10 Sustainability Predictions for 2011

Register now

A year ago, Val Haskell and I collaborated on predictions related to sustainability for 2010. This year, I am going to look back at those predictions to see how closely reality matched what we said, and I will come up with some new predictions for 2011.

1. 2010 prediction: Energy management will increase as a priority. Energy price volatility will continue to threaten corporate bottom lines and the two key consumers of energy - buildings and data centers - will be scrutinized. Energy management software will be implemented at more and more sites to get this spending under control.

2010 recap: I saw significant customer activity and interest in using information to identify opportunities to improve energy efficiency and reduce energy expenses. Forward-looking companies are recognizing that energy prices will continue to rise steadily for the foreseeable future - regardless of the specific growth of the U.S. economy - and that reducing consumption of energy per output (i.e., increasing energy productivity) is a great way to save money.

2011 prediction: The software market for tools in the energy intelligence space is also evolving. Many vendors are emerging with offerings targeted at energy management for general facilities, manufacturing processes and data centers. I expect some clear leaders to surface from this rapidly maturing market in 2011.

2. 2010 prediction: Leadership in Energy Efficient Design evolves. LEED, the U.S. green building standard, will have to evolve and become more rigorous to defend its value to buildings. LEED will modify their practices to include postconstruction building performance to maintain LEED status.

2010 recap: This is still a work-in-process as the LEED certification system gets more stringent and companies are adopting the LEED Operations and Maintenance rating system (published last year) to ensure that buildings are operating as efficiently as possible.

2011 prediction: I expect continued evolution and increased adoption of the various LEED standards.
3. 2010 prediction: Public-private partnerships will build out the new transmission networks for wind and solar energy to transport energy generated in remote locations to metropolitan areas. Think of the famous oilman T. Boone Pickens or Hunt Energy’s partnership with the State of Texas to build out a transmission network that carries wind-generated energy from the Panhandle to Dallas.

2010 recap: There have been many activities on this front, with public and private investments in smart grid and alternative energy projects in Albuquerque, New Mexico, Austin, Texas, Arkansas, Chicago, Los Angeles and many others. Some setbacks have occurred, though, with T. Boone Pickens abandoning his plans to create the world’s largest wind farm in Texas due to delays in construction of transmissions lines. He instead seeks to do this in Canada, where current market conditions make it a more attractive investment.

2011 prediction: In the U.S., there will likely be less investment from public sources, given the high national and state debts and the shifting balance of power in the U.S. House of Representatives. Also, with several major automobile manufacturers releasing first-generation models of electric vehicles (EVs) in 2010 and 2011 (e.g. GM, Nissan, Ford), I expect to see greater activity from cities, utilities and private entities in taking the first small steps to build out a publicly available EV charging infrastructure.

4. 2010 prediction: Battery technology will enter into the equivalent of the space race between the U.S. and Russia back in the 1960s. This battery technology will impact car production, consumer electronics and more. Expect a revolutionary breakthrough in early 2011 and production by 2015.

2010 recap: There have been several announcements in the last year of various breakthroughs coming from research at major universities such as MIT, University of Buffalo, Stanford, University of Central Florida, Imperial College London.

2011 prediction: Some of these battery technologies seem to be closer to commercialization than others – so this will continue to be a very interesting area to watch in 2011 and beyond.

5. 2010 prediction: New regulations, Wal-Mart’s Sustainability Index and Obama’s Environmental Executive Order drive wide-scale adoption of carbon reporting, and carbon costs become part of financial reporting. The reporting standards normalize, much like what GAAP did for accounting. Carbon has a cost that impacts business, and green businesses increase in value while the inverse is true; brown businesses lose stock value and have a harder time getting investment dollars. (Editor’s note: read related article, “The U.S. Government, Wal-Mart, and You.”)

2010 recap: There have been many activities on this front, which will all require companies to track and report on greenhouse gas emissions. In 2010, California voters cleared the way for a large-scale cap and trade program to be implemented by 2012 in California, which is the eighth largest economy in the world. Due to the lack of legislation by the U.S. Congress and responding to the 2007 mandate by the Supreme Court, the U.S. Environmental Protection Agency has developed regulations modifying the Clean Air Act that requires permits to be obtained by large emitters of GHG – covering more than 70 percent of the emissions in the U.S. from stationary sources. All U.S. federal agencies have developed and published sustainability plans, as required by Executive Order 13514. These agencies are now beginning to execute these plans – many of which focus on reducing use of energy and water and reducing waste and GHG emissions in the agency operations and their suppliers. The U.K. has implemented its Carbon Reduction Commitment plan as a carbon tax on emissions from U.K.-based sources. There are some encouraging results related to the performance of green companies. For example, it has been found that the Top 100 companies in the Newsweek 2009 Green Rankings outperformed the S&P 500 by 6.8 percent. Using the same data, another analyst found that the "greenest" companies in the “brown” industries had the best stock performance relative to their peers.

2011 prediction: Compliance with these reporting requirements will likely drive greater adoption of sustainability related reporting and accounting systems and processes. More companies will begin to track the end-to-end lifecycle footprints of their products, allowing them to help identify ways to eliminate costs. New software packages will likely begin to emerge that make this easier to manage.

6. 2010 prediction: Climate change will become a high-profile security issue, and its implications to coastal areas, food supply and severe weather will be part of military preparedness. The U.S. government will solidly transition to identify, plan, budget and prepare our military for security concerns related to environmental issues.

