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Rethinking B2C: Business to (Carbon) Consumer

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I was thinking about the term business to consumer (B2C) the other day. I am not a huge fan of the term “consumer” in the digital era– we’re all content creators after all. But I just realised that my notion that we are all producers is even more true in terms of carbon footprint. Whether individuals or businesses, free agents or organisations, we are all net producers of carbon dioxide.

Aha- I thought to myself, “neat insight”, and so to twitter, where I said:

“when it comes to carbon emissions none of us are consumers. we are all producers.”

Quick as a flash Digital Signals came back and said:

“The fern on our bathroom window sill would beg to differ!”

The real insight therefore is that Business To Consumer might have an entirely different meaning this century. Businesses need to create closed loops systems with plants, the only reliable carbon consumers. Of course such an idea might sound bonkers – but why shouldn’t a polluter directly pay to halt deforestation in, say, Brazil? Lets save the planet’s lungs while we still can, before the only carbon consumers we can use are ugly crop-based monocultures.

At the moment we’re trying to come up with sophisticated cap and trade schemes to work the climate change problems we face. As ever complexity rules. But if every company in the Fortune 500 rethought the notion of the consumer, and worked the problem accordingly, we could see some interesting new models emerge.

It has been said that offsetting is horse puckey, but that seems awfully shortsighted, particularly if the offsetting investment is in carbon consumers. An awful lot of research is going to be required to identify the best plant species for carbon consumption- but there has to be a successful business or five in there.

So what might your Sustainable Business To Consumer strategy be?

picture courtesy of dawnzy58 on flickr under creativecommons 2.0 attribution license.

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Biofuels – the bad and the good!

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biofuel
Photo Credit jurvetson

The Guardian revealed today that it has obtained a World Bank report claiming that biofuels are responsible for 75% of the recent surge in food prices – far more than was previously thought.

Rising food prices have pushed 100m people worldwide below the poverty line, estimates the World Bank, and have sparked riots from Bangladesh to Egypt.

The report was being withheld, it seems to avoid embarrassing President Bush because it directly contradicts his claims that plant-derived fuels contribute less than 3% to food-price rises.

The report author, Don Mitchell, is an internationally-respected senior economist at the World Bank and has done a detailed, month-by-month analysis of the surge in food prices. This approach allows for a much closer examination of the link between biofuels and food supply than was possible in previous reports.

Dr Mitchell’s report

argues that production of biofuels has distorted food markets in three main ways. First, it has diverted grain away from food for fuel, with over a third of US corn now used to produce ethanol and about half of vegetable oils in the EU going towards the production of biodiesel. Second, farmers have been encouraged to set land aside for biofuel production. Third, it has sparked financial speculation in grains, driving prices up higher.

However, the news on biofuels isn’t all bad. There are some biofuels which don’t cause massive food price increases, and while I’m not a huge fan of biofuels (burning them produces CO2 still, don’t forget), they are a renewable resource.

They have, in the case of algae for example, the potential to be used in large-scale carbon sequestration projects. Large vats of algae could have the exhaust from power plants bubbled through them. The algae would feed on the CO2 and along with light convert the carbon into biofuel – recycling the carbon if you will.

Long term we need to get off the carbon economy but algal biofuels (which are not produced on viable farmland) look like a reasonable short-term way of reducing our CO2 emissions.

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High oil prices are a good thing!

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Houston Smartypants Car
Creative Commons License photo credit: Lori Greig

I wrote a post a couple of weeks back saying that the sooner oil reaches $200 per barrel, the better. Unsurprisingly, it generated a bit of comment!

So I was mighty chuffed to read Thomas Friedman’s superb Op-Ed in the New York Times yesterday where he made a very similar argument.

Thomas said:

there is no short-term fix for gasoline prices. Prices are what they are as a result of rising global oil demand from India, China and a rapidly growing Middle East on top of our own increasing consumption, a shortage of “sweet” crude that is used for the diesel fuel that Europe is highly dependent upon and our own neglect of effective energy policy for 30 years.

Cynical ideas, like the McCain-Clinton summertime gas-tax holiday, would only make the problem worse, and reckless initiatives like the Chrysler-Dodge-Jeep offer to subsidize gasoline for three years for people who buy its gas guzzlers are the moral equivalent of tobacco companies offering discounted cigarettes to teenagers.

I like the discounted cigarettes to teenagers analogy but it doesn’t go far enough. You give discounted cigarettes to teenagers, you kill them. You give discounted petrol/gas and you kill the planet. In effect, with its massive subsidies for oil companies (subsidies for oil companies? who thought that was a good idea?), this is what the United States administration has been doing for decades. But we digress.

He goes on to quote the arguments of energy economist Philip Verleger Jr. who wants a “price floor” – a guaranteed minimum price below which gas will not go:

$4 a gallon for regular unleaded, which is still half the going rate in Europe today. Washington would declare that it would never let the price fall below that level. If it does, it would increase the federal gasoline tax on a monthly basis to make up the difference between the pump price and the market price.

To ease the burden on the less well-off, “anyone earning under $80,000 a year would be compensated with a reduction in the payroll taxes,” said Verleger. Or, he suggested, the government could use the gasoline tax to buy back gas guzzlers from the public and “crush them.”

But the message going forward to every car buyer and carmaker would be this: The price of gasoline is never going back down. Therefore, if you buy a big gas guzzler today, you are locking yourself into perpetually high gasoline bills. You are buying a pig that will eat you out of house and home. At the same time, if you, a manufacturer, continue building fleets of nonhybrid gas guzzlers, you are condemning yourself, your employees and shareholders to oblivion.

With the current high prices for gas/petrol in Europe and the US, the message is starting to get through. Te demand for hybrid cars is growing daily as Thomas noted when he went to buy a new one:

I was visiting my local Toyota dealer in Bethesda, Md., last week to trade in one hybrid car for another. There is now a two-month wait to buy a Prius, which gets close to 50 miles per gallon. The dealer told me I was lucky. My hybrid was going up in value every day, so I didn’t have to worry about waiting a while for my new car. But if it were not a hybrid, he said, he would deduct each day $200 from the trade-in price for every $1-a-barrel increase in the OPEC price of crude oil. When I saw the rows and rows of unsold S.U.V.’s parked in his lot, I understood why.

The absolute worst thing which could happen now would be for oil prices to drop again. Companies who had invested heavily in renewables would potentially go out of business and fuel efficiency would no longer be a primary concern for car buyers.

No, high oil prices are a good thing. Nothing will move us off the carbon economy as effectively as a strong financial incentive.