Diving With Green Turtles and Lettuce Coral, While Searching for a Silver Bullet

By Elena Rohner

Plug Akumal, Mexico into Google Maps and you’ll see a tiny town 60 miles south of Cancun on the “Riviera Maya” with a few restaurants, a large resort, and a pueblo on the other side of the highway that 1,200 people call home.

What Google Maps doesn’t reveal is the impact that tourists are having on the reef’s health.

I recently spent 20 days in Akumal—which means Place of the Turtle in the Mayan language—researching the size and health of lettuce coral as part of an Ecosystem Field Studies course run by the University of Montana.  I quickly felt overwhelmed by the sheer number of snorkelers crowding the water to see the town’s main attraction: the gentle green turtles who feast on sea grass at the bottom of Akumal Bay. During my time there, I saw quite a few snorkelers diving down to touch turtles or standing on coral, actions which harm both of the respective organisms.

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Green Sea Turtle seen at Horseshoe Reef, Akumal

Akumal’s tourism industry has skyrocketed in the last five years. Centro Ecologico Akumal (CEA), a local environmental NGO, reports that the monthly number of snorkelers increased by more than 400% between 2011-2014, while coral cover in the bay decreased by 79%. CEA is trying to educate tourists about how to reduce their impact with a short informational video before they go out snorkeling, and life jackets that keep people on the surface of the water.

After observing the intense human pressure on the bay, I posited that lettuce corals might be smaller and less healthy on reefs in the bay than further out on the barrier reef. My data was inconclusive on that point, but I did observe fewer lettuce corals in the bay, and those that I did see were often heavily bleached or covered in algae.

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Healthy lettuce coral (A. agaracites form danai) observed at 54ft at Half Moon Bay Reef, Akumal

Coastal and marine ecosystems around the world are degrading rapidly in the face of both local and global stresses. Increased concentrations of atmospheric CO2 are making our oceans warmer and more acidic; locally, tourism, overfishing, and fertilizer runoff are all taking a toll.  Out on the reefs this translates into more frequent and more severe bleaching events, excessive algal growth, and lower resilience.

I left Akumal with so many more questions than when I’d arrived. The most complicated question I left with was, is it possible to have it all?  Is there a way to ensure that tourists and researchers can enjoy and learn about this incredible marine ecosystem without having such a negative impact?  Is there a tourism business model that generates enough income for the people who live in Akumal while preserving the reef and turtles?

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Unhealthy lettuce coral (A. agaracites form carinata) observed at 47ft on La Isla Reef, Akumal.  Coral is bleached in upper right corner and whole left side is covered in algal growth

I realize that there probably isn’t a silver bullet solution, but I’m interested in exploring whether a market-based approach to environmental protection might be one part of the answer. Diving in Akumal opened my eyes. I saw the harm that’s happening to an amazing underwater world, but I also saw huge potential for improving how we interact with that world.

The Importance of Nuclear Energy in Reducing Carbon Emissions

By Richard Whiteford

Former Indiana Senator Evan Bayh, now co-chair of Nuclear Matters, an organization promoting nuclear power as the answer to a carbon free energy source, spoke at Wharton University’s Huntsman Hall for the Initiative for Global Environmental Leadership (IGEL) on February 3, 2016.

The most important point he made, in my opinion, is that in order to cut carbon emissions enough to keep the planetary temperature from rising another 1.5° C we must keep our existing nuclear power plants maintained and running and we need to build more to further reduce our carbon emissions. For instance, Mr. Bayh pointed out, just Pennsylvania’s nuclear power plants alone, reduce our carbon output by 52 million tons per year. If those plants close it would increase our carbon emission levels by that much at a time when the federal government’s Clean Power Plan mandates us to reduce our emissions.

Case in point, at the COP-21 Climate Summit in Paris in 2015, scientists said the carbon content in the atmosphere since around 1750 has risen from 280 parts per million to today’s 400 parts per million. At present we pump 110 million tons of CO2 into the atmosphere every day from burning coal, oil and natural gas. This has caused the average global temperature to increase by 1.2°C or 2.16° F. That doesn’t sound like much if you think about a daily temperature change, but this is the average planetary temperature – a very different thing.

