Business Taking Different View of Environment : Policy: Corporate America is awakening to the importance of clean air and proper waste disposal--and recognizing the opportunities that lie ahead.
“In the old days, the hippie days, we used to have conferences and you would see a lot of beards,” recalls Clarence G. Golueke. “Now you see a lot of suits and ties.”
Golueke should know. Director of research and development for Cal Recovery Systems, a Richmond-based consulting firm, he’s a veteran of four decades at UC Berkeley, teaching and developing environmentally sound solid-waste treatment schemes. During much of that time he was affably ignored, except by those foresighted conservationist longhairs.
But environmentalism has come into its own in the 1980s and now attracts professionals in suits from engineering, law, manufacturing and marketing. With this has come a far-reaching change in the attitude of U.S. businesses, particularly as corporate leaders have pondered the industries to be spawned in the next decade by an avalanche of new environmental regulations. Some opportunities are already clearly in sight.
The fall of the Berlin Wall, for example, was just more bad news for Robert Toering.
As a citizen he was pleased. But as president of a firm that makes shell casings for naval guns and tanks, he saw a bleak future for his corner of the defense business. Toering, president of the Norris division of NI Industries, in Vernon, had watched his sales dive in three years from $240 million to an expected $105 million to $110 million in 1989.
“We’ve got to learn to make something other than bullets,” he told himself again when he heard the news from Eastern Europe. And he pressed the search for ways to expand into civilian work. He didn’t have to look very far.
One effect of current federal law is that by May, metal-plating firms lacking approved treatment facilities must truck their liquid waste out of the Los Angeles basin, at considerable expense. Toering estimates that it would take two years and $7 million to build a commercial waste-metal treatment plant from scratch.
Toering just happens to have such a facility, however, running at only 15% of capacity. When he announced that it might become available, more than 400 Southern California companies gave him a call.
Toering also hopes to make containers for high-level radioactive waste. His machinery, which forms shell casings from single sheets of metal, could produce seamless drums that he says would hold up well “sitting out in the open for 50 or 100 years while they decide whether or not to use Yucca Mountain,” the controversial proposed radiation waste dump in Nevada.
“I think every defense contractor is out there looking for non-defense business that might be appropriate for his company,” says Toering. And having the right machines may not be the only advantage that defense contractors bring to environmental manufacturing.
“We’re pretty good at dealing with the bureaucracy of the government,” he points out, “so we’re trying to find programs where that ability is an advantage.”
Hughes Aircraft also looked in the mirror for opportunities in the booming environmental business.
Hughes scientists were studying ways to reduce emissions from their own buildings when the company took their ideas to the South Coast Air Quality Management District, which is in the thick of its ambitious effort to clean up Southern California’s smog. The district agreed to help fund seven Hughes projects.
“Now we can develop the solutions faster,” says Verne Wochnick Hughes senior liaison for legislative and regulatory affairs. “And by having them join us, we are also able to share that information a lot easier.”
Other major companies see potential in the immense effort to clean up more than 1.5 million asbestos-plagued buildings around the country, 37,000 hazardous waste sites, more than 15,000 factories still discharging air pollutants and uncounted polluted ground water basins.
The big push behind these cleanups comes from federal, state and local regulations taking effect during the next decade.
Take drinking water quality. The EPA is required to list--every three years, indefinitely--25 more contaminants that must be tested for and removed if necessary. As Jon G. DeBoer, of the American Water Works Assn., confided to a meeting of water industry executives last summer, “If I had the money, I’d build a lab. I’d build a string of labs, across the country.”
Water will also likely be far more expensive at the tap, providing another economic lure for innovation. Already some U.S. homes are connected to dual water delivery systems. One pours high-quality drinking water; the other, less treated water for lawns and cars.
Another growing market is under-the-tap water filters at home. Promoted as a reassurance to consumers who are suspicious of public water, the filters are also touted as a way to keep down the cost of maintaining city water pipes, since standards in the country’s aging delivery pipes would not need to be drinking-water quality except at the tap.
“The profound change will come when water utilities get into the business of providing these units for residential, and probably commercial, use,” predicts Neil Berlant, of L.A.-based Water Research Associates. “And they’re already looking into it.”
Berlant expects water prices to double or quadruple during the next three years and the home-filter business to grow from $3.5 billion in sales to more than $10 billion.
Other laws are pushing environmental businesses forward.
Many states have enacted or are drafting statutes to control the relentless stream of municipal trash, mostly by requiring large chunks of it to be recycled. A new California law requires a reduction of 25% in the state’s municipal waste by 1995, and 50% by the year 2000, prompting a Los Angeles recycling ordinance passed this month. In all, 30 states have passed recycling laws, 10 of which are mandatory. No matter its recent round of bad publicity, recycling is about to become part of the nation’s everyday life.
“We are really going through a basic change,” says Richard Chase, a partner in Recycle 2000, a San Marcos-based consulting development company. “We’re changing from a reliance on virgin materials to what’s going to be a predominant reliance on recycled materials. . . . And it’s definitely going to happen.”
Energy efficiency systems and planning--another growth field--takes various forms. In one incarnation, environmental consultants survey factories and office buildings to correct wasteful practices by replacing outmoded lights, insulation, and heating and cooling systems. They take their fee from the savings in overhead.
Larger-scale planning may be key to opening new international markets for U.S. environmental technology, particularly in Eastern Europe.
As one offshoot of an exchange begun three years ago, scientists and policy planners from the Soviet Union, the California Energy Commission, the Northwest Power Planning Council and the San Francisco office of the Natural Resources Defense Council, a U.S. environmental group, have recently been commuting between the two nations, studying Soviet energy use. They hope to find ways to end the Soviets’ awesome inefficiency.
In Tallinn, capital of Estonia, the group is measuring the power used in a standard Soviet apartment, since the Soviets don’t even know where household energy is used. Moreover, residents there sometimes have a hard time controlling the temperature in specific offices and apartments, since whole villages are often heated from one giant plant.
“It’s not uncommon to see windows open in Moscow when it’s 30 below,” notes Robert K. Watson, an energy resource specialist with NRDC who is working on the project, “just because they’ve got those suckers cranked up so.”
Two larger projects focus on a planning technique that has yet to become a household word in the United States, despite its use in some areas since shortly after the OPEC oil crisis of the 1970s.
It’s called least-cost planning. The basic idea is that, all else being equal, it’s better to meet increased energy demands with more efficient generators and appliances than simply to build another power plant.
A simple example, often used by environmentalists:
Forecasts show the need for a new power plant in the next 10 years. Yet planners might find that the efficiency of all the refrigerators expected to be sold in that area for the next decade could be improved enough so that no new plant was needed.
In fact, the Northwest Power Planning Council states of Washington, Oregon, Idaho and Montana have applied this philosophy, according to Edward Sheets, executive director of the council, whose least-cost plans are being tested in two Soviet republics.
In the past 10 years, Northwest utilities have spent more than $1 billion on energy-efficient programs, saving roughly the electrical output of one coal-fired generation plant.
“And all told,” says Sheets, “the Northwest would have had to spend $1.4 billion more to get the same amount of power if it had built a coal plant.
“I guess there are two angles here,” says Sheets. “First, there is a business opportunity for firms that can provide energy efficiency services. And secondly, we like to think that it’s a benefit to the local economy if we can keep more dollars in consumer pockets by lowering their electric bills.”
Sheets sees an increasingly good market in the Soviet Union and elsewhere for high-quality U.S. home insulation, energy-saving windows, lighting, and heating and cooling systems for buildings. In industry, he sees a significant market for efficient drive systems--pumps, motors, belts and all the machinery that makes a production line move.
As part of the current study, the U.S. side has agreed to provide the Soviets technical support and economic development assistance, which Watson of NRDC describes as “a highfalutin way of saying that we’re going to try to set up American industries who produce energy-efficient or energy-saving technologies, and try to get that technology exported to the Soviet Union.”
“Least-cost planning really appealed to the Soviets,” Sheets reports, though he’s less optimistic about the Soviet republics as a market for U.S. technology. For one thing, he wonders whether they have the money to pay for it.
“My sense is that if they thought they could build it themselves, that would be their first choice,” he says. “We found a great interest in joint ventures, a willingness to enter into production arrangements to produce U.S. technology.
. . . Actual direct purchase is problematic because of a real shortage of hard currency.”
Meanwhile, many environmentalists would be happy if the project brought more visibility at home to the least-cost planning philosophy. They and some industry leaders have only lately persuaded the Department of Energy to consider it in its long-term strategy, currently being developed.
“Unfortunately,” says Daniel Becker, director of global warming and energy programs for the Sierra Club, “the utility industry isn’t one of the more enlightened industries in the country. . . . Coal and nuclear power seem to still be central to their approach for an energy policy for the future.”
Other international markets may soon develop closer to home, in Mexico.
Richard Chase of Recycle 2000 has lately been in conversation with Mexican officials about setting up reprocessing plants for recyclable materials in Tijuana. Sooner or later all Southern Californians will have to separate their trash at home and office. Recyclable paper, metal, glass and plastic will go into one system. Organic trash will either be composted, burned or buried in a landfill.
Recyclables are reconstituted as raw materials, as pulp, metal ingots, plastics in pellet form. These are then made into more paper, cans and construction reinforcing rods, plastic flower pots and TV sets.
Benefits of Mexico
Chase sees several advantages in having these processes based just across the border. Mexico’s lower wages--recycling is labor intensive--are only part of it.
“Paper mills, steel mills, aluminum smelters, glass factories--given the environmental and other situations in Southern California, it’s difficult to locate those kinds of facilities here,” says Chase.
"(In Baja California) you would have your raw material, a climate that’s hospitable to economic development--and by that I don’t mean hospitable toward pollution but hospitable toward industrial activities that produce jobs and export earnings--and you’re sitting right next to the largest consumer marketplace in the world. It’s all there.”
Chase considers it absurd to ship recyclables to Asia, 10,000 miles rather than 120, as is done today. It also misses the chance to support a long-suffering neighbor.
“Certainly we have a bigger stake in the healthy economic development of Mexico,” says Chase, “than in the economic benefit of Taiwan, Singapore or Indonesia.”