Green Geeks and Why We Need Them

By Molly Webb, Head of Smart Technologies, The Climate Group.

When Netflix users rate films, the company can usually predict their choice within eight-tenths of a star. But some films proved tough to rate, so Netflix set out a public challenge worth $1 million to see who could improve their algorithms. Is Netflix a film rental company? No, they are an entertainment service that needs us to stay hooked – they need great software to ensure that when we rent that next film, we like it.

This is increasingly how we need to see climate and energy services. These need to be information businesses -- based on sophisticated sensors, communications platforms and data storage, processing and analytics.

There is a huge opportunity for businesses to sell services based on getting the right information about where energy and fuel are being consumed in transport, buildings, the electricity and industrial sectors – and making it possible to act on the information. We can eliminate waste by optimizing across complex systems or supply chains. In our SMART 2020 report, we showed that this smart use of resources amounted to a staggering 7.8 Gt CO2e emissions savings opportunity in 2020, worth over $900 billion.

On Tuesday in New York City at the event on Financing SMART cities, states and regions during Climate Week, we heard from industry and government representatives who are trying to finance these solutions. (The event was part of the The Climate Group's SMART 2020 programme.)

We heard the good news: retrofitting the Empire State Building with smart sensors and management systems has a 3 year payback, and South Korea is making a commitment to put 2% of R&D into green growth. But we also heard about the challenges: incentivizing utilities to invest in ‘negawatts’ (or saving electricity) still isn’t commonplace, and the sheer pace of decision-making and growth in China and India means we risk ‘locking in’ to high carbon economies.

In New York, everyone seemed to agree that the opportunity for ‘smart’ solutions is clear, but we need accelerate the pace of technology trials and deployments. Can ICT support this as well?

We know “you can’t manage what you can’t measure”, and it became clear on Tuesday that the phrase “you can’t finance what you can’t measure” may be equally true.

Functioning markets require complete (or as good as we can get) information. Using ICT not only for technical or logistical efficiency, but to provide some certainty and predictability around how people and systems behave will help speed up financing the low carbon economy. It helps investors – from both public and private sectors -- identify and share risks.

Some behavior is largely predictable: We know that a certain amount of energy will be produced from gas or coal in countries like China or the US this year. Or in places where very few public transport options are available, traffic may be fairly easy to predict.

But some behavior isn’t predictable. What happens if the energy we want to produce comes from wind - how sure are we that we’ll have the output of power we expect over a give time period? Or in the case of travel, if there were a cycling program in the area, how would the uptake of bicycles impact on vehicle travel?

Let’s take the example of homes or schools. Home energy management technologies can save people 2-15% on energy bills. Some studies show 40%. Zero Footprint’s zero schools challenge benchmarks (so far) 1,000 schools in Toronto, and energy per square foot varies between schools by a factor of 7. Is this level of variation going to allow us enough certainty to plan home or school energy services contracts that guarantee energy efficiency over the long term? The risk around the variation in impact of home energy retrofits is one of the reasons the PACE (Property Assessed Clean Energy) scheme has been delayed in the US, and experts believe good performance-based metrics could help overcome this.

Put another way, there are two systems integration challenges that a smarter, cleaner future that ICT can help solve. One is a systems integration problem when we have all the information – the other is a systems integration challenge when we don’t have the knowledge we need. If I’m Walmart, I might be able to at least begin to monitor and account for my energy, waste and resource flows, and look for ways to make these more efficient because I have more of this information at my fingertips, and reducing energy costs clearly impacts my bottom line.

But what if I’m Mumbai, New York or Chongching and I do not yet use IT infrastructure to reach my sustainability objectives? I will need to understand how to collect data, where I draw the perimeter of the system I’d like to affect, how to create visibility about the citizens using the system. I may not know how all the policies are interacting at the city level which effect behavior. This uncertainty equates to financial risk for those making investments into energy or resource efficiency.

These challenges will not be tackled overnight. We are just beginning to apply tools in the ICT toolkit to the problem of climate change. But we can learn from the past: Enterprise resource planning (ERP) makes businesses more efficient, and companies like Netflix or Tesco use algorithms to understand market behavior.

Does this require open data? It certainly helps. Amsterdam is focused on openness of data because they believe businesses and consumers are more innovative than governments in how they will use data to develop services and solutions to climate change.

I wonder if Netflix could tell me how many people who liked The Matrix also liked Al Gore’s An Incovenient Truth? They just might want to design the climate-saving services of the future.