It has caused the past decade to be the hottest on record and July 2015 was the hottest month ever recorded. If you pay attention to the extreme weather events like historic floods, droughts, storms, and glacier melts that are happening and consider that if a 1.2° C temperature rise did this, what will a 2° C or a 4° C temperature rise do to the planet?  According to Secretary of State John Kerry, “since 2013 America has been forced to spend $160 billion on extreme weather events.”

According to climatologists, if we don’t drastically cut CO2 emission right now, we will contribute enough CO2 to the atmosphere to hit that 2° C temperature in just three years and if we keep burning fossil fuels at the current rate, we will pass the extremely dangerous threshold within 20 years. The critical issue is that we can only afford to burn around 800 billion more tons of carbon and expect to stay within the 1.5° C limit but we have 2,795 tons of carbon in inventory to burn. If we burn that it will raise the planetary average temperature to around 6° C or 10.8° Fahrenheit which would be disastrous for life as we know it on this planet. Nuclear energy will have to be a sizable part of the energy mix along with solar, wind, geothermal, and hydro to meet our future energy needs without fossil fuels.  We have to leave carbon in the ground.

Richard Whiteford
Board Member
World Information Transfer
an NGO at the United Nations.

The Role of Nuclear Plants in a Clean Energy Future Conference

By Emily Woodhull Newton, IGEL Coordinator 

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Join the Wharton Initiative for Global Environmental Leadership (IGEL) and Nuclear Matters for a conference on The Role of Nuclear Plants in a Clean Energy Future on Wednesday, February 3, 2016 in Jon M. Huntsman Hall. The conference is IGEL’s first event of the spring semester and will feature a discussion with Evan Bayh, the former Senator and Governor of Indiana and the Co-Chair of Nuclear Matters. Senator Bayh works with Nuclear Matters to inform the public on the benefits of nuclear energy, raise awareness of the economic challenges facing nuclear energy, and collaborate with stakeholders to develop potential policy solutions to address those challenges.[1]

At the IGEL-Nuclear Matters conference, Senator Bayh will talk about the benefits of nuclear energy and how nuclear power plants are currently the largest source of carbon-free energy in the United States. Without the use of nuclear energy from existing nuclear power sources, it would become increasingly difficult for the United States to achieve the carbon-reduction targets proposed by the Environmental Protection Agency (EPA) in the Clean Power Plan.

Senator Bayh will also provide his insight on the risks posed by the closure of nuclear energy plants due to potential market and policy challenges. He will not only elaborate on what these risks mean for the United States but also for the state of Pennsylvania, which currently has nine nuclear reactors in five locations across the state. According to the Nuclear Matters website, Pennsylvania’s nuclear energy plants supply 35% of the state’s energy, contribute $4.5 billion in economic output and support approximately 20,900 jobs.[2]

On a global scale, the decarbonization of the world’s economy will need to include the use of nuclear energy in the renewable energy portfolio, according to recent research by top climate scientists presented at the recent 2015 United Nations Climate Change Conference (COP 21) held in Paris.[3] Without the use of nuclear energy, it is unlikely the world will meet the goal of containing the increase in average global temperatures within 2°C and avert the worst effects of climate change.[4] Considering the current state of all energy generation technology, nuclear energy will have to be a central part of the discussion when planning how to implement the goals agreed to at COP 21.

To learn more the current and future role of nuclear energy sources in the United States and its benefits, join IGEL and Senator Bayh at The Role of Nuclear Plants in a Clean Energy Future on Wednesday, February 3, from 11:30 am to 2:00 pm on the 8th Floor of John M. Huntsman Hall. More information on this event can be found on IGEL’s website. Pre-registration is required and can be found on IGEL’s Eventbrite page.

