Execs discuss incentives for new energy

After Fuqua student Willem Fadrhon wrote a prize-winning essay on the future of energy, three energy executives gathered at the University Thursday evening to discuss the future of their industry.

Much of the discussion revolved around finding economic incentives to promote sustainable energy. Michael Elliott, the event’s moderator and an editor for Time and Fortune, began the discussion by asking how the industry could encourage consumers to “play the game” by being more energy efficient and taking advantage of new technologies.

Chairman and Chief Executive Officer of Cree Charles Swoboda said people would have more incentive to develop energy-efficient habits if they could see a direct and immediate benefit in doing so. He added that although people understand the rationale behind investing today in more expensive light bulbs that will last longer and save them money in the long run, many will still often choose the cheaper option.

“We don’t do it because today I think we’ve wasted too much time making it an argument that’s social and environmental,” he said. “The only thing that matters on a consistent basis is economics.”

He explained that a successful energy efficiency initiative could pay for itself if innovators are given proper economic incentives. Selecting which sorts of technologies to develop is an important decision, however, because some alternative energies may not ultimately pay off.

President of the Alliance to Save Energy Kateri Callahan said one of the industry’s major problems is inadequate consumer awareness.

“We’ve got work to do [on] educating consumers, educating businesses, educating policy makers,” she said.

Callahan cited the recent implementation of energy efficient practices in Salina, Kansas, a traditionally conservative town, as an example of successful consumer education. The town is participating in a competition sponsored by the Climate and Energy Project.

“They were [saving energy] for thrift reasons, for patriotic reasons... [and] because it was a competition with other areas,” she said.

But in most instances, there is currently little economic benefit to adopting energy-efficient habits, Callahan, Swoboda and President of Shell WindEnergy Richard Williams agreed.

“The price of electricity in your home is so cheap... you’ve got no incentive to change,” Callahan said.

But beyond raising consumer awareness, the panelists disagreed about how best to go about encouraging and enforcing energy-efficient practices. Williams said the current industry is built on regulated money and that increased capital would be required to incentivize investing in alternative energy.

“Let’s create goals that drive people to go solve them and find the entrepreneurs who solve them,” Swoboda said. “Trading things is nice, but if you really want to move the game forward let’s solve the base problem—force the fundamental change.”

He added that ineffective public policy was also a root of the problem.

“We need a policy that drives market behavior to solve problems,” he said. “We could simply raise those standards and we’ll see... businesses pop up to solve those problems.”

Callahan said a combination of better policies and innovative technologies would be an ideal solution and added that keeping old and inefficient products on the market risked confusing consumers.

The panelists also discussed the benefits of outreach programs that encourage younger students to consider careers in science and engineering. Swoboda and Williams said they both work with middle school children and Callahan said many of her company’s interns went on to take jobs in the energy sector.

Throughout the discussion, audience members were asked to answer multiple choice questions about the status and future of the industry on an electronic polling device. One question asked the audience to predict the price of gas in 15 years, and 46 percent responded “six dollars or more.” The panelists were divided on this matter.

“This is only 15 years,” Williams said. “It’s hard to make a change that fast.”

Swoboda disagreed, citing the unexpected success of technologies such as the iPod as evidence that rapid technological change renders such predictions unreliable.


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