Roughly a decade ago, after being part of the team that built Sitel – one of the largest call center companies in the world – Jules Kortenhorst decided to take a sabbatical and spend some time considering what his next step should be. It was then that he transitioned to public service and he has been working to tackle climate change ever since. He began first in politics, running for the Dutch Parliament and then heading up the European Climate Foundation. He now finds himself at Rocky Mountain Institute (RMI), the Boulder-based “think-and-do” tank that finds solutions to the most pressing issues in the energy world. Mr. Kortenhorst has been leading RMI as CEO since 2013 as the organization works to swiftly scale its impact and accelerate the transition to efficiency and renewable energy.
Conscious Company Magazine sat down with Mr. Kortenhorst to discuss the remarkable work of RMI Co-founder and Chief Scientist, Amory Lovins, and the team at RMI, as well as his experience as a leader in the clean energy movement.
Reinventing Fire, written by Amory Lovins and the RMI Team, presents a multitude of solutions to the energy challenge. How have some of these solutions gained traction since the book was published?
Jules Kortenhorst: On the whole, the energy revolution is gaining traction. There is something magical about the moment when renewable technologies become less expensive than traditional, fossil-fueled sources, right? Solar power is suddenly making economic sense, and you can see this in the speed at which photovoltaics are rolling out. Solar PV costs are coming down dramatically, installed solar capacity is tracking with Reinventing Fire’s projections, and solar’s installed cost per watt is tracking with or just ahead of the US Department of Energy’s SunShot targets. Battery costs per kWh are similarly exceeding most industry analyst forecasts. We are across the tipping point with solar.
Energy efficiency is progressing in other sectors as well, such as with LED lighting and transportation. Five or ten years ago, LEDs were 17 times more expensive and therefore unaffordable. Now they’re still a little more expensive, but not by much, and if you know that your electricity costs drop by 20 percent as a result of using them and that they last 15 years instead of five months – boom – there you go.
Electric vehicles (EVs) are on the cusp of a revolution, which can be seen in innovative cars such as Tesla’s Model S, Nissan’s LEAF, BMW’s i3 and i8, and Chevrolet’s upcoming Bolt. Tesla, for example, will soon sell a car for $35,000 – and when electric vehicles become sexier, cheaper, faster, and better than the old thing, why not, right? There’s virtually no maintenance, very low fuel cost, they have the acceleration of a Porsche 911, a range of 300 miles, and the same price as a conventional option.
For the first time, EVs are bridging the divide between the electricity and transportation sectors. Lithium-ion battery developments and price declines driven by the automotive sector are crossing over into stationary residential applications; clean solar power is providing an alternative to fossil fuels for cars that once burned only gasoline or diesel; and vehicle-to-grid technologies are offering firming capacity for variable renewables and ancillary grid services such as frequency regulation. [Editor’s note: vehicle-to-grid technologies allow electricity to flow back and forth between an EV and the grid. With smart controls, these technologies can allow EV owners to sell electricity back to the grid when output from renewable energy technologies drops, such as when a cloud passes over a large solar facility or the wind stops blowing at a wind farm. Also, renewables sometime require additional generation resources in order to provide electricity at the proper frequency and voltage, and batteries, including EV batteries, can provide these ancillary services.]
In other areas, efficiency is not gaining traction fast enough due to misinformation about its benefits and because of transaction costs or perceived hassles. Regardless, integration of these solutions is what is exciting.
Speaking of integration, the business case for many of the shifts proposed in Reinventing Fire seems clear and logical, especially for the private sector. What is preventing the adoption of these ideas more quickly?
JK: As an organization, we have to increase our impact. We have, over the course of time, had many great insights, but great insights are not good enough – they don’t achieve impact. It is great insights and ideas deployed at scale that have impact in the end. I’m here to help the organization transition to an organization that is obsessed with scaling impact. If we don’t very quickly switch the ways in which we provide ourselves with energy, then it’s game over for our children and grandchildren (I’ve got four of them, and they’re a huge source of inspiration).
What’s challenging is the powers of old who are holding on for dear life to the financial interests of the past. If you are a coal business, oil or gas business, or in the old vehicle business, then you are worried about this transition. In the next ten years, we will see massive businesses being built, enormous fortunes being made, and big new companies emerging. At the same time, we will see old companies disappear, old ideas go away, big companies become small companies, and massive fortunes disappear. So naturally, there is pushback, particularly from a certain part of the political spectrum, because they are representative of those old interests. However, many of the energy incumbents have a different perspective and find it hard to understand that their world is dramatically changing. We are working with them to help them realize that they can thrive by accepting these changes and transforming their business models.
“We have to increase our impact. We have, over the course of time, had many great insights, but great insights are not good enough – they don’t achieve impact. It is great insights and ideas deployed at scale that have impact in the end.”
RMI makes a very clear case that improving energy efficiency will save money. In theory, efficient markets should adopt superior solutions. So, what’s impeding momentum?
JK: Efficient market theory has been debunked – markets are not efficient, and this is true in the case of the energy efficiency market. In other words, pure economics alone haven’t been enough to move large amounts of capital and see adoption at scale. A number of other market barriers still stand in the way. One reason is that there are enormous information gaps and a lot of misinformation about the benefits of energy efficiency. Most people fail to take into account the value of efficiency beyond the energy cost savings – the myriad of other quantifiable benefits such as risk reduction, better brand reputation, or improved employee health and productivity – that come with super-efficient buildings.
“The biggest change we will see in the next 25 years is the transition to a low-carbon energy future. There will be huge opportunities, and also huge losses. Those that move to make themselves part of that revolution are likely to do extremely well and will play a part in preserving this planet as a safe place for future generations.”
