July 21, 2010

Google Makes Direct Purchase of Wind Energy in its Effort to Become Carbon Neutral

On July 20, 2010, through its official blog, Google announced it “just completed a substantial 20-year green Power Purchase Agreement that allows us to take responsibility for our footprint and foster true growth in the renewable energy sector. On July 30 we will begin purchasing the clean energy from 114 megawatts of wind generation at the NextEra Energy Resources Story County II facility in Iowa at a predetermined rate for 20 years.” This deal is the first by Google Energy LLC, an entity formed in December 2009 that allows Google to procure large volumes of renewable energy by participating in the wholesale market. This is a significant step in the Google’s effort to voluntarily become carbon neutral. (Photo: Google)

In explaining the complex deal, Google says, “Buying renewable energy directly from the developer impacts the development of renewable energy projects in ways that are more meaningful than the purchase of Renewable Energy Certificates (RECs) from third parties. RECs allow energy consumers to identify and track power made from eligible sources of renewable energy. They have value and are typically bought and sold independently of the electricity from which they are generated.”

Specifically to this deal, Google is purchasing renewable energy directly from the wind farm. Since they cannot use this energy directly, they will resell “it back to the grid in the regional spot market – but retiring the RECs associated with the power,” according to Mountain View, California-based company. “By obtaining RECs through the purchase of green power, our deal has a greater impact on the renewable industry than simply buying ‘naked’ RECs from third parties; our long-term commitment directly frees up capital for the developer to build more wind projects.” This deal will allow Google to obtain enough power to supply several data centers.

It will be interesting to see how successful Google will be in achieving their goal of becoming carbon neutral. This could be a model for other tech companies that use large amounts of power to run their data centers. Is this a sustainable model for Google? What methods are other companies using to reduce their carbon footprint?

July 14, 2010

Manufacturing Ethical Clothing in Africa

PRI’s “The World” produced a report about a fair-trade clothing factory is the West African country of Liberia, which is recovering from a 14 year civil war. With an estimated unemployment rate to be as high as 80 percent, there is a great for job growth should Liberia maintain peace in the long-term. The World’s Jason Margolis visited a sewing factory in Liberia’s capital of Monrovia that is making t-shirts bound for the United States. With a high unemployment rate, it is easy to take advantage of people by employing them in sweatshops with working hours beyond reasonable limits and paying low wages. (Photo: PRI)

Chid Liberty, who owns the t-shirt factory, was born in Liberia, but his family fled to the United States after a military coup in 1980. With Liberia’s civil war over, Mr. Liberty “decided he wanted to return to his native country and help it rebuild,” explains Mr. Margolis. “Two years ago, Mr. Liberty decided it was finally safe to return. And when he started his apparel company, he was determined to make it good for the workers. He says he’ll take no profits from the Monrovia sewing project. He earns his living through a trading business back in the States. Liberty says all future earnings in Monrovia will be put into a fund.” Mr. Liberty says that “these women actually decide where that money goes in terms of building schools, roads, health clinics in their communities.”

There is value in placing a fair trade label on these t-shirts, which makes good business sense. Most of the women being trained at the factory used to be tailors. “But like Eliza Jones, they left the freedom of their shops for the shackles of 9 to 5 employment,” Mr. Margolis reports. “Now she gets paid every month, $100. That’s $30 dollars more than an average civil servant makes in Liberia. The women also get medical insurance and a monthly bag of rice.”

In order for Mr. Liberty’s factory to have the “fair trade” designation, it must comply with 90 standards prescribed by TransFair USA, a 501(c)(3) nonprofit organization based in Oakland, California. TransFair USA’s standards address child labor, forced labor, health and safety, working hours, and wages. According to its website, TransFair USA is one of twenty members of Fairtrade Labelling Organizations International (FLO), and the only third-party certifier of Fair Trade products in the United States. They audit transactions between US companies offering Fair Trade Certified™ products and the international suppliers from whom they source, in order to guarantee that the farmers and farm workers behind Fair Trade Certified goods were paid a fair, above-market price. In addition, annual inspections conducted by FLO ensure that strict socioeconomic development criteria are being met using increased Fair Trade revenues. Regarding Mr. Liberty’s factory, a full West African supply chain is utilized where the cotton is grown in Mali and Burkina Faso, it is shipped to Morocco where it is spun into yarn and fabric, and then sewn in Liberia.

The challenge in manufacturing or growing fair trade products is that meeting the standards often translates to higher costs in producing the product. These costs are almost always passed along to consumers and while many consumers would pay more for a fair trade product, their purchasing habits may not represent their standards during tough economic times. TransFair USA’s founder and president Paul Rice says that people were skeptical when he began his organization a decade ago selling fair trade bananas and coffee. Mr. Rice notes that grocery stores like Whole Foods has created a niche providing fair trade products to their consumers who are willing to pay a higher price and this concept has expanded to other retailers not typically known for selling fair trade products. “But who thought that fair trade would work in Dunkin Donuts and Walmart? Well lo and behold, Dunkin Donuts, Walmart and bunch of others have put fair trade products out there. And they’re selling very, very well.”

I would like to hear from you: Are you willing to pay a high price for a fair trade product? Has the economic recession changed your purchasing habits for fair trade products?

July 6, 2010

Doing Business in a Poor South African Neighborhood

PBS Newshour aired a segment on July 5, 2010 about the efforts of a South African company, Dabba Telecom, which is selling mobile phone and Internet services in one of Johannesburg’s poor neighborhoods. Dabba’s Rael Lissoos says less than one percent of households in South Africa can afford landlines. Given the high cost, people are forced to use prepaid cell phones at rates three times what Americans pay for a similar service, even though South African earn significantly less. Moreover, as explained by Newshour’s Fred de Sam Lazaro, “Lissoos says the huge fees to connect or terminate calls to even local phone networks hurt South Africa’s competitiveness against countries with much lower telecom rates, like India and China.”

Beyond becoming more competitive with other emerging or developing nations, broadening access to cheaper mobile and Internet services helps bridge the digital divide that prevents people from gaining the skills required to compete in a global economy. In addition, companies are formed and jobs created that help stimulate the economy for individuals and entire communities including those living in poverty. The news segment highlights a South African entrepreneur, Collins Moyo, who owns two Internet cafes. Mr. Moyo claims that without Dabba’s lower connection rates, he would have no profit. “If, say, I can pay 10 rand to telecom, maybe Dabba, I can pay two rand, so I’m saving eight rands.” He says the 80 percent savings is allowing him to expand to a third store.

The most remarkable point of the story is the fact the private sector, not the government, is increasing the Internet footprint to an underserved population. For developing countries like South Africa, people must have regular access to modern information and communication technology devices and services. Efforts like Dabba Telecom should be replicated in other developing countries. You can watch the Newshour segment by clicking on the link below: