Roundtable III: Strategies to Drive Investment in Sustainable Energy Solutions

On this panel:

• Rana Foroohar — Senior Editor, Business, Newsweek International
• Helmy Abouleish — Chairman, Board of Directors, Egyptian National Competitiveness Council; Managing Director, Sekem Group
• Meyer S. "Sandy" Frucher — Vice Chairman, The NASDAQ OMX Group
• Dr. Susan Hockfield — President, Massachusetts Institute of Technology
• H.E. Kandeh Yumkella — Director-General, United Nations Industrial Development Organization

Rana Foroohar: Global energy demand will increase by 44% by 2030. We need an additional 17 trillion in investment to meet that demand without increasing emissions. What are we missing in the public sector?

Kandeh Yumkella: Stable regulatory panel and common global standards -- this is why Copenhagen is important. We need an open dialogue between CEOs and government leaders.

Susan Hockfield: We need to understand the magnitude of the deficit in our investments in creating the innovation pipeline. In 1980, 10% of US R+D dollars were spent in energy -- now it's 2%. Industry developments in R+D is between 15 and 20% -- US investment is less than 1%. We've lived on a rollercoaster -- stimulus investment is a good investment, and those investments are critical.

Sandy Frucher: Governments are doing very little. They have the capacity to provide resources to R+D and they can create markets through regulation. Until the US has carbon standards, the world won't be stable. Unless we create a market, we'll have monopolies with little incentive to do R+D.

Helmy Abouliesh: Egypt is growing fast -- our biggest challenge is youth employment. On one hand, we have low energy consumption, but we subsidize energy (and food and water) because so much of the population is below the poverty line. We need movement on many different levels -- Copenhagen can create standards for sustainable agriculture, sequester CO2 emissions, and create a flow of no idea. Until that happens, we'll be lagging behind.

Rana Foroohar: What lessons can we learn from sustainable agriculture?

Helmy Abouliesh: Sustainable agriculture can sequester 7.5 tons of CO2 per hectare. That could be a huge contribution toward stopping climate change. We believe that agriculture can be an important tool in the short term to stop climate change. Sustainable agriculture uses 20-40% less water than traditional agriculture. It also creates an income flow for farmers, and is the only possibility for millions of people in Africato engage in climate change.

Kandeh Yumkella: But we have a dilemma. If the poor stay in agriculture, they're disadvantaged in the long-term. If we want to transform, we should industrialize on a low-carbon path, or we're postponing a bigger security crisis. Restructuring economies can lift people out of poverty. We should look at opportunities for wealth creation -- tech transfer becomes necessary. Some economies are too small to be viable, so they must be linked to global markets. I know it's difficult to push these issues. But if we don't have a good deal in Copenhagen, we can't see how fast these issues are going to go.

Sandy Frucher: We should be looking at how to grow capital markets in developing countries -- that's the beginning of developing indigenous wealth.

Rana Foroohar: We need to talk about how China is going to change the game.

Helmy Abouliesh: A question in Copenhagen is how developing countries can take a commitment. There's no way for Egypt to say "we don't care." We have to move. I hope all of the developing countries will take responsibilities -- not targets, but to move on a path. But at Copenhagen, we need to decide about funding mechanisms and technology transfer.

Rana Foroohar: There was just a crackdown in China on Microsoft pirates. Is that a gamechanger?

Susan Hockfield: We're seeing a trend to try to be an industrialized countries. People want to run in the path of an innovation economy -- we're in a very different place than we were in the 20th century. We need to figure out intellectual property. The US needs to show a leadership role -- we're moving to a world of trading carbon, and the US needs to get its act together.

Sandy Frucher: A lot of this has to do with commerce, bottom-line. When you become a true innovator of products and ideas, you want to protect them.

Kandeh Yumkella: For poorer countries, the US universities can play an enormous role in making tech available. They helped make sure India could feed itself. Same as the "green revolution" - with all good intentions, some of these developing ministries are very new and don't have the capacity they need. US leadership is critical.

Susan Hockfield: Most of the generatoin of ideas is open-access and about capacity-building. We need to produce innovators as well as innovations.

Kandeh Yumkella: Companies in China show off their US-educated employees.

Rana Foroohar: How can you get ideas out to capital markets?

Susan Hockfield: The great limit of alternative tech is energy storage. For 200 years, batteries didn't change. We couldn't have an energy revolution 20 years ago. Now there are dozens of new batteries at MIT alone.

Rana Foroohar: Can nations use green to diversify their economies?

