The End of Charity

Every now and then someone comes along and inspires you. On the Carbon MBA course, we're lucky to have master classes from people of all walks of life. We've had Carbon specialists talking about Kyoto to finance directors discussing their company. All have been excellent, but none as inspirational as Nic Frances. Frances is one of those people who have the ability to inspire all sorts of people in different ways. He has been a priest and then became a charity worker before losing faith in "doing good". He now calls himself a social entrepreneur, but has decided to sell his businesses and become an actor. Hardly bog-standard MBA stuff.

His book The End of Charity highlights his journey from Jesus to selling to carbon credits in Mexico. It's well worth a read and I would jettison any MBA text book that has the word(s)excellence or value-added or blue skies or whatever the latest business jargon is in fashion.

He had a failing business that he turned around by getting to grips with the Carbon market, and, indeed, made a very good carbon margin. In Victoria in Australia, he realised that he could gain carbon credits by giving away low energy light bulbs. The price of carbon was A$10 a tonne, each pack of four light bulbs saved one tonne of carbon per annum and cost A$5 to distribute. The carbon margin being A$5/tonne. His failing business was saved. He did the same in the UK. In September last year he distributed over 4 million light bulbs via the Sun newspaper. They gained carbon credits for the energy companies and he took a cut. According to external audits 85% of the bulbs are used. This means a huge reduction in emissions.

So what? Well, no charity could match that nor could any government; in fact no organisation of any kind has matched what he has done to reduce emissions. And, it gets better:
Frances hopes in the next few weeks to have approval from the UN for his Clean Development Mechanism (CDM) project in Mexico.

CDM projects, put simply, are carbon offsets. An energy company in the UK may miss its EU-ETS targets and can buy emissions reductions elsewhere - in this case Mexico. There are skeptics about offsets, but they are highly regulated and will reduce global emissions AND reduce poverty. Frances' company - Cool NRG -is giving away 30 million low energy light bulbs to low and middle income households across Mexico starting in the city of Puebla. It is estimated it will cut 8.1 million tonnes of CO2 over ten years. It will also save US$165 million in lower energy bills AND save the Mexican government US $585 million in electricity generation infrastructure costs and US $200 million in reduced household electricity subsidy payments each year. Cool NRG make an IRR of 15% if the price of carbon is around €15/tonne. A lot more money is made if projections of the price of carbon rising to €30-€50/tonne in the next 5-10 years are correct.

Some interesting facts emerge from this: the saving to the Mexican people is the equivalent of one weeks income and the money saved is five times the annual US aid budget to Mexico. This is money direct to the people without NGOs or governments saying what it can be spent on.

It's a work of genius from an entrepreneur who wants to make money. Can Oxfam do this - yes they can, but they don't. Can any NGO do this - yes they can, but they don't. What some people don't like is that it makes a carbon margin; what they fail to understand is that "doing good" doesn't work. It needs to be both.

The Holy Grail

I'm part of a team of three Carbon MBA students working on a consultancy project for Adnams. A very green company; their brewery is extremely efficient in keeping emissions low and their distribution centre is even greener. It's well worth a tour if you're down that part of the world.

The team is doing a fairly straightforward carbon footprint project, but the difficult bit is trying to attempt to link the carbon data to behavioural change. In Adnams' hotels up to 20% of emissions, and, possibly more, could be reduced by staff using less electricity or heat. The key question is: what would persuade staff to use less energy? The answer is the climate change equivalent of the Holy Grail.

What motivates you to actively reduce emissions? Some of you are aware of what needs to be done and act accordingly, but is an awareness campaign enough for those who are less bothered? And, what kind of awareness campaign: a softly softly approach or one that frightens them? It's not like cigarettes where a campaign might lead people to stop smoking and actually feel the financial and health benefits pretty quickly.

Perhaps competition is better. A league table of carbon emissions anyone? Each week your shop, hotel, university department, council department, business unit - you name it - competes with each other to see who has kept their emissions the lowest compared to last year. Would this work? The government likes them for schools and hospitals but has it improved standards?

What about a diktat? You will reduce emissions by 10% or...what? The sack? Less money? Perhaps it should be more positive: reach a 10% reduction and you will get half that saving. If that's a few bob, then that might motivate people.

I actually have no idea what might work the best, but our team is going to trial all three out and report the findings to Adnams. I'd love to know what you think or if you have any ideas that might motivate people. Let me know and maybe we can trial them.