Resources. Upcycle. Energy.
(From the archive. Originally published in April 2015)
I’ve been reading about sustainability quite a bit lately and couldn’t help but think the implications of this on the energy sector.
One of the fascinating reads has been Resource Revolution by Stefan Heck (@Stefan_Heck) and Matt Rogers. The authors lay an incredible, fact-based case that we are at the cusp of third industrial revolution. Many industries will get disrupted, even more companies will get formed to delight the customers with better experiences while preserving resources.
One of the examples from the book is how inefficient a mature industry like automotive is. An average car is used only 4% of the time. Less than a percent of energy is used to move the person. American roads only reach peak throughput only 5% of the time, and even then they are only 10% covered by cars!
A pause and reflection on far reaching impact and potential disruption by autonomous cars to — car ownership, electric drive train, automotive insurance, highway design to name a few could be astounding.
In the hindsight, it’s not a surprise that we’ve seen unprecedented growth of the sharing economy, as was laid out in the fantastic book What’s mine is Yours, by Rachel Botsman (@rachelbotsman). In past decade we’ve seen rise great companies that better utilize either tangible or intangible assets — AirBnB, Uber, SkillShare to name a few. It’s interesting that we haven’t yet seen disruption at this level in the products-based industries.
Which brings me to The Upcycle by William McDonough (@billmcdonough) and Michael Braungart. By considering what authors call as biological and technical nutrients in products, we can be more conscious of multiple useful lives of nutrients. And the end of these, the nutrients can be cost effectively recycled instead of ending in a landfill. The authors proclaim that we humans don’t have a pollution problem, we have a design problem.
As 2.5 billion people join the urban middle in next two decades, it will generate unprecedented demand for various commodities — oil, gas, water, steel etc. Designing products such that there are multiple useful lives of the ingredients is one way of alleviating the problem. Embedded in this is the thesis of having products as service — a drive away from ownership, but instead paying for service of that product. There have been some interesting examples / experiments in the past — e.g. having the washer / dryer installed in your house, but instead of upfront payment, manufacturer is paid by each wash load. Or instead of buying tires, paying the manufacturer by miles. Not only does it not enable manufacturer to retain a prolonged engagement with the customers, but it changes the equation on how the products are designed — with quality, reliability, and recyclability being prime.
Which brings me to the last aspect — one of the most basic commodity, energy. Though sun is one of the most abundant resources, solar energy still is less than 1% of the energy generation capacity globally. It is ironical given that fact that today almost 2 billion people today have either no or limited access to energy. In developed countries, energy consumption and generation is usually not even an afterthought. It’s hard to change status quo when in the US an average customer spends 6–9 minutes per year to interact with the utility, and the electricity prices on average are quite a bit lower. These reasons, coupled with the current utility business model based on selling more kwh, doesn’t provide a strong and far reaching incentive for a change.
One has to wonder how long can this status quo last.
Instead imagine a world where products are designed sustainably for multiple useful lives, leverage renewable energy like solar and wind to provide energy access to 2 billion people. Or imagine a world where consumers are more conscious of energy usage and perhaps they pay by unit of energy consumed by their washer, by their microwave, by their refrigerator. In the process making conscious decisions on which services they value the most and are willing to pay correspondingly for it. Or imagine that majority of the energy consumption needs are met by energy generated by solar panels on their roofs that are designed and built sustainably and offered as service to the customers.
I think it will be an exciting world and I couldn’t be more happy to be part of it.
