Cheap Power = Prosperity

Countries like Germany and Denmark have pulled back on wind—why?

They’ve pulled back on renewables in general because they have come to understand the incredibly high cost. Since 2000, Germany spent roughly $100 billion subsidizing renewable energy, and what are the Germans doing now? They’re going to close their nuclear plants because the Green Party in Germany is so powerful, and they are going to replace them with lignite-fired—low-rank coal-fired—power plants. This is their CO2 strategy? This is how they’re going to save the climate? Makes no sense whatsoever. And further, when you talk about competitiveness, the biggest industries in Germany are going to the German government saying, “We need a rollback on this Energiewende project—that’s the name for their renewables effort—because it’s simply pricing us out of the market.”

Industry will flee Germany if this continues. BASF, the biggest chemical maker in the world, recently said that moving all of their operations from Germany to the U.S. would save on the order of $700 million a year in energy costs. So, industry gets it.What do you make of one of the great buzzwords in contemporary business: sustainability? It’s one of these squishy words frequently used by marketing people, particularly by European companies that can mean anything you want. I’ve never seen a definition. In fact, I know [Whole Foods CEO] John Mackey was invited to speak on sustainable business practices somewhere, and he responded, “When you send me a definition for ‘sustainable,’ I’ll give you an answer on my giving a speech.” Of course, he never heard back. On one level, it’s a buzzword that is devoid of meaning, but which has no value in practice. However, there is also an insidious anti-growth side—anti-economy, anti-jobs. For example, I received an email the other day from the Environmental Law Institution (ELAW), which is trying to block a coal-fired power plant in India because building a power plant there would destroy this fishing village. Think about it. A wealthy environmental interest group in the West wants to prevent development in India because it is concerned about climate change. So they want these fishermen to stay poor and live in their huts because it’s cute? This is fundamentally disgusting.

What actions should business leaders take from the ideas in your book?

It’s up to business leaders to survey their own businesses and determine if their processes are smaller, faster, lighter, denser, cheaper. If so, it should be positive for them and their customers because theyare doing more with less. That’s what we humans have been trying to do since we started walking upright. Getting from here to there faster. Making it smaller, making it denser. This is our nature. And a lot of this palaver is a distraction. If it ain’t profitable, it ain’t sustainable.