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VII
Networks, Club Goods, and Partnerships for Sustainability: The Green Power Market Development Group

Liliana B. Andonova

Colby College

ABSTRACT

The Green Power Market Development Group (GPMDG) was launched in 2000 by the World Resources Institute (WRI), a non-profit environmental organization, in cooperation with ten U.S. corporations—Alcoa Inc., Cargill Dow, LLC; Delphi Corporation, DuPont, General Motors, IBM, Interface, Johnson & Johnson, Kinko’s, Inc., and Pitney Bowes. The partnership seeks to engage major commercial consumers of energy in the development of green power markets. It has been established to provide a specific good: “1,000 megawatts of new, cost-competitive green power by 2010 in the U.S.” The concept of “green power” is defined by GPMDG as “both renewable and clean energy sources that are commonly accepted as having a relatively low impact on human, animal, and ecosystem health.” The membership of the original group, GPMDG-US, grew to 15 companies by 2007. In 2005, a sister partnership GPMDG-EU was launched with 14 EU companies as partners. In February 2008, a new initiative GPMDG-California was announced with 12 corporate partners.

This particular type of partnership network, involving non-state actors from different sectors, supports sustainability by providing first and foremost a set of sustainability “club goods” for its members. The club goods provided are research, knowledge, technology-specific information, collective learning; support for members’ environmental strategies and public relations. These “club goods” also support broader societal and policy objectives, however, namely increasing the share of renewable energy in commercial consumption as a means to addressing global climate change



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VII Networks, Club Goods, and Partnerships for Sustainability: The Green Power Market Development Group Liliana B. Andonoa Colby College ABSTRACT The Green Power Market Development Group (GPMDG) was launched in 2000 by the World Resources Institute (WRI), a non-profit environ- mental organization, in cooperation with ten U.S. corporations—Alcoa Inc., Cargill Dow, LLC; Delphi Corporation, DuPont, General Motors, IBM, Interface, Johnson & Johnson, Kinko’s, Inc., and Pitney Bowes. The partnership seeks to engage major commercial consumers of energy in the development of green power markets. It has been established to provide a specific good: “1,000 megawatts of new, cost-competitive green power by 2010 in the U.S.” The concept of “green power” is defined by GPMDG as “both renewable and clean energy sources that are commonly accepted as having a relatively low impact on human, animal, and ecosystem health.” The membership of the original group, GPMDG-US, grew to 15 companies by 2007. In 2005, a sister partnership GPMDG-EU was launched with 14 EU companies as partners. In February 2008, a new initiative GPMDG- California was announced with 12 corporate partners. This particular type of partnership network, involving non-state actors from different sectors, supports sustainability by providing first and fore- most a set of sustainability “club goods” for its members. The club goods provided are research, knowledge, technology-specific information, collec- tive learning; support for members’ environmental strategies and public relations. These “club goods” also support broader societal and policy objectives, however, namely increasing the share of renewable energy in commercial consumption as a means to addressing global climate change 65

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66 Summary: Enhancing the Effectieness of Sustainability Parnerships and other environmental externalities associated with the burning of fos- sil fuels. GPMDG was overall successful in making substantial progress towards the sustainability goals it set for its members. It is also highly valued by members. Several key factors contributed to the successful imple- mentation of the partnership. These can be summarized as follows. Incentives to partner: The partnership was designed by its convening organization, the WRI, so as to engage companies which had already dem- onstrated interest in environmental leadership and sustainable energy. This facilitated the organization of a self-enforcement initiative and minimized the reputation risk that WRI as an environmental organization might have incurred by collaborating with large corporations. Only one of the original GPMDG members had to leave the partnership due to insufficient commit- ment to green power development. The specific quantitative target of the partnerships was also selected by the members themselves, ensuring owner- ship of and commitment to the process. Organization and Governance: GPMDG was carefully structured with a view to its functional objectives. The adoption of a measurable sustainabil- ity target safeguarded its environmental integrity. Membership is kept small to facilitate more productive learning and open sharing of information. To this end, partners sign an information non-disclosure agreement and new members are only admitted with unanimous approval. Only companies which are not direct competitors can participate. WRI staff maintains one-to-one contact with member companies, tailoring technology research to their specific needs. Through quarterly annual meetings (held 3 times a year since 2008), partners showcase some of the technologies implemented and share experience and knowledge on advantages and hurdles of tech- nology options and their implementation. Since close to 80-90 percent of the membership attends each meeting, there is no formal governance body such as an Executive Board or Executive Committee. Decision with respect to pursuing (or not) a specific green power project are managed internally by the member companies. Implementation and Outcomes: In the case of GPMDG, contrary to many partnerships, it is relatively unproblematic to assess implementa- tion. As of March 2008, the 15 GPMDG-US companies have purchased or implemented 733.5 MW toward the 1000 MW objective, indicating that there is a high likelihood that the group would achieve its target of 1,000MW of green power by 2010. Another tangible outcome of the part- nership is the demonstration of a wide array of green energy technologies. Of the 733.5MW of green energy developed, 471.8 MW was purchased in the form of wind Renewable Energy Certificates (RECs), 31 MW from biomass RECs, and 24.4MW from landfill gas RECs. In addition, the group has facilitated the development of 34.8 MW of wind power, 72.8 MW landfill gas and biomass based energy, 44.5MW of low impact hydro,

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6 The Green Power Marketing Group 36.3MW of fuel cells, and 18.4 MW solar and other power. While it is very plausible that GPMDG companies would have pursued green energy options in the absence of a partnership effort, it is also possible to make the case that GPMDG has helped amplify the interest of these companies, and has influenced the timing and scale of green power development within the group. GPMDG has had a broader impact on the framing of debates related to energy security and climate change in the corporate sector and in U.S. public policy. It has contributed to the diffusion of knowledge and best practice within and beyond the original group, as the extension of the initiative to Europe and California demonstrates. Assessment: The GPMDG case illuminates some important advantages of partnerships as learning and implementation networks associated with their non-hierarchical structure, voluntary self-interest membership, an easy exit option, and leveraging of interest and information. Partnerships that provide specific “club goods” for their members as in the case of GPMDG have particularly high potential to facilitate learning and action for sustain- ability through self interest. The study also shows that assuring the internal and external credibility and legitimacy of the process remains critical, as with other institutions for information assessment and diffusion. Understanding the anatomy of GPMDG also raises questions about potential limitations of the club-like partnership approach to sustainability. One potential risk even for partnerships that are highly successful in achiev- ing their immediate goals is that they could skew purposefully or involun- tarily the broader policy agenda toward the particular sphere of interest of members. GPMDG, for example, has supported a turn in the U.S. energy and sustainability policy discourse in favor of three distinctive instruments: green power (not just any alternative to fossil fuels); RECs as the new cur- rency for expanding renewable energy supply; and tax support for renew- able energy developers. This set of technology and policy options can have the consequence of crowding out equally or more efficient approaches to reducing GHG emissions such as full cost pricing of fossil fuels, carbon regulations, or technologies for carbon sequestration. Another potential pitfall of club-like networks is their limited external and public accountability. “Private” networks cannot be obliged to provide detailed information on all aspects of their operations, particularly if such information is considered sensitive. In GPMDG, this dilemma was allevi- ated to some extent thanks to the high capacity and interest of its lead organization, WRI, to communicate in a summary manner and in multiple formats the progress and achievements of the partnership. It was also facili- tated by the fact that there were achievements to be reported. Over time, partnership initiatives should also be prepared to report not only success but also failures, as well as budgetary and governance matters, which are critical inputs to strengthening the transparency and public legitimacy of the partnership approach.

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