[1] Nuclear Matters. (2016). About Us. Retrieved 24 January 2016, from http://www.nuclearmatters.com/about

[2] Nuclear Matters. (2016). Nuclear Stat U.S.. Retrieved 24 January 2016, from http://www.nuclearmatters.com/nuclear-stat-us

[3] Forbes.com. (2016). Forbes Welcome. Retrieved 24 January 2016, from http://www.forbes.com/sites/jamesconca/2015/12/15/paris-cop21-and-the-urgent-need-for-more-nuclear-energy/#50e7fb484952

[4] the Guardian,. (2015). Nuclear power paves the only viable path forward on climate change. Retrieved 24 January 2016, from http://www.theguardian.com/environment/2015/dec/03/nuclear-power-paves-the-only-viable-path-forward-on-climate-change

 

Ford Smart Mobility Experimentation Platform and the Future of Big Data in the Auto Industry

By Bert Barnes

Organizations around the world are harnessing big data to reveal patterns, trends, and associations that were once very difficult, if not impossible, to infer. This strategy is being used across various industries and sectors, with energy, agriculture, and retail being some of the most notable potential beneficiaries. Joining the ranks of companies employing big data-driven strategies, Ford has partnered with IBM to leverage the power of big data to improve the efficiency of transportation.

Ford’s Smart Mobility Experimentation Platform offers a glimpse of where automakers may divert increasing resources in coming years. The pilot platform allows scientists to look at portions of data as small as 10 or 15 seconds at a time to spot patterns, correlations, and trends, which they use to draw insights about human behavior and interaction. With these insights in mind, code can be written to make more efficient transportation decisions. Ford and IBM’s technology is similar to that used in the stock market, where masses of data are aggregated quickly to enable rapid transactions, and in energy provision, where data is used to monitor grids, identify opportunities for predictive maintenance, and deploy crews automatically.

It’s not difficult to imagine the transformative effects that widespread use of a platform like Ford and IBM’s could have on transportation. Less congestion on roads means less fuel utilized more efficiently, and with less idling. Predictive maintenance could result in fewer accidents and an improved emissions profile throughout the life of a vehicle. Big data-enabled travel advisories could mean real-time adjustments of mechanical and human systems towards more efficient and convenient forms of transit. In fact, Ford is already fostering the latter by deployment its Dynamic Shuttle service, which operates based on its Smart Mobility Experimentation Platform to serve its employees in Michigan. The service routes shuttle requests away from out-of-service vehicles to other transits, allowing another shuttle to redeploy to keep all riders on schedule.

With the automotive industry turning to big data for insights, it seems as if it is only a matter of time until transportation as we know it begins to change in significant, exciting ways.

 

For more information about Ford’s Smart Mobility Experimentation Platform, visit the news heading of Ford’s Media Center. For more information about how big data is advancing sustainability efforts across industries, check out the Knowledge@Wharton report from last spring’s Wharton IGEL conference.

The Red-Headed Stepchild of Your Sustainability Initiatives

By:  Shira Weintraub

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The push for organizations to improve their sustainability is rapidly accelerating

Global economic policy has recently taken a strong stance on the need to transition to a low-carbon economy, as evidenced by COP21’s landmark climate accord. It is clear that the era of carbon reduction has arrived and that sustainability is becoming an increasingly influential business dynamic.

With energy costs, government regulations, and stakeholder scrutiny all on the rise, companies around the world are beginning to take a more strategic approach to managing and reducing their environmental impacts. As a result, energy and sustainability management initiatives are climbing the priority stacks of many organizations. More companies are actively engaging in sustainability activities to drive cost savings, improve customer perception, attract new talent, and more.

Data is the key piece to the sustainability puzzle

When businesses first approach sustainability management and reporting, they define the questions that they need answered. For example, a company may need to know the average number of kilowatt-hours each square footage of building space consumes or the energy cost associated with producing a certain quantity of a specific product. The first step to finding these answers, which enable a company to understand and then reduce its sustainability impacts, is to gather the relevant data. Unfortunately, collecting accurate and timely sustainability data at scale is actually the biggest roadblock that companies and organizations face today in managing and reporting on sustainability. It often hinders companies from either gathering critical insights to make improvements or incorporating sustainability into their business models altogether.

