, this point is technically true. At first, this seems like a very strange situation (and my gut reaction is to say "You can have your own opinion, you may not have your own facts). After all, one of the tools that clean economic advocates have used to give the market good information about the true costs of energy has been to propose carbon pricing as a way to realize the value of the fossilization of sunshine. In other words, if we put a price on carbon (because we want to deter the use of hydrocarbons that most scientists believe are leading to climate change when introduced into the atmosphere) then we have a way of creating a value proposition for energy that recognizes the imbalance between systems that support fossilized sunshine and those that create new opportunities for non-extracted energy.

But really, the climate issue is just a way of trying to grapple with this fundamental uneven marketplace; the incorporation of the "cost of carbon" (because we have used the "fear" lever in the spectrum of fear and greed that the marketplace right now recognizes as the only two drivers for economic activity) is a way of monetizing fossilization in that extracted petroleum, coal, hydrocarbon feedstock. So even though we are compelled to action when we are thinking of the dire scenarios painted by rising sea-levels, the killing of the base of the food chain in the oceans as phytoplankton succumb to a warming environment, and the plight of intelligent animals who reside at our poles, the response to the threat has been less than enough if we want to change from an extractive economy to a clean one. I believe part of the reason for this resides in the corruption of our economy itself; we still aren't asking the right questions so we are still faced with answers that do not get to the true root of the opportunity we are facing.

The fact is that we don't need to argue the opportunity of clean economic development and clean energy from just a climate perspective. Indeed, it is a valuable tool in our toolbox as clean economic proponents, but this presentation highlights that there are myriad benefits to clean economic principles that go beyond just reining in the damage that hydrocarbons are causing to our home planet. Last week, Governor Schwarzenneger blasted Big Oil for descending on his state with a fictitious positioning of the real promise of California's clean tech industry. Big Oil, and specifically Valero and Tesoro, are funneling their dollars into that state's political process in order to overturn any rules that have been set to give non-extractive energy a fair market playing field.

Our public discourse is being sabotaged by cynical strategists; corporations are largely amoral and will play by the rules that are set, but I have observed that the most successful leadership in corporate landscapes are those that are consummate "gamers of the system." They do not care if they are the black hat or the white hat, they just want to win. The competitive spirit and fierce independence of our private sector stars has been seeping into the character of elected officials and the counsel they keep. In a democracy dependent on an educated citizenry and on the cohesion of a common dream (how nebulous and tenuous the principles agreed upon by the Founding Fathers when they created the DNA for our aspirations), we also rely on good information in our marketplace of ideas. Hence, arguably the American Dream's current status: "utterly broken."

But then again, we must be pragmatic and work with the system we have while we orchestrate our tipping point to a clean economy. It may make a great deal of sense to continue with closed-door sessions as municipalities figure out how to transform their energy infrastructure away from the risk associated with extractive energy. Within the liminal space between markets and policy, the "special interests" of clean technology companies are trying to influence the rule makers for our markets, albeit swimming against the current of a century of extractive industry efforts in this arena. In fact, in my role as a regional co-chair of the Clean Economy Network, I realize that I am privy to discussions on the clean tech side of the equation that I am sure are mirrored by closed-door sessions in extractive industries. So one of the first items that I think we should think about is a "sunlight campaign" (transparency in processes that involve our democracy's citizens) that could in turn enhance our ability to monetize the value of fossilizing sunshine. I know that we have been working with what we have, the Investment Tax Credit that thousands of new renewable projects have been attributed to went through on an earmark, demonstration of the blessing-and-curse conundrum of our current system.

The recent Supreme Court ruling opening the doors for more corporate influence on our elections is truly a double-edged sword. Perhaps clean tech should take some plays from Karl Rove's playbook in his work with American Crossroads where he is accused of funneling money for "education" through a shell organization to influence-peddling opportunities. Maybe a Super PAC of donations from all of the supporters of clean economic development would move our needle towards that fair playing field. Closed-door discussions about which technologies in the clean tech landscape get how much from our government coffers is the modus operandi for the fits-and-starts approach we seem to have in building any sort of energy and economic platform that de-toxes us off our addiction to extracted energy. But if we keep doing the same thing and expect different results, well, someone much smarter than any of us referred to that as "insane." Yes, it's a crazy world right now, but I believe we have a better way of doing things.

Imagine if we could leverage the internet and social media to aggregate capital for renewable energy and energy efficiency infrastructure development. So, instead of using a 20th century version of economic assumptions that rely on the coordination of a hierarchy, with an elite set of decision-makers dictating where large sums of capital would be deployed for individual projects, we instead think about a viral campaign aligning many micro-investments coordinated with sophisticated online tools to distribute this wealth towards multiple communities to retrofit their energy needs. For example, a recent WSJ article highlighted micro-finance and community lending happening right here in the U.S. as opposed to what many people think of when micro-lending comes up: impoverished people in developing nations taking out small loans for things like the purchase of a cow or a sewing machine. A coordinated strategy that used peer-to-peer networks to both educate and activate the will of the people towards funding platforms like Prosper.com and LendingClub.com to identify and deploy micro-investments to build weatherization and solarization projects could potentially accelerate the transformation of our energy landscape, while at the same time closing the gap on some of the inequity found in our current wealth structure (Robert Reich's recent interview on Fresh Air highlights how detrimental having a society with so much disparity between the haves and have-nots is on social cohesion).

What I mean by that is that as households and small businesses implement energy efficiency and renewable solutions using mechanisms that don't hurt the pocketbook up front, they will be saving financial resources in the near term and in the mid to long term be well positioned as the price of extracted energy continues to climb. Moreover, by creatively building this type of strategy and implementation, the externalities of our competition from extracted energy solutions are mitigated by a competitive advantage in financing energy efficiency and renewable that helps even the market playing field to some extent. Most interesting though is that the medium itself is the message: We need to begin to de-centralize our economic interdependencies as we head towards a global market landscape that will be at high risk if it continues to rely on an energy source that is in decline.

Fear is the driver in the climate discussion; greed is the driver in extractive arenas. The driver in viral modes of clean economic development is a combination of both these qualities with an additional powerful motivation that resonates with the human spirit, an altruism that seeks to make real a community of citizens building our American Dream together. I'll let you, the reader, define what that means, but Martin Luther King, Jr. describes it this way: "When our days become dreary with low-hovering clouds of despair, and when our nights become darker than a thousand midnights, let us remember that there is a creative force in this universe, working to pull down the gigantic mountains of evil, a power that is able to make a way out of no way and transform dark yesterdays into bright tomorrows. Let us realize the arc of the moral universe is long but it bends toward justice."

We know that the world is heading towards a major upheaval, whether we name it as climate disaster, drying up of our most widely used energy base, or a wealth of other looming challenges from overpopulation to water conflicts. But the larger the problem, the greater the opportunity. My hope is that we embrace the tools we have today to imagine a future where we begin to ask the right questions about how we build clean economic infrastructure by aligning the best aspects of our democracy with the most impactful of strategies for accelerating this shift.

In the words of a compassion driven leader, "Let us develop a kind of dangerous unselfishness."