PrintJune 6, 2010
Green Tech Defined
Despite the frequent use of "Green Tech" to describe the future of the American economy, the phrase remains fuzzy...until now, that is. Green tech can be divided into three categories: Efficiency Tech, Bull Tech, and Real Tech.
Efficiency Tech
This is what most people conceive of as Green Tech. It is largely based on the principle of conservation of energy or the use of renewable resources to generate energy and consists of solar panels, LED lights, Toyata Priuses, insulation, and the like. These technologies are proven, but we are nearing the plateau of capability for the scientific principles that underlie them. In other words, each dollar spent on research to improve these items yields smaller and smaller gains.
A good example is the Toyota Prius. The 2001 Prius, widely hailed as the future car of America, received an average of 41mpg. The 2010 Prius? 50mpg. Nearly a decade of the greatest expenditure of research for "green" technologies has yielded only a 20% increase in fuel efficiency for the most popular fuel-efficient vehicle. Even 50mpg is largely unrealistic, given how test data is manipulated by manufacturers to boost congressionally mandated fuel efficiency standards. Try getting 50mpg in the traffic encountered by most corporate drones on their commutes to the cubicle. Similar situations exist for solar panels, batteries, and light bulbs.
Efficiency Tech products are also becoming a commodity -- it is a dead end for businesses looking for growth. American manufacturers specializing in the assorted paraphernalia of the "Green" market will find that their products are identical in quality to those manufactured more cheaply in Asia. As items become commodities, price becomes the most important factor, slimming profit margins and impeding growth. A similar situation happened to computer manufacturers in the last ten years. Just last week, computer-maker Dell announced that their profit margin dropped from 17.6% to 16.9% year-over-year. Forward-looking companies leave sectors as they become commodities if they can. Several years ago, IBM realized that PCs had become a commodity and offloaded its PC manufacturing business to the Chinese firm Lenovo in order to focus on the much higher profits of its software business. Thus, all those stimulus dollars we spent creating "Green" jobs by supporting efficiency-tech manufacturing in the U.S. were a short-sighted waste; anyone who believes the U.S. can manufacture commodities cheaper than China ignores the lessons of the last thirty years of economic change.
Bull Tech
Remember the local news headline where the science teacher converted his '82 Volvo wagon to run on the grease from McDonald's? The press, fellow teachers, and students swooned at how green-conscious and forward-looking the teacher was. Not surprisingly, no student asked if there were enough burger joints to power a lot of cars and, if there were, whether or not the infrastructure (e.g., gas stations) to distribute French Fry Fuel exists. Bull Tech is technology that seems visionary but whose "Green" value is illusory because the real environmental or financial costs are concealed, or the widespread adoption of the technology is impossible, or because it is financially unavailable to most Americans.
Examples of Bull Tech include the Chevy Volt, the Tesla, ethanol, and biofuels. Take for example the much-hyped electric automaker Tesla. Can you guess the average cost of a new car sold in America? $28,400. The price of an absolute, base-model, stripped-down Tesla? $50,000. This is after $7,500 tax credit from Uncle Sam, so the real cost is $57,500 plus the cost of installing a 220-volt plug in your garage. Not only are Teslas financially out of reach for the average American, but they aren't zero emissions, either. The electricity to manufacture and power them has to come from something, and guess where it most comes from? Coal-fired plants.
Just because their real "Green" value is minimal and their future is dim doesn't mean Bull Tech companies have no role in modern America. Quite the opposite is true. Their plants provide photo-ops for politicians, their stocks serve as pump-and-dump opportunities for speculators, their products serve as social ornaments for the rich, and, most recently, their popularity serves as means through which other companies can mend their reputations. Toyota, still reeling from the black eye of those sticky accelerators, has a newfound love for Tesla, in the range of a $50-million investment (a pittance for a company of Toyota's size).
Real Tech
Let me bury a common misconception about the future of Green Tech. Sorry to break your hearts, millennials, but there will be no green "Manhattan Project" in the U.S. Why? Because we lack the clarity of vision, prioritization of resources, and empowerment of leadership that only the bloodiest and most costly war in history could provide. That would be World War II, milleninals. This isn't 1943 -- it's 2010, and even with 10% unemployment, things are still pretty good from a historical standpoint. That aside, just imagine the modern regulatory headaches involved with practically everything the Manhattan Project did, from the use of eminent domain to take land from a boys' private school to the above-ground detonation of a nuke inside the lower 48. These days, it takes decades to get permission to install oversized windmills off the Massachusetts coast; keep in mind that in 1945, there was still concern among physicists that a nuclear explosion would light the atmosphere on fire and destroy the world.
The Manhattan Project teaches us something else. Just like the Manhattan Project, Real Tech will be an engineering problem rather than a theoretical problem. Physicists arrived at Los Alamos knowing that the general principles of an atomic bomb were already settled science. The biggest hurdle was obtaining purified uranium or plutonium, for which monumentally large industrial complexes were built. However, Real Tech is farther behind the initial stages of the Manhattan Project. There is no clear direction, no clear principle around which a massive industrial effort can be focused. Once this principle is established, the victor will be the one who takes advantage of each country's unique strengths and capabilities to provide a competitive product that improves people's lives.
A green job is not a machinist working on the propellers for a wind farm. It's definitely not that hot new electric car your yuppie neighbor just bought. The "Green" economy is the slow, deliberative problem-solving among a computer programmer, an electrical engineer, and an industrial engineer in a cubicle farm in California determining how their plant in China can most efficiently produce their product. That's what America does best right now.
The bad news is that Green Tech will be a long, hard slog, not a short, sexy photo-op. The good news is that the future looks more like the words on the back of my iPod -- "Designed by Apple in California. Assembled in China."
Greg Collins is a West Point graduate and Iraq War veteran. He currently resides in Seattle, Washington.