Collecting utility data is a major challenge, and often overlooked

Utility data, a major component that underpins a company’s carbon emissions calculations and overall environmental footprint analysis, is especially difficult to access for a variety of reasons. Firstly, there is an extensive number of data elements on each utility invoice, including consumption, tariff information, and commodity type, that are all necessary to developing a sustainability baseline. Additionally, the structure, semantics, and format of bills vary by utility provider and even more so internationally. And to make things even more complex, there are multiple document types — standard invoices, adjustments and re-bills, inserts, shut-off notices, and more. With 35,000 utilities and 4.5 billion meters worldwide, you can imagine the challenge of aggregating and then centralizing all of this data, often locked up in paper invoices.

Because utility data is so hard to gather and homogenize, many organizations rely on manual data collection, OCR technology, limited EDI feeds, or third parties that also resort to these methods. These processes often result in slow, low quality, incomplete, and unreliable utility data, making it impossible for organizations to effectively manage and report on their energy consumption and sustainability. With such poor visibility, managers are forced to come up with solutions based on guesswork and intuition instead of proven facts and figures. Therefore, they are unlikely to make the smartest, most cost-effective business decisions and fully optimize their operations.

Urjanet is making the world’s utility data easily accessible and usable

Founded in 2010 at the Advanced Technology Development Center (ATDC) in Atlanta, GA, Urjanet was created to solve the lack of access to quality, timely, and accurate utility data, and as a result enable better decision-making and resource management.

Sanjoy Malik, Urjanet’s CEO, explains, “As the pressure to reduce our natural resource use and increase efficiencies continues to rise, many executives are searching for ways to better manage their businesses’ environmental impacts. We are committed to helping companies and organizations all around the world improve their sustainability and make smarter business decisions by providing them with access to the data they need.”

Urjanet’s cloud-based platform automatically aggregates and standardizes utility data from thousands of disparate providers and seamlessly integrates it into popular business applications. Urjanet supports a variety of service types including electricity, natural gas, water, waste, and more. The company is exclusively focused on capturing and providing quality, usable data and does not offer analytics, bill payment services, or reporting software.

Because utility data has so many different use-cases, Urjanet supports a growing volume and variety of organizations. Today, an expanding list of industry-leading companies, such as Kimberly-Clark, Cox Enterprises, Chick-fil-A, and Honda use Urjanet’s award-winning data products to better manage their energy spend, optimize financial performance, and reduce carbon emissions. Additionally, top energy solutions providers, including Ecova, Johnson Controls, Verisae, and EnerNOC use Urjanet to improve operational efficiency and results for customers. In one of its research reports, independent analyst firm, Verdantix, stated that “as Urjanet’s software and services customer list continues to grow, those firms not working with Urjanet will have to start asking themselves why.”

Urjanet is on its way to becoming the world’s utility data standard. To learn more, visit www.urjanet.com.

 

 

 

 

 

 

 

At Wharton Conference, a New Collaboration

By Jon Miller and Jim Motavalli

At a December 15 Wharton School conference entitled “Sustainability and Health Care: Creating and Capturing Value,” several partners described a new initiative aimed at creating an industry-wide, cloud-based solution to greening the healthcare supply chain.

The collaborators now piloting the initiative include healthcare giant Johnson & Johnson, furniture maker Steelcase, global purchaser Premier (representing 3,600 U.S. hospitals), Edward-Elmhurst Health hospital group and sustainability solutions company MindClick. Their goal is to make it easy for hospitals to get relevant sustainability information about products they’re considering. The pilot program is scheduled to turn into a broad-based launch next year.

The conference, hosted by Wharton’s Initiative for Global Environmental Leadership (IGEL) and sponsored by Johnson & Johnson, began by providing a broad context for the new data-driven effort. Speakers from the World Economic Forum, the private equity firm KKR and Wharton discussed how sustainability drives value for a wide range of organizations, including large and small for-profit companies, mission-driven non-profits and even the U.S. military.

According to JoAnna Abrams, CEO of MindClick, the new initiative in healthcare is benefiting from a similar approach, launched in 2011, that has allowed Marriott to integrate sustainability into its massive procurement system. The problem in healthcare, said Abrams, is that gathering sustainability data is currently time consuming, labor intensive and expensive—and because there is so much data and so little consistency, the effort is often wasted. She estimated that, “$25 million industry wide is going to collecting information that can’t be used.”

