In 2008, Thomas Friedman laid out a future scenario in his book, “Hot, Flat, and Crowded: Why We Need a Green Revolution and How It Can Renew America.” The book was ahead of its time, and I think we are on the cusp of tipping into the future that Freidman wrote about.
Today in 2022, the current situation feels as though we have forces at play that are different than what Friedman fully predicted but nonetheless, the outcomes are the same. Peak oil may or may not ever happen. We hear differing estimates of proven reserves all the time and it seems oil companies can keep producing ever more.
Energy costs have remained constant over the past 30 years. Natural gas is so cheap that oil producers flare it versus piping for use. When drilling a new natural gas well, drillers will flare the gas to evaporate until the pipeline is installed as they are only paid once the well is drilled. Any immediate future with a renewable energy and energy storage mix will have to include some sort of fossil fuel generation for electricity. There are only a few days a year when large dips in both solar and wind generation are too diminished to meet demand. Small gas turbines that are highly efficient could cover these gaps of natural energy production while significantly reducing the carbon on the electrical grid.
The electrical grid is owned by the local energy producer and in many instances, is not interconnected—which makes moving electricity more difficult. California will probably see the state take over the grid with PG&E maintaining the infrastructure. Reference: PG&E turns down San Francisco’s $2.5 billion offer to buy assets
In the future we see smaller companies tie into the grid with their energy producing technologies. The grid will then distribute the energy and customers will have a choice of where to buy their energy. The grid will be state or federally owned as it will be deemed a state or national asset. A carbon tax, while still politically unpopular, will in time be more prevalent at the state level and we will see changes coming at the national level.
Electric cars are on the forefront of consumer demand. We will soon have more batteries sitting around, ready to engage in the grid for real-time energy production, or charging as suggested by Freidman.
As we look to the future in the built environment, we can no longer look at our building’s energy consumption as something that has to have an immediate or short-term ROI. In many cases, such as with fuel costs, there is no ROI. Natural gas is the cheapest fuel, and you should burn it as inefficiently as possible when making decisions solely on ROI.
Focusing on ROI is no longer the sole reason to make a decision. Every business and building owner will need to consider the impact of their business on the environment.
Investors and consumers alike are going to require leadership to make decisions consciously on environmental stewardship. Business owner decisions will need to be framed upon a carbon calculation. These factors will give a true return on investment based upon a carbon impact.
In the near future, buildings as an asset class will need to be energy producers and not energy consumers. As we see radical shifts in energy makeup and consumer expectations, the costs of operation and ownership will need to be isolated. Abandoning gas as our fuel for heating and converting solely to electric heating—by using heat pumps for instance—will allow for the energy consumed to be produced with renewables so that, in the future, you will be able to select your energy producer or produce on site.
Profit is still a driver of business success and any decision that would put a business in financial stress should not be undertaken. Shaving a few profit points immediately—while implementing energy strategies—will ultimately have multiple times return on your capital expenditure. Leadership and environmental stewardship now go hand in hand.