01 Sep 2011
From grass-fueled power plants to carbon-negative cement, HBS alumni are working to put the “green” in green business.by Julia Hanna;Sarah AuerbachTopics:
Issue Focus: Business and the Environment
What does it mean to be green? It’s a trendy color these days, but over the years HBS alumni have demonstrated a long-standing commitment to environmental concerns in business, nonprofit organizations, and public policy. Erling Lorentzen (MBA ’48) was a prominent figure at the 1992 Earth Summit in Rio de Janeiro and for decades led a number of sustainable development initiatives as chairman of Brazil’s giant pulp and paper producer Aracruz Celulose S.A.; John Doerr (MBA ’76) and his partners at Kleiner Perkins Caufield & Byers have invested over $200 million in green technologies; Mark Tercek (MBA ’84) serves as president and CEO of The Nature Conservancy; and Carter Roberts (MBA ’88) is president and CEO of the World Wildlife Fund. Meanwhile, Hank Paulson (MBA ’70) and Hansjörg Wyss (MBA ’65) have focused their considerable philanthropic energies on land and wildlife conservation efforts around the world.
It wasn’t until 2009, however, that the HBS Green Business Alumni Association was cofounded by Erika Diamond and Annie Fishman (both MBA ’07). Diamond, who serves as the group’s president, grew up near the beach on New York’s Long Island and became interested in the ocean and in environmental issues as a teenager. After college and a master’s degree from Yale’s School of Forestry and Environmental Studies, she worked with a conservation and development organization in Belize to help revitalize the region’s ecotourism industry.
“What was missing in that environment were business skills,” recalls Diamond, whose HBS admissions interview (conducted by phone from the Belize town of Punta Gorda) was interrupted by a balky connection and a melee of noisy chickens and roosters running through her yard.
Interested in a “green” career post-HBS, she found it difficult to locate the alumni and networking opportunities that would provide a leg up on the job hunt, so she joined forces with Fishman to create an alumni organization to network, exchange ideas, and build partnerships. “The green economy has been moving at an incredible pace over the last five years,” says Diamond, who works as VP of business development at start-up ThinkEco. “We thought that if we could get some of our alumni leaders together, we could really move the needle in this space.” Alumni in the profiles that follow (a representative sample of the School’s green business leaders) are doing just that.
— The HBS Green Business Alumni Association welcomes new members and volunteers. For more information, visit www.hbsgreen.org.
A Growth Business
Native to Africa, elephant grass isn’t picky. If it has sunshine, warmth, and some moisture, the tall, cane-like species of grass that serves as a source of forage for livestock and wildlife will grow. And grow. And grow.
A more recent discovery is that elephant grass can feed power plants as well as animals. Cut, dried, and burned, it generates 25 times as much energy as the fossil fuel used to produce it, thanks in part to a remarkable annual average yield of 30 to 40 tons of dry biomass per hectare (just under 2.5 acres). (The energy balance ratio of corn ethanol is around 1 to 1, while sugarcane ethanol stands at about 8 to 1.)
None of this was lost on Brazilian native Ana Maria Diniz (OPM 36, 2007). Formerly a high-level executive at retail giant Companhia Brasileira de Distribuição (where she continues to serve as a board member), Diniz had already launched a consulting business but was ready to move on. “I’m very results-oriented, very practical,” she says. “I wanted to invest in something that was sustainable in the new economy and offered a good ROI.” Diniz began to brainstorm with Paulo Puterman, a friend studying to get his PhD in biotechnology at the University of São Paulo who also happened to be focused on the highly efficient elephant grass/electricity equation. “After a year of talking we understood that the market was there,” she says, noting that Brazil offers incentives in the form of discounted transmission rates for biomass-generated electricity. (Brazil is almost entirely independent of fossil fuels, relying primarily on hydroelectric energy for its grid electricity and sugarcane ethanol to fuel its cars.)
Located in the northeastern state of Bahia, the $43 million thermoelectric plant built as a result of those initial talks has a year-round capacity of 30 megawatts (enough to power 200,000 Brazilian homes), generated entirely by a dedicated 4,000-hectare (9,884-acre) plantation of elephant grass. Diniz hopes that the plant will be the first of many built by Sykué (“See-kway”) Bioenergia, as the new company is known. Recognizing the resources that will require, Sykué is negotiating a partnership with a larger energy player to realize those ambitions.
The Wind in the Wires
Clean Line Energy Partners
“We’re kind of like the express line,” says Michael Skelly (MBA ’91). That’s how he likes to explain Houston-based Clean Line Energy Partners’ mission of developing high-voltage transmission lines that carry wind power hundreds or even thousands of miles. Unlike the industry-standard AC power grid — the “local” — Clean Line’s system uses direct-current technology, which transports energy long distances with less energy loss.
Wind power is cheap to produce — as low as 5 cents per kilowatt-hour with tax credits — but difficult to transport, since the best locations to generate it are far from the densely populated areas that need it. Wind-generated electricity traveling from western Kansas to St. Louis, for example, loses up to 15 percent of its energy en route. The Grain Belt Express, one of Clean Line’s projects, could transport power the same distance with only a 5 percent loss.
One of Skelly’s biggest challenges is the red tape involved in convincing residents and various levels of government that more power lines are a good thing. “We think the way to get this done is by creating as many wins for as many people as we possibly can,” he says. To that end, Clean Line has committed to buying from suppliers located near the lines and to building converter stations, the pickup points for the energy, in order to create jobs locally.