As part of the new “environmentally preferably purchasing” (EPP) initiative, MindClick is working with its partners to standardize the data that providers will supply, develop the software platform that will accommodate the massive amounts of data generated, and create the metrics that will be used to transform all this data into usable and useful information for hospitals nationwide.

The value of such a database, said Kevin Lewis, national program coordinator for Premier’s GreenHealthy division, is in moving from a highly labor-intensive approach to a more automated model that frees up staff time to act on the information collected.

Dustin Heiler, a market and business developer at Steelcase, says that today’s environmental data collection can be problematic for suppliers, because of the time commitment required, and because questions are neither standardized nor always relevant. “We may be asked questions about a chemical that was banned 15 years ago,” he explained. Instead of responding to disparate sustainability surveys from multiple providers, Heiler said Steelcase sees value in providing information to one source that strategically targets the key issues hospitals really need to evaluate their suppliers.

A reliable, widely used data base of EPP products could help jump-start the business case for corporate sustainability initiatives, such as the Johnson & Johnson internal Earthwards review process that recognizes products that have made three or more significant sustainability improvements. And the waste savings can be considerable. In one example offered at the conference, Steelcase furniture provided to Premier customers in 2014 contained 47% recyclable content. That furniture has the potential of diverting more than five million pounds of potential waste from landfills.

The U.S. healthcare sector represents 18% of U.S. GDP with more than $200 billion in annual purchases. And not all the money is well spent. Olivier Oullier, head of strategy, global health and heal­­thcare strategy at the World Economic Forum, said at the Wharton conference that a third of the annual global spend on healthcare is wasted.

Michael Paul, president of the Enterprise Consumer Group at Johnson & Johnson, ended the conference by discussing Johnson & Johnson’s strategic approach to breaking down silos and marshalling all of the company’s vast capabilities for the benefits of its major customers. It seems clear that such boundary-crossing, all-encompassing solutions, whether company-specific or industry-wide, are what it will take to realize the benefits of truly sustainable healthcare.

There’s value in getting ahead of the curve, Paul said. He noted that Johnson & Johnson’s acquisition of Sterilmed, a reprocessor of medical devices, “sends a strong message that we care about waste reduction, and also about reducing costs to our customers.”

Climate Agreement in Paris: A Step Forward

By Professor Eric Orts

A significant step forward has been taken in Paris with a landmark agreement establishing a framework for potential progress in the reduction of greenhouse gas emissions, the preservation of forests, and other related issues. I’m reading the details of the full agreement now and will have an initial perspective to share on Wharton Business Radio tomorrow at 10 am (Sirius XM 111). My immediate reactions, though, are quite positive.

Unlike Copenhagen, the diplomatic efforts followed by the Paris organizers followed a “bottom-up” approach advocated by me and others, encouraging each country to come forward with their own plans rather than attempting to impose a “top-down” solution through a comprehensive detailed treaty or agreement. This idea sees the global agreement reached in Paris as only one of many needed agreements or what I’ve called “climate contracts” at many levels.

The major success of the Paris agreement is to establish a solid framework of international verification and reporting. It also demonstrates and reaffirms a global consensus of nations that the available science reveals real and serious risks to humanity.

The agreement itself will not “solve” the climate change problem (as President Obama has noted in his speech on the topic), but it establishes a path forward that can serve as orientation toward reducing the overall risks of climate change by reducing greenhouse gas emissions, preserving intact forests, encouraging continued focus on improved governmental solutions, and, perhaps most importantly, providing incentives and enhanced motivations for business and research-based institutions to invest in discovering and developing “climate friendly” technologies, products, and services.

Paris is a large step forward and a symbol of hope for the future. Whether in fact the promise of Paris will be borne out in actual progress remains uncertain, and long-term success will depend on the future actions and commitments of many nations and millions of people, but progress is now more probable than before.

