Energy Transitions: Natural Gas

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After thinking a bit more about my post yesterday on Energy Policy and Transitions, I realized that the US may be in the middle of a transition, due to the sudden discovery of a large reserve of shale gas.

According to a New York Times story published in August 2013, “By 2020, new oil and gas production could increase the country’s economic output by 2 to 4 percent beyond what it otherwise would be, add as many as 1.7 million jobs and perhaps reduce the bill for energy imports to zero, according to a report by the McKinsey Global Institute.”

Another study found that the Cost of Natural Gas Used in Manufacturing Sector Has Fallen due primarily to the increase in availability through shale extractions.

However, the benefits of shale gas need to be balanced with the environmental risks that fracking brings. Many advocacy groups have raised concerns about air and water pollution as a result of the extraction process. Careful consideration of these potential consequences is needed in the creation of reasonable energy policy.

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Energy Policy and Transitions

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I just started reading the book The Power Surge: Energy, Opportunity, and the Battle for America’s Future by Michael Levi. From what I gather so far, he recommends that the US not focus on the “next” energy source with an eye toward transitioning from oil and gas to wind and solar energy. Rather, from his perspective an “all in” strategy is the best way forward, meaning that both new energy sources and fossil fuels be pursued simultaneously and leveraged in a way that helps the country move toward energy independence. This means developing new energy sources while seeking ways to make fossil fuels cleaner and more efficient. I’m not sure I agree with everything in the book so far, but it has me thinking about what his recommendations might mean for US energy policy.

Historically, energy policy has presented a challenge due to the artificial fluctuations in energy prices, often tied to unrest in the Middle East or the manipulation of pricing by OPEC. We have seen this play out again in recent weeks. A report published in early September found that the “primary drivers of higher crude oil prices over the past five weeks included an uptick in unplanned crude oil production outages and increased tensions in the Middle East.” As the US weighs a military intervention in Syria, energy prices appear, once again, to be in jeopardy. Most US citizens agree that moving away from dependence on oil from the Middle East is in our best interest.

As the Congressional Research Service notes, the debate around energy policy hinges on long-term vs.  short-term focus and a drive to increase supply vs. encourage conservation. Sometimes the best choices in this area are the least popular. As the report says:

An energy policy that would most effectively shield the nation and the economy from the worst effects of supply shortages would be a policy that might well deny the nation the full benefits of cheap and plentiful energy when markets are stable.

Although the book by Levi recommends developing new energy sources and pushing for cleaner fossil fuel standards, others believe that the only way forward it through transitioning to new sources. Historically, we have seen transitions in energy and technology – including the coal-powered steam engine, electricity, and petroleum use; however, projections suggests that a significant transition to new clean energy sources, such as wind or solar, would take decades in the current environment. That may be too late to prevent long term impact of global warming. As a recent article in the New York Times explains, “we have a lot of mainstream science that says if human society keeps burning fossil fuels with abandon, considerable land ice could melt and the ocean could rise as much as three feet by the year 2100.”

Considering that little has changed since the Congressional Research Service reported to Congress on Energy Policy: Historical Overview, Conceptual Framework, and Continuing Issues in 2004, the chances of a complete transition to a new form of energy seem unlikely at best. Rather, the policy of the current administration seems to parallel Levi’s, pursuing many energy sources at once.

Finding ways to balance the pursuit of multiple energy sources while encouraging meaningful change in current policies certainly raises challenges. However, some states appear to be pushing for alternative management processes. For example, California Public Utilities Commission has been encouraging power companies to increase energy storage to more efficiently manage the greater demand for energy in peak times. According to a recent TriplePundit story, California Moves Forward on Energy Storage, management of energy in this way “makes for better utilization of clean, renewable power, and, by extension, less pollution and carbon emissions.”

An important dilemma in the use of electricity as an energy source is the seasonal peaks of usage and the inefficiencies that it brings. Policies that encourage energy storage as well as clean sources for electricity generation will help work toward that balance.

I look forward to reading more of the book. I’ll share any good insights that I find.

International Public Relations Research Conference

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A few weeks ago, I attended the International Public Relations Research Conference (IPRRC) in Miami. The conference was small, but it attracted big names in the field. Check out this excellent summary of research presentations written by Tom Watson at Bournemouth University. Next year, the conference will be held March 5-8 (2014) in Miami.

Thon provides prime model for impact of volunteerism

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On Sunday, the Centre Daily Times published an article that I wrote about volunteerism and the model that Penn State’s THON event offers. The online version doesn’t include the wonderful pictures from the event that the CDT used in the print version, but the text is all here. I appreciate the opportunity to share a bit of my research.

Dennis Treacy from Smithfield Foods to speak on Sustainability at Penn State University

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Next week the Arthur W. Page Center has the honor of hosting Dennis Treacy, Executive Vice President and Chief Sustainability Officer for Smithfield Foods. Dennis has agreed to speak to students, faculty and the public about “Smithfield’s Sustainability Journey.” Dennis has been a tireless advocate for sustainability within Smithfield, and we are so pleased to have him talk with the Penn State campus community about his work.

If you wish to join us, see the details below:

Who: Dennis Treacy, Executive Vice President and Chief Sustainability Officer, Smithfield Foods.

When: Monday, March 18, 6 pm

Where: Foster Auditorium in the Paterno Library

What: Treacy will give a talk on “Smithfield’s Sustainability Journey.”

For more information, contact me at dsb177@psu.edu.

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Why aren’t companies talking about climate change strategies?