Window on a Greener World
Rao Mulpuri (AMP 171, 2006) loves talking about Soladigm glass. You can hear it in his voice. Dynamic glass, he says, is ideal for the task of making buildings more energy efficient. That’s because unlike commonly used low-emissivity insulated glass, dynamic glass changes tint on demand — so you can “instruct” it to block or allow solar heat and light based on outside conditions.
Mulpuri’s delight in this technology makes perfect sense. He’s a materials scientist with degrees from universities in both India and the United States. But he’s also a business-builder. Most recently, he was president of Novellus Systems Japan and VP and general manager of the Integrated Metals business unit. “The biggest thing that gets me excited about Soladigm is the scale,” remarks Mulpuri, noting the product’s significant impact and global market potential.
Soladigm glass can reduce total HVAC energy usage by 25 percent and peak energy usage by 30 percent. In an average (20-story, 400,000-square-foot) office building, that translates to a savings of about $100,000 a year. Because lower peak usage means a smaller heating and cooling system, it also shaves about $1 million off the cost of HVAC installation. That savings, says Mulpuri, cancels out any price premium on Soladigm’s product over “ordinary” glass.
But the numbers don’t tell the whole story, he continues. Soladigm eliminates the need for window treatments, allowing for better views and more natural light. That means happier tenants who are willing to pay more for the space.
Soladigm, which has a pilot manufacturing facility in California, is in the process of building a high-volume manufacturing facility in Mississippi. Mulpuri is pleased with what he’s been able to accomplish so far, but doesn’t want all the credit. Just about the only topic that lights up his voice more surely than dynamic glass technology is the team he’s hired — including CFO Mike Armsby (MBA ’97) — to make the technology a commercial reality.
The Science of Cement
As an industry, cement isn’t exactly a bellwether of innovation. “On the surface, it’s a bit dull, dusty, and gray,” concedes Stuart Evans (MBA ’73). As executive chairman of Novacem, however, Evans has a more colorful story to tell. “If you had gone to a cement industry conference 15 years ago and asked if anyone was ever going to invent a replacement for Portland cement, the room would have fallen about laughing,” he says, referring to the most commonly used building material in the world. The only problem is that Portland cement produces approximately 800 kilograms of carbon per metric ton of cement — half from the energy required to heat the kilns to a blistering 1,500 degrees centigrade, the other half from carbon burned out of the limestone in the production process.
So Evans is understandably excited about Novacem, a carbon-negative cement based on an invention out of Imperial College London that uses magnesium silicates as its base. The silicates don’t contain carbon, and are heated at half the temperature of limestone, using biofuels; in addition, carbon is absorbed through the production process. The company’s innovation has already received a slew of awards and accolades from the World Economic Forum, the Wall Street Journal, and MIT’s Technology Review.
“This is a $170 billion market screaming for a fundamental innovation,” says Evans. “It’s a fantastic opportunity.” Most recently CEO of the tech company Plastic Logic, Evans was familiar with the process of taking an innovation from academia to the marketplace when he joined the new venture in 2008, even if the cement industry itself was a departure for him.
That turn, taken in the later phase of his career, has resulted in an eastward-looking orientation. China represents roughly half of the cement market, Evans points out, followed by India, while the United States accounts for only 4 percent. “China’s most recent five-year plan includes some serious commitments to reducing carbon,” he notes. “I think its going to be, as in so many other fields, a real leader.”
In addition to the science of Novacem, Evans is completely engaged by the strategic aspects of a high-stakes, capital-intensive industry. “A cement works is expensive, lasts a long time, and has to be built in just the right place, or you’re completely screwed,” he says, citing the costs of transporting the product. Evans will have the opportunity to help make that all-important decision as Novacem works in partnership with building materials giant Lafarge over the next five years to develop an industrial pilot plant with an annual 25,000-ton capacity. For now, Novacem is produced at a pilot laboratory plant in central London. It’s the first such cement works in the city since Roman times — further evidence that everything old can be new again.
The advertising, marketing, and strategy roles Mei Shibata (MBA ’03) has held at large corporations like Citigroup and Pfizer aren’t the most obvious path to co-founding ThinkEco, the New York−based start-up she launched in 2008 with husband Jun Shimada. ThinkEco produces the modlet, which plugs into any standard outlet. Users then plug in devices and use their web browser to wirelessly manage power consumption by shutting down power at specified times, since plugged-in devices draw power in shut-off or “standby” mode.
“The concept was so obvious that we decided to take the risk and do it,” Shibata says. The company had a beta prototype ready to go in 15 months; after 15 more months of fine-tuning the user interface and obtaining regulatory approval, the product was ready to launch. This October, the modlet will be honored for its innovation by the nonprofit Alliance to Save Energy.
While ThinkEco targets businesses as its primary customers, Shibata (to the right, with VP of business development Erika Diamond, MBA ’07) believes their product will gain credibility and appeal with employees. “Ultimately, it’s an easy-to-use solution that saves money and energy,” she says, noting that the modlet usually pays for itself in six to nine months. “We’d love consumers to have it in their homes, too.”
Class of MBA 1948
Class of MBA 1984, Section B
Class of AMP 40
Class of MBA 1965, Section E
Class of MBA 2007, Section A
Class of MBA 2007, Section G
Class of OPM 36
Class of MBA 1991, Section A
Class of AMP 171
Class of MBA 1997, Section E
Class of MBA 1973, Section F