2010 recap: The U.S. military has determined that for every 24 fuel convoys it runs in Afghanistan, one person is killed or wounded, and it costs about $400 per gallon to get the fuel to the forward bases. As such, the U.S. Department of Defense is extremely motivated to improve energy efficiency and reduce dependence on fossil fuels – to save money, save lives and reduce the chance of future wars over resources. In response, it has developed an extremely detailed sustainability plan with aggressive goals. The highest-ranking officer in the military, the Chairman of the Joint Chiefs of Staff Navy Admiral Mike Mullen says, “The world isn't what it used to be, whether we wish it to be so or not. And we can either lead the change or be changed by the leadership of others. I prefer the former. This effort is not merely altruistic. It is essential. Failing to secure, develop and employ new sources of energy or improving how we use legacy-energy systems creates a strategic vulnerability and, if left unaddressed, could threaten national security.”

2011 prediction: The U.S. military seems committed to continue to execute and adapt its sustainability plans, seeking to achieve incremental progress against the multiyear goals they’ve defined in 2010.

7. 2010 prediction: Public infrastructure upgrades to green. The aging U.S. public infrastructure, bridges, traffic systems, sewers, water mains, etc., is long overdue for upgrades. Improvements can now be made greener than ever before in ways that increase safety and water quality and reduce traffic pollution. Federal buildings also make a serious effort to go green, reducing energy consumption and square footage.

2010 recap: The first U.S. offshore wind project was approved in Massachusetts. The U.S. government announced plans to reduce the number of data centers by 800, which will reduce energy consumption of federal buildings where those data centers operate. The General Services Administration set aggressive goals to achieve a zero environmental footprint. Says GSA Administrator Martha Johnson, “GSA will use federal buildings as a green proving ground for new technologies and techniques. The agency will also develop and implement technology to track purchases of green products across government and implement many more changes as we head toward ZEF.” In the U.K., despite deep budget cuts associated with an overall austerity economic plan, the government is actually considering increasing spend on green and public infrastructure projects, seeing this as a way to stimulate jobs in the short run and enable economic growth in the long term.

2011 prediction: I expect to see other offshore and onshore wind projects get approved and started in the U.S. in 2011. In order to pursue ZEF, the GSA will continue to pursue pilot projects to adopt sustainable practices in government facilities that they are responsible for, setting standards that will later be adopted by an increasing number of GSA facilities. The Obama administration is also pushing for greater infrastructure investment, and if the conversation can be positioned similar to how this was viewed in the U.K., there is a chance that the administration’s attempts will be successful, but it could also be put on the backburner as austerity/deficit-reduction measures are undertaken.

8. 2010 prediction: Water becomes a headline act in 2010. Climate change will increase weather severity, with some areas parched and other areas drenched. Access to plenty of fresh water will be a determining factor for corporate relocations and product decisions. Water will be managed more like a precious commodity, such as oil, with similar measurement systems for verifying volumes and pressures.

2010 recap: In 2010, for the first time, the voluntary Carbon Disclosure Project requested a subset of companies (302) to disclose information about their water footprints and management practices as well as water-related business opportunities. The idea is to start looking at water management on a more global basis, with more and more companies participating over time to better manage this scarce resource and share best practices with others.

2011 Prediction: There will be greater focus on measuring and managing water usage by major corporations due to the increasing recognition of water scarcity.

9. 2010 prediction: Agribusiness’ focus will be food for 9 billion people. It is a blessing for agribusiness and a curse: it’s a blessing because the demand is high for a solution to feed 50 percent more people in 40 years without increasing the land area farmed. It’s a curse because agribusinesses have not had the technical breakthrough that will make this possible. Ambivalence about engineered seeds will remain. In parallel, small, local farms will continue to grow and have their best year ever.

2010 recap: One important development last year was a commitment by Wal-Mart to double their purchases of produce from small, local farmers by 2015. Large agriculture-based businesses, such as PepsiCo and ConAgra, are making investments in techniques and technologies to help them with crop management to allow for reduced water use and carbon emissions while still maximizing yield and quality.

2011 prediction: Due to the savings experienced by companies from increasing the usage of small, local farms, in terms of transportation costs and reducing water usage for agriculture-based businesses, there are incentives for other companies to pursue these developments.

10. 2010 prediction: Cities jockey for green positioning. Urban districts will see green initiatives as a determinant in attracting the best, the brightest and the affluent. Cities will upgrade quality of life and amenities, tackle traffic and pollution, and market their green-living credentials.

2010 recap: This is still a work-in-progress, but the concept of green cities has been getting coverage in the mainstream media, giving some cities an opportunity to showcase what they are doing and raising the bar for other cities to follow. It was interesting to note that while Vancouver had the world’s attention during the Winter Olympics, the city chose to nickname itself the “Green Capital,” and announced plans to be the greenest city in the world by 2020. Of all the things they could have chosen to promote, this was the face they wanted to put forward. There are also several initiatives globally to encourage the largest cities to improve and to share ideas and practices, such as Sir Richard Branson’s Carbon War Room’s Green Capital Challenge and the EPA’s Greening America’s Capitals program.

2011 prediction: Approaches to sustainability will likely begin to follow similar patterns as early-adopter cities begin to learn from each other’s experiments – doing more of what works and less of what doesn’t.

Note: The views expressed in this article and the 2009 article addressing 2010 sustainability predictions are solely those of the authors and do not represent or constitute Hitachi Consulting's positions, views, strategies or opinion. The author is not qualified to give, nor does this article contain, any investment advice.

For reprint and licensing requests for this article, click here.