The Bay Area Consulting Business Level Index (BA-CBL) came in at 97 for the week ending April 14th 2011. This is virtually flat, down 1 point from last week’s reading of 98.  A reading below 100 suggests subdued business activity for consultants and executive level contractors in the Bay Area.

The 97 reading is very close to the neutral line for this index and is slightly above the index reading for March 2011 which came in as 93.

Please keep in mind that the BA-CBL is experimental, and the weekly reading can swing wildly.

Sunogos and its affiliates decline any responsibility if the index is used for any purposes.

Claus Schafhalter, Management Consultant @ Sunogos

Activist organization Greenpeace publishes periodically a “Guide to greener electronics”. The guide attempts to rank top electronics manufacturers according to their “policies on toxic chemicals, recycling, and climate change”. I have written about this ranking earlier, it showed Nokia as the greenest company and Nintendo on the bottom of the list.

In October 2010 Greenpeace released their updated ranking, here are some excerpts for some companies including their “green score” (10 is best, 0 is worst).

1. Nokia   (Score: 7.5)
2. Sony-Ericsson (6.9)
3. Philips (5.5)
4. Hewlett Packard (5.5)
5. Samsung (5.3)
…
16. Toshiba (4.3)
17. Microsoft (1.9)
18.Nintendo (1.8)

Looking at this list unscientifically I cannot see an obvious connection between sales success of a company and “greenness”. The top contenders do well in the markets, but the low ranked companies seem to do very well too. Microsoft is certainly making lots of money, Nintendo is my son’s favorite. So, is it fair to say that being green is an insignificant factor for overall sales success?

I think so. Availability of a favorite game or ability to play games with friends is important to many kids, sustainability is not. Does this change with the age of the consumer? Apparently not, features and coolness (think Apple’s product line) seem to be more important than qualities like energy efficiency or sustainable  practices  in production.

There might be exceptions to this observation. Some products sell because they are deemed to be green (think about a Prius Hybrid for a moment). Still, consumers might choose these products more to make a statement than for its green features.

But I do have one hope: What if there is a company that delivers cool and feature rich products made in a very green way? Will this combo sell?

Claus Schafhalter, Sunogos

On September 9 2010 a high pressure natural gas pipe ruptured and sent a fireball into the sky a few hundred meters away from my house in San Bruno, CA. At least 4 people died and many homes were damaged and destroyed. When I took my boys into the car and evacuated our house I saw black smoke coming our way. There was also an eerie orange glow behind the smoke. This was less than 15 minutes after the initial blast, and at this moment everyone thought that an airplane went down causing the fire. It was a reminder of the risks we incur using fossil fuels to drive our standard of living.

As I have written earlier I am critical continuing to use fossil fuels as the main source of our energy. But as a person used  to the benefits of modern society I do also know that we cannot shift our energy production from fossil to renewables over night.

I am convinced that two things have to happen:

1. A long term shift to renewable energy sources accompanied by a much more efficient use of the energy produced.
2. A short term focus on safety to ensure that our current energy production and distribution system is as save as possible.

In 2010 we had a few wake up calls  showing us that we need to rethink our behaviors, processes and methodologies. BP lost Billions of Dollars when their oil well in the Gulf of Mexico blew up. Comparably little money would have been necessary to prevent the accident from happening in the first place, if the risk and its consequences had been taken seriously.

Similar things can be said about the San Bruno gas explosion. It becomes more and more evident by the day that PG&E knew about the risk of these gas pipelines running through densely  populated residential areas. But short term it is cheaper to take an elevated risk and hope that nothing happens. Mid and long term this is almost certainly the wrong decision, but if no bad incident happens just long enough then executives and shareholder can cash in on short term profits, while their successors will have to struggle with the consequences of unaddressed risks.

The day when the disaster hit home made me think. Why is it so difficult to change things before something happens? Why is it so seemingly easy to change things after something bad happened? At least four people died on that day in San Bruno. In the days and weeks after the explosion the Public Utility Commission, State and federal law makers come up with proposals to enhance inspections, replace old pipes, and enhance technologies meant to lower the risk of another blast.

What will need to happen that we take the risk of burning fossil fuels as the main source of our energy source more seriously? And will we be able to change before something really bad happens?

Claus Schafhalter, Management Consultant @ Sunogos

A little known program to jump start solar energy projects on public land is a huge failure, according to an AP report “Feds fail to use land for solar power”.

In 2005 the U.S. congress mandated that by 2015 10 megawatts of renewable energy at peak time should be generated on public land.  The U.S. Bureau of Land Management set aside stretches of public land primarily in the south-west of the U.S., but so far not a single project delivered energy to the grid.

The idea was to provide land to private developers who would in turn build energy farms. Interestingly many of the leases for the land went to a firm better known for its role in the financial meltdown than its role as leader in renewable energy: A subsidiary of Goldman Sachs!

So, how did the Bureau of Land Management “manage” the process? All an interested party had to do was fill out an application, pay a fee and file development plans. Apparently the filings were not evaluated for technical or financial feasibility. And the applicants did not have to show that they are capable and willing to develop the sites.

So, many of the country’s best sites for alternative energy production have claims on it by organizations unable or unwilling to develop. This land is effectively taken away for productive alternative energy use, the total opposite of the intentions that Congress formulated in 2005.

Just to let yo know: In the same time period when the Bureau of Land Management managed to not manage alternative energy leases, the agency approved more than 75,000 leases for oil and gas. Which clearly shows where the priorities are.