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I enjoyed reading this TriplePundit article earlier in the week, Levi’s Quietly  Announces Climate Change Strategy. It touches on a trend that I think a lot of us are observing: companies are actively addressing sustainability issues but they’re not really talking about it publicly. This is particularly true for climate change strategies. And as Mike Bellamente notes:

The unfortunate reality is that climate change remains such a high voltage issue for people that addressing it as a corporation can no longer be effectively marketed as a benefit to consumers….People don’t want to be saddled with the world’s problems when they are out buying jeans. In fact, consumer brands are more likely to risk alienating politically conservative consumers (53% of whom deny global warming) than they stand to gain in boosting sales for demonstrating leadership in corporate responsibility.

At the same time, companies are aware of the risks of climate change, and they are actively addressing them in their business strategies. As one sustainability communicator told me recently, until there is pressure from financial analysts to report on these issues, companies won’t take the risk.

This creates an interesting challenge for public relations departments that want to tell their companies’ stories, but part of the story brings too great a risk. Does the fact that companies are making a priority of sustainability and climate changes strategies obligate them to talk about it? One could argue that by not talking about it, companies are missing out on the opportunity to educate the public on the importance of these issues. And, that could explain, in part, why there is such a disconnect between business behavior and consumer behavior around global environmental issues.

The biggest challenge, of course, is the economics of sustainability. As long as green products cost more than other products, they will be considered a luxury. I appreciate a recent blog post by Robert Axelrod at Fleishman Hillard which suggests that green products be discounted. While this may raise questions among consumers about the quality of green products, it will certainly drive purchasing behavior.

Nonprofit crisis management: What we learned from Susan G. Komen Foundation

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I want to diverge a bit from sustainability to talk about an important case in nonprofit public relations. This morning I talked with a New York Times reporter about the Susan G. Komen crisis that unfolded earlier this year. As I was preparing for the interview, I was piecing together the timeline since the initial announcement by Planned Parenthood that Komen would no longer fund its cancer screening services. It is fascinating to me that after the crisis, corporate partners continued to support the organization, even increase their association with the organization, clearly indicating that Komen is a good cause marketing partner. But, the advocates and fundraisers at the local affiliates are seeing a significant drop off in funding for their Race for the Cure, a primary source of income for the local affiliates.

So, why the disparity? Why are corporate partners still onboard with the organization but local supporter are not?

Here’s what I think. No one anticipated that Komen would make a politically motivated decision with its funding (let’s set aside the debate over whether it was truly politically motivated, and let perception be reality). So it caught the public, supporters, and partners by surprise. When Komen reversed its decision, the public moved on pretty quickly, but local fundraisers, advocates, and supporters felt betrayed by the decision. Pink still sells products, because the investment is low. I can buy a pink product for the same price as another, so why not let some of the money go to a good cause. But, raising money for a charity or making a donation requires a higher level of involvement. Supporters of the local affiliates have raised hundreds of thousands of dollars for the nonprofit. Some feel that Komen’s decision revealed a political motivation, and they feel betrayed.

Add to that the unique circumstances in this crisis. The issue that Komen engaged was outside of its mission, and for some women, that issue is more critical than breast cancer research. So, while some past supporters may continue to feel good about giving to Komen to support cancer research, others feel good about NOT giving to Komen and thereby taking  a pro-choice stand. Komen has created a dilemma for some groups, forcing them to choose between two important issues. Fighting breast cancer is a cause that brings people together, but abortion is a cause that polarizes them, and Komen introduced a source of conflict into its organization when it made the ill-fated decision.

So where did Komen go wrong in its public relations? Here are five key missteps.

  • First, decision makers didn’t vet the idea broadly. Had they consulted with a PR agency (I believe Ogilvy was on retainer but was not told about the decision before it became public) they would have been advised to take a different approach to the issue. I’ve read that the board did ask senior management to project consequences that may result from the decision. Based on their research, management recommended Komen continue funding Planned Parenthood, but the board disregarded the recommendation (the issues with nonprofit boards is a topic all its own).
  • Second, they didn’t own the story when it came out. They let Planned Parenthood own it.
  • Third, they didn’t respond with full disclosure. If they had revealed their dilemma with pro-life supporters, the public may have been more receptive (it would have been most effective to talk about the dilemma publicly before the decision was made).
  • Fourth, they didn’t engage with the media and publics quickly. Instead employees issued generic statements and deleted posts from the Facebook page.
  • And, finally, they didn’t clean house quickly. The significant personnel changes that we’ve seen over the past few months should have happened right away in February.

What can we learn from the case? Nonprofits (or any organizations) must be transparent in their communication about decisions, especially highly contentious ones. The board should have known that the public would view the Planned Parenthood decision through a political lens. Either they missed it, or they misjudged it by thinking the public would be forgiving because of the good work they have done. It’s possible that they thought the story would never surface, but that, too, was naive.

The second lesson is this: engage with your stakeholders. The backlash that Komen is feeling right now comes from local supporters and fundraisers. If they had engaged with the affiliates before the decision, the outcome may have been better. I see Komen making much more effort to bring affiliates into the conversation now and even put the spotlight on the impact in local markets.

Will Komen’s reputation be completely restored? As long as abortion is a hotly debated issue, it may be difficult for the nonprofit to restore the relationship with a portion of its base. However, I see Komen trying to refocus on the outcomes of its research investments and the impact of its local affiliates, and that’s where the nonprofit needs to be focused right now. This will help restore its reputation.