Helmy Abouliesh: You need the private sector for innovation. We need to get the message to our fellow private sector companies that the world will be completely different in 20 years. It's not just a question of competitiveness -- it's a question of survivial.

Sandy Frucher: That applies to the United States as well. You're not going to get a company to change unless you can show them that there are going to be more than marginal if they change. We have to develop capital markets in developing countries and create global entrepreneurs. We need carbon markets, but we need standards first.

Susan Hockfield: We need to protect "green shoots" companies until they can thrive.

Kandeh Yumkella: We have a production system that's resource-intensive. We need to decouple growth from excessive use of natural resources. Companies have to be conscious of whether they're taking energy in a sustainable way -- we need corporate social responsibility so that we don't create failed states.

Snady Frucher: Government has to lead corporate responsibilities -- companies will invest because it's in their best interests, not because it's moral.

Kandeh Yumkella: But when you're dealing with countries such as Liberia, the UN isn't in the room. Countries have to take responsibility.

Rana Foroohar: What should multilateral organizations such as the UN and WTO be doing to encourage investment?

Helmy Abouliesh: All of the things we talked about today are interrelated. We need to convince everyone (multinationals, companies, countries) that sustainable strategies are a competitive model and we have to use them as such.

Kandeh Yumkella: Multinationals should continue the dialogue on carbon-pricing post-Copenhagen.

Audience questions:

Question: One way to solve the problem is to reduce demand through higher efficiency, but more people means more demand. What is the UN doing to solve this problem?

Kandeh Yumkella: Education is critical. We're promoting health care systems around the world, but in addition we're creating opportunities for people to live a better life and have sustainable jobs. We need to create awareness of where we're moving and where we're moving right -- it varies by cultures.

Question: What's the long-term effect of offsetting markets in developing countries?

Susan Hockfield: It can have positive and negative consequences. I can get carbon credits in ways that don't drive economic growth, but I can also get credits in good ways. We have to structure these policies so that we drive good development.

Kandeh Yumkella: An example of bad development: we're developing a program to get energy into homes. It's easier to burn it and you can get carbon offsets for teaching people to burn it, but the better long-term solution is something else.

Sandy Frucher: We need global standards and transparency for this to work.

Susan Hockfield: Is there a market that has these kinds of demands already? This is really a fascinating problem unlike anything else.

Sandy Frucher: We haven't seen this kind of market, but this will be the largest single product traded in the world. We're really behind the curve not getting involved in this.

Susan Hockfield: I was happy Secretary Locke discussed the acid rain problem from the 1990s -- once policies were set, people got busy figuring out how to make money solving these problems and we were able to solve them.

Helmy Abouliesh: This program can channel funds from the developed world to the developing world and we need to establish things like sustainable land use.

Question: The increase of educating women and family planning is a successful economic solution, and a number of other problems fall into line. In parts of the world, girls can't go to school without threats of violence. How can education help solve our economic problems?

Susan Hockfield: It's about capacity-building. Only through education can we move countries forward --  the internet makes technology accessible and gives people access.

Question: Is urban-to-rural population shift a problem? What policies need to be put in place to limit urban migration and make rural development a successful strategy?

Kandeh Yumkella: Growth opportunities in most parts of the country. The land grant system in the US has helped US populations -- that can work in other countries as well for rural and community development. We also have to link these rural communities to markets so that incomes can rise. People will always move to where there are opportunities, so we have to talk about growth and wealth creation, not just stopping poverty.

Question: Driving investment in sustainability must deal with the consumer side and the supply side. What is the role of retail (Walmart et al) in pushing sustainability and changing consumer habits?

Helmy Abouliesh: The consumer is the power. Consumers have led the way where governments, academia, and companies have not. There's a change happening where consumers want clean products. We'll see more demand for such products.

Sandy Frucher: Consumers are also voters. Around the world, green is an important part of advertising -- there's a demand for these issues. Hopefully a demand for green products leads to a demand for legislation.

Rana Foroohar: What's the number-one thing you would do to increase green capital?

Kandeh Yumkella: Convince the US to take the lead. They've done it before to feed the world, they can do it again.

Susan Hockfield: We have to make a commitment to sustain R+D over a long period of time -- ten years or longer. 

Sandy Frucher: I'm going to write to my congressman and senators. Corporately, we need to work with developing countries to create markets.

Helmy Abouliesh: Seal the deal in Copenhagen.

Coming up: Ted Turner and the president of Iceland discuss technology cooperation.

— Sarah Spooner

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