So, can anyone explain to me why the Federal Bureau for Land Management leases sites to develop renewable energy generation to entities closely affiliated with the likes of Goldman Sachs?

Claus Schafhalter, Management Consultant @ Sunogos

Today I read a report by Bloomberg Businessweek that the Senate climate bill, which aims to cut greenhouse gas (GHG) emissions 17 percent from the 2005 level by 2020, could cut U.S. gross domestic product (GDP) by $452 billion , and cost the average household $206 annually from 2013 to 2035.

I do  not want to discuss the merits of the Senate climate bill in its current state — if there are merits at all, but I cannot wonder if we are really measuring the right things.

The problem that I see is that GDP calculation measures and weighs everything the same way, without accounting for effectiveness. A simple example: After we change a power generating process  to use less coal to put the same amount of energy into the grid, GDP goes down. Being more efficient means a negative impact on GDP. Because we consume less, even if we get a better outcome.

GDP rewards waste. Once we increase waste, GDP goes up. This is totally contradictory to any lean management approach, where we try to reduce waste to get more efficient, and where we measure the output of a process by its effectiveness.

To do more with less is sane, responsible and should be rewarded. Measuring the wrong things punishes otherwise useful initiatives. Should we not come up with other metrics than plain GDP to make sure we go into the right direction?

Your thoughts?

Claus Schafhalter, Management Consultant @ Sunogos

A new study issued by the German “Umweltbundesamt” comes to the conclusion that Germany should be able to switch energy production to 100% renewable sources within 40 years. Interestingly the head of the agency, Jochen Flasbarth, states that this is doable with technology that is available today. Building the necessary infrastructure would need decisive action and investment money.

One shortcoming of the study is that they do not include a quantitative cost — benefit analysis. Jochen Flasbarth is quoted “he feels on the save side, as the cost of the switch to alternative energy should be less than the cost of climate change.”

Here is my take: Switch to alternative energy can not come fast enough. Any economy that acts on a well thought out master plan to make the switch could very well be the leader in a wide range of energy technologies and reap economical and ecological benefits. Studies that concentrate on technological feasibility are very well, but not sufficient. There has to be a convincing business case that shows that this switch is beneficial so that  investors and entrepreneurs will invest. The German Umweltbundesamt would be very well advised to augment their study with cost — benefit scenarios and to come up with firm recommendations to the political leadership in Germany. It is very likely that other institutions like the European Union or other sovereign governments could take up the ball and advance the move away from a fossil economy to a sustainable economy.

Leaves me to wonder what the decision maker in our country will be able to do. Looks like any energy plan is stuck in the same old politics between the major parties as so many other things are stuck today. Will the US Administration and Congress be able to come up with a plan to lead us to a sustainable future? I do not hold my breath just yet, looks like climate change, Gulf oil spill and the huge amount of money for fossil fuel paid to foreign countries is not enough to initiate meaningful change.

Your thoughts?

Claus Schafhalter, Management Consultant @ Sunogos

An Oekom Study looking at 27 leading oil and gas corporations rates organizations regarding their sustainability. The study’s authors granted that corporations try to do the right things, however overall their activities are not focused enough and lack tangible results.

On a scale from A+ to D-, the small Austrian company OMV ranked first with a “B”, followed by Snam Rete (Italy) and Total (France).  Norway’s Statoil is rated only “C”.

What about the company behind the oil spill in the Gulf of Mexico? BP is also rated “C”, and the authors of the study stated problems with save operation of assets and higher than normal risk for workers to get injured.

While the Deepwater Horizon — the oil rig that exploded and sunk killing 11 people — was owned and operated by Transocean, BP is said to had a major role in making decisions that lead to the tragedy and the catastrophic oil spill that followed. Maybe a “D” would have been in order for BP?

Claus Schafhalter, Management Consultant @ Sunogos

Many builders attending the National Green Building Conference stated that they have been able to sell sustainably built homes considerably faster than the traditionally built new homes that have been languishing in today’s tough market. Especially energy efficiency remains the feature most important to consumers interested in green buildings.

Good news is also that the price gap between green and standard housing is closing, helped along by tax and other incentives.

One of the problems builders have is to get the green features appraised correctly. If appraisers do not factor in the value of green features, the loan a potential buyer can get will be lower and maybe not sufficient to buy the house. And this in spite the savings in monthly expenditures, which means that borrowers are able to pay somewhat higher mortgage payments instead of spending the money on higher utility bills.

Does building green pay off? Research is still in its infancy, but there are numbers cited that each Dollar in annual energy savings adds $20 to the value of a house.

If this holds true, then we have another example where doing the right thing for our environment is also the right thing for our pocket books.

Claus Schafhalter, Management Consultant @ Sunogos

I am still concerned about what’s going on with the oil spill in the Gulf of Mexico. Previous estimates were that 800,000l oil spill into the sea every day. Some scientists come to the conclusion that it is more likely to be 10 times more! It seems to be consensus that right now nobody knows exactly how much oils streams into the Gulf.

This is what  BP Chief Operating Officer Doug Suttles had to say:

“This data is not easy to capture,” Suttles said. “We actually have to assign some of our technicians to gather that data.”

Yes, clearly someone has to look at this. Does it matter how much oil is leaked?

Well, you can’t control what you can’t measure. This begs the following question:  If BP cannot measure the spill, how do they think they will be able to stop the spill?

Claus Schafhalter, Management Consultant @ Sunogos