ET Innovation requires a market signal

Today we had the good fortune to produce an event featuring Thomas Friedman, author of Hot, Flat and Crowded.  Go read it.  In the meantime remember one key message from his talk: If you want to make a measurable difference to mitigate climate change (Hot), build sustainable globalizing economies (Flat) and alleviate the impact of elevating population (Crowded), one of his key messages is change your leaders, not your light bulbs.  Friedman isn’t saying don’t bother switching to CFL bulbs, he’s saying that it’s our government leaders who create the rules, the regulations, which govern the manner in which our economy can grow in a sustainable manner.  And without government-imposed regulation on what we pay petro-dictators overseas, it will be exceedingly difficult for 10,000 entrepreneurs in 10,000 garages to be the change catalysts we need.  Researching his book, Friedman interviewed Jeffrey Immelt, CEO of GE, who was clear that even the greatest MNC and font of ingenuity of our last century will not invest in creating sustainable and available electrons (electric power!) to the world against the moving target of oil at $120 (Sep, 2008) and $42 (Feb, 2009).  How can even the leviathan GE make a conscionable multi-decade, multi-billion investment to compete in this market landscape?

Friedman predicts Energy Technology can be the next .Com innovative revolution to solve what he identifies as the five primary thorny issues confronting us today: Energy and natural-resource supply and demand, petro-dictatorships, climate change, energy poverty, and biodiversity loss.  In an optimistic talk, Friedman challenges us to find that silver bullet which is capable of alleviating each of these concerns.  That is – cheap, renewable, ubiquitously available electron molecules.  His challenge – from entrenched MNCs to garage entrepreneurs – is to help make sustainable and ubiquitously deliverable electric power to the world.  Sound audacious?  It is, but as he states it will start with the policies and regulations we impose on the marketplace.

A key consideration is to recognize that we the U.S. – or any other country – need to have faith that we have the skilled talent and imagination to confront this challenge and we want the bar raised.  We want regulation to dictate the baseline efficiencies of washers, air conditioners, cars, light bulbs, etc. because by raising the barrier to entry in the market we will fuel innovation.  By eradicating environmental impacts or lowering efficiency demands on the products and services we consume, we invite Chindia market disruptors who can build and deploy cheaper and dirtier technologies – which only exacerbate the big five issues shown above.