Cycling the Material Economy


By Scott Cassel

Nearly four decades ago, I roamed the Quad with piles of psych and English texts tucked beneath my arms, before leaving school for a “gap year” with my dog, Jackson, to jam the road with Kerouacic enlightenment. The Grand Canyon, Great Sand Dunes National Monument, and Big Sur posed questions to me I could not answer. Organic food gave me answers to questions I did not yet have.

I returned to Penn a year later and threw myself into the Geologic depths of canyons, streams, and tectonic plates to figure out WHY. And then I was faced with WHAT I could do to protect these great lands. What was MY personal responsibility to ensure the beauty would be there for me and others?

My Environmental Studies deepened. I was confronted with the Three Mile Island Nuclear Meltdown, acid rain in the White Mountains, uranium tailings on Native lands – all of which I was unequipped to stop. So I did what I could. I collected the neighborhood’s newspapers on my porch and shuttled them to trailer trucks at the now defunct Ecology Food Coop in Powelton Village; drove the Penn Recycling truck to gather newspapers from metal bins; and sold barrels of smashed glass containers to scrap dealers in West Philadelphia to fuel recycling parties and truck gas. I was saving a few resources if not saving the world. And I fit all the environmentalist stereotypes.

The American landscape fueled my passion; Penn academics kept me sober.

Back then, the Wharton Business School towered over me on Locust Walk like a shadow at dusk – mysterious, powerful, and foreboding. The drive for PROFIT drove me away. I did not know that the skills needed to run a non-profit business were right under my nose.

I am coming back now – and things have certainly changed. The old tensions between business and environmental interests have dissipated because there are no sides in a system that calls for (and could collapse without) cooperation. Wharton Genius can transform materials into all sorts of creative and useful stuff. But since stuff is depleting Earth’s raw materials, we need to cycle the stuff and keep it in commerce as part of a Circular Economy. What goes around comes around – from Recycling, Cradle to Cradle, and Zero Waste to the Circular Economy. Material to Product to Material to Product. Harnessing the value of the material economy. We have learned that we are better off walking in a cul-de-sac than down a one-way street.

But who is responsible for making these changes toward this circular economy? Who is responsible for wastes from mining? Emissions from burning coal, gas, and oil? Landfills filled with stuff? Pharmaceuticals in waterways? Old mattresses and tires in vacant lots? Toxics in our products?

Are these market failures? Or is this just the way the free market has been allowed to operate? We know that the free market is not free. But who is paying for the externalities that result from making and selling all the stuff? Is cleaning up a mess a voluntary effort? Or is this what we expect Government to do? And do companies pursue Corporate Social Responsibility only when it has marketing benefits that allow them to sell more stuff?

There are many questions to answer.

How do we create systems that balance regulation with the need to create a corporate consciousness that protects while it profits? How can we reorient our production and consumption patterns toward sustainability and reduce the level of material depletion? How do we create a new playing field so that product manufacturers design for recycling during product conception? And how do we link the benefits of sustainable development to the profit priorities that keep businesses running, producing, and solving problems?

The systems of production and consumption are piecemeal. We need to gather these pieces to develop an economic loop that creates value from waste all along the way, so that the loop keeps cycling over and over to unleash innovation and tap new ideas of which we can now only dream.

Join Scott Cassel, CEO and Founder of the Product Stewardship Institute, for a discussion about how Penn (and later MIT) equipped him to start an organization that engages consumer product companies to take responsibility for reducing the health and environmental impacts of the products they make and sell.

Earth, Water, Fire, and Air

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By Austin Bream

These four elements define our modern environments, from the resources that nourish us to the habitats we live in to the motivators that fuel our actions. Just four elements and yet they form the basis for our everyday existence. For this basic reason, we, the Student Sustainability Association at Penn (SSAP), are hosting The Element Series. Over the course of this year, we will examine these four elements and how understanding them helps us understand sustainability and allows us to construct our future.

We begin with Earth on October 7th. Green Architect William Marston opens our conversation on urban agriculture before our screening of Growing Cities. We gather to discuss our growing cities and explore how our food supplies can keep up.

We continue our conversations with Water in early November. As IGEL hosts a Water Conference, we too explore our relationship with water. Through a speaker panel and a collective trip to a water treatment facility we examine Philadelphia’s water treatment programs and how we can be better stewards of our water habitats.

