Published in The Guardian’s Sustainable Business section, September 24, 2014
With international cash reserves already in the bank, even one big US company could singlehandedly improve 1 billion lives, deal a blow to global inequality and slash carbon emissions – while making money
By Daniel M Kammen and Felix Kramer
With international cash reserves already in the bank, even one big US company could singlehandedly improve 1 billion lives, deal a blow to global inequality and slash carbon emissions – while making money
Most Americans take turning lights on for granted. But one in five people in the world still can’t plug anything in. The World Bank estimates 1.2 billion people lack electricity all together – resulting in millions of premature deaths yearly – and many more have undependable or unaffordable electricity service.
Meanwhile, solar photovoltaic cells, batteries and LED lights have grown so cheap and durable that an “off-grid” household – spending less than it would dole out on kerosene over two years – can harvest enough electricity to power lights and charge a cellphone for decades.
In Africa, for example, companies such as Azuri Technologies and M-KOPA Solar already sell “pay-as-you-go” electrification systems for as little as $1.50 per month. At $200 each for these systems, a total of $50bn in loans – over several years – would be enough to finance the electricity to light up dark homes in Africa and India.
This would immediately improve lives in the world’s poorest households and substitute renewable energy for some of the dirtiest fossil fuels. But progress so far has been slow and small. In spite of some big government goals – such as US government’s Beyond the Grid initiative, which plans to invest $1bn to get power to 20 million people in Africa in five years, and India’s goal, missed in 2012, to get electricity to every household by 2019 – experts figure broad electrification will take decades.
All this adds up to an enormous opportunity for US multinationals to make history with bold game-changing investments that will bring a billion people into the global economy – and to profit in the process.
Right now, US companies are sitting on international profits 200 times greater than the $50bn needed for these loans. But bringing home more than $2tn in profit would cost billions in corporate taxes. So companies wait, find ways to park their funds overseas and hope for an unlikely tax holiday as their “problem” grows. Just last year, these idle overseas amounts grew 11.8%.
Some companies have enough in overseas billions – take Apple’s $138bn, GE’s $110bn, Microsoft’s $93bn, IBM’s $52bn, Cisco’s $48bn and Google’s $48bn – that just one of them could take on the whole job singlehandedly. Another lender could jump in to finance bigger systems for households or villages, or to fund renewable replacements for the sooty biomass that 2.5 billion people now use for heating and cooking (resulting in approximately 1.5 million deaths from fumes and smoke annually).
A corporate pioneer could create a giant working capital fund, move quickly with pilot projects and experienced local partners, then get big fast with savvy international intermediaries. Sure, there are investment obstacles today. But there are also smart people – CEOs, CFOs, sustainability teams and others – who could certainly identify and hurdle these barriers for a first-mover advantage on an opportunity of this size.
Investments would be loans, and investments in promising commercial ventures, not philanthropy, and a successful program could set margins to yield competitive returns.
Unlike microfinance for individuals, working capital funds would go to companies – experienced manufacturers and vendors – that would supply the systems. With this funding, these companies could grow manufacturing, education and marketing efforts, sales and collections.
Cellphone-enabled pay-as-you-go technologies that provide validation codes when installment payments are received reduce the risk of nonpayment to the companies. And these systems stop working if they are stolen or if their electricity is diverted, further reducing the risk.
The world would applaud any company that enabled a billion people in villages and rural areas to get light and connectivity, stop spending more than $30bn a year on kerosene and other fuels and join the global economy.
This move would represent a groundbreaking, successful and profitable response – well beyond business as usual – to both inequality and climate change. It would quickly improve global living standards while slashing greenhouse gases and black carbon.
Which company will step up to put its cash to good use, take a big bite out of fossil fuels and light up the world?
Daniel M Kammen, a physicist, is the director of the University of California at Berkeley’s Renewable and Appropriate Energy Laboratory. He directed the World Bank’s renewable energy and energy efficiency programs from 2010 to 2011, and has been a contributing lead author for the UN’s Intergovernmental Panel on Climate Change for the past 15 years.
Felix Kramer is an entrepreneur, climate activist, cleantech advisor and investor. He led The California Cars Initiative’s successful 10-year campaign to get automakers to make and sell plug-in hybrid cars.