After the semester break, we conclude our Element Series with Fire and Air. In conjunction with Penn Green Campus Partnerships’ Power Down Challenge in February, we host a forum on fire, exploring the burning of fossil fuels and the potential for improvements in the energy sphere. And we conclude with a discussion of air to analyze how this vital resource can be protected and utilized for our sustained existence.

Earth, Water, Fire, and Air. Four elements define our modern environments. Four elements form the basis for our understanding of sustainability. And thus these four elements serve as the cornerstone of our year-long series as we set out to redefine our relationship with our environment. Join us.

For more information, please visit ssapenn.com/elements.

Finance for the Environment

By Melusine Boon Falleur, a senior in the Huntsman Program at the University of Pennsylvania

Many of us Wharton undergraduates decide to work in finance during our summer internships and after graduation. Amongst the glut of prestigious financial service companies, most of us choose the path of investment banking while paying little attention to the underlying sector such as telecommunications or commodities. However, finance is a great tool that can profoundly change a sector. Through my summer internship working for a project finance company specialized in renewable energy projects worldwide, I discovered the extent to which finance is essential to find attainable environmental solutions. In this article, I will explain why students should consider going into the green sector if they want a finance challenge while making an impact.

One of the biggest impediments for the deployment of renewable energy is very high upfront capital cost. Unlike other sources of energy, renewable energy has almost no operations and maintenance costs, but requires huge capital expenditures at the start of the project. The challenge with green energy sources therefore lies in the cost of capital and not – as we often assume – in innovation and technology. Through my summer internship in project finance, I soon learned that there is a huge demand for creative financial instruments that reduce the cost of capital for renewable energy projects. Companies who have thrived in the green industry are the ones who secure cheap financing, not the ones with the best technology.

SunEdison, a very successful solar energy company, has achieved the scaling of solar projects by designing a pioneering financing scheme. Instead of directly selling solar equipment to customers, SunEdison owns the solar panels and sells the energy produced to its clients. This transfers the burden of the upfront investment from the customer to the energy company, who is more efficient in securing cheap capital for the construction than individual consumers. Consumers who were reluctant to invest a large amount of money for an energy installation now simply just needs to lease the solar panels or buy the electricity from SunEdison. This is just one of the many innovative financial structures deployed in the renewable energy sector.

In addition, local and national policies, such as subsidies and tax credits, also affect renewable energy companies and open opportunities to create profit-maximizing tools. SolarCity is an example of a company that successfully used tax credits to secure cheap capital. By selling its tax credits to large firms such as Google and Goldman Sachs, SolarCity created a way to borrow money without having to pay it back in cash. Today, the tax equity market in the United States offers very attractive returns for firms with large taxable income and helps renewable energy companies raise capital.

Throughout the summer, I have been exposed to many challenges that project finance companies faces in the renewable energy sector. Whether in the United States or abroad, renewable energy is a nascent field met by a lot of skepticism from investors. This is why, as a project finance company, we spend a lot of time finding ways to show our partners that our projects are indeed profitable investments. In order to achieve an attractive margin on our capacity deployment, we constantly need to find ways to reduce our cost of capital. We also need to ensure that our customers will be able to pay for the electricity that we sell them, especially when installing solar panels on commercial and industrial buildings. This implies finding ways of creating credit ratings for firms who sometime don’t publish any information. Because our projects are long-term (sometime as much as 30 years), we also need to find ways to secure payments through long period with Power Purchase Agreements. All these tools need to be carefully designed, and small improvements can have huge impacts on the profitability of a project.

Wharton Students who want to intern and work in the financial sector should consider the following: if you enjoy thinking creatively and using finance as a problem-solving tool, then the renewable energy sector (and the sustainability sector at large) is an amazing field to unlock your potential. There is a big demand for individuals who can think outside the box and find new models to reduce the cost of green energy. Not only will your work be interesting, but you will also have the fulfilling feeling of bringing positive change to the world.

Melusine Boon Falleur is a senior in the Huntsman Program at the University of Pennsylvania. She studies Environmental Policy and Management at the Wharton School.