Often there are transaction costs and implementation hassles or simply a lack of organizational focus. For example, in the built environment, we see a lot of problems due to the landlord-tenant gap, in which landlords may not be incentivized to invest in energy efficiency upgrades since the tenants are the ones who pay the utility bill and would realize the financial benefits.
Can you tell us about your merger with Carbon War Room? What was the catalyst for this merger and what are RMI’s ultimate goals for this partnership?
JK: Against the backdrop of an accelerating energy revolution but a slow-moving policy agenda, the need for market-driven change is greater than ever. The impetus for the partnership with Carbon War Room is partly that we are both driven by a mission to accelerate market-based change to a clean, prosperous, and secure energy future by mobilizing the private sector. We exist for the same reasons Carbon War Room is bold and innovative. It’s focusing on entrepreneurs, mobilizing capital, and removing market barriers to speed adoption. RMI has a long and accomplished track record founded on fact-based analytical rigor, as well as developing breakthrough insights and solutions. By merging in a strategic alliance with Carbon War Room, we feel we can have an even greater impact, combining the strengths of both brands against today’s most pressing energy challenges.
RMI is a nonprofit. In what ways do you work with private industry to further your goals or implement your solutions? How does this corporate structure help further RMI’s objectives and goals?
JK: RMI and Carbon War Room extensively partner with the private sector in almost everything we do. The corporate sector is the most powerful institution we have to scale solutions, and that is what is now needed. Our independent, nonprofit, nonpartisan stance has been very helpful, allowing RMI to work together with individual companies, industry organizations, and associations to bring about the changes we want to see. We’re able to take a long-term view that corporations held to short-term financial results cannot, and we can convene diverse industry stakeholders that otherwise find themselves at odds or in competition based on our reputation of trust, sound thinking, and data-driven rigor that we’ve built.
What other industries besides energy do you think could benefit from the “think-and-do” tank model?
JK: We need to rethink how we live within the planetary boundaries that are so abundantly clear. I expect that we will see a similar revolution in agriculture, land use, and forestry. To address climate change, we need to shift those sectors just as we need to shift global energy use. So whether it is water, biodiversity, the agricultural system, or phosphates and nitrates and the health of our soil system, what’s required is a combination of deep insight and understanding of what can be done that should be done. Then it’s about making sure that those ideas are implemented.
What does success look like for RMI, and what metrics are you using to measure progress along the way?
JK: It’s actually a question that we are right in the middle of debating because of the fact that, as a part of the merger, we’re also looking at what our strategy should be. Are we focused on the right impact areas? How do we compare having impact in China, where we do a lot of work, versus having an impact on small Caribbean islands? Or working on the new business models of utilities in the US versus driving energy efficiency in the built environment. It’s so hard to compare apples with oranges.
Some of the metrics we are honing in on are the reduction in greenhouse gas emissions, the reduction of fossil fuel use, and the acceleration of capital flows in the direction of new business models and energy systems of the future. For now, this is the best way to assess and compare these projects and the work we’re doing.
POLITICS AND INDIVIDUALS
What role do you feel politics play in mitigating climate change? Which governments, if any, do you think model the most progressive and constructive behaviors?
JK: Government policy can play a critical role in setting standards, like it has done with building codes and fuel efficiency (CAFE [Corporate Average Fuel Economy]) standards. But, what we need is leadership. President Obama is showing that leadership and so is the Chinese government. Yet, unfortunately, there are short-term populist leaders in many parts of the political arena that deny the reality of climate change to protect the interests of the fossil-fuel industry. Clearly, we need to price the externalities of carbon emissions. Politics and policy have an important role to play, but thank goodness it’s not the only lever we can pull.
Interestingly enough, the Chinese government is as committed to this issue now as any, and it is interesting to see how they are putting in place bold measures to reduce the carbon intensity of the Chinese economy, reduce greenhouse gas emissions, and reduce air pollution. When you travel to China, it’s often unbearably poor air quality to operate in. So, China is absolutely heading in the right direction, but we’re not all the way there yet.
What role do you feel individuals’ behavior plays in mitigating climate change? Are we in a world where we need to consciously change our behavior or can we design things people will love and enthusiastically adopt that are transformational in terms of carbon impact?
JK: A dear friend of mine once said to me, “We will not fix the climate change issue until we shift the consciousness of mankind.” I think he may be right. We need to help people around the world come to grips with the planetary boundaries we face. Although that will require a shift in consumer behavior, innovative technologies and business models can help make that shift easier and maybe even imperceptible. Smart thermostats improve personal comfort while decreasing energy use of homes. New business models – such as car sharing – are transforming how people meet their mobility needs, enabling a reduction in total vehicle miles traveled. Entrepreneurs will continue to find novel solutions to our energy challenges and each of us can also play an important role in the decisions we make – from separating household waste, to buying a plug-in car, to replacing incandescent light bulbs with LEDs, to voting for political leaders that are advocating for the right decisions.
Can you tell us a bit more about what building inspired organizations means to you?
JK: If it’s only techniques or tricks, then it will never have lasting impact. I think it starts with genuine care for people. I think great organizations, and great leaders, care about their people. That doesn’t mean there is no accountability or that there cannot be toughness when it’s required. It certainly doesn’t mean that an organization shouldn’t be results-oriented. But underneath it all, I think people recognize that great leaders really care.
I think a second ingredient that is more apparent to me now is that if you just try to build organizations and your goal is “to make a boatload of money,” then the people who are going to show up will be there because they want to make a boatload of money. They’re not going to show up because of their heart. One of the things that I’ve been privileged to do is to work with people and build organizations that have a mission that is greater than just making money. In leading RMI and Carbon War Room, one of the real privileges is that we get out of bed every morning because of the impact that we get to drive, and that’s wonderful.
What have you learned from failure either personally or professionally that has really served you well in your career?
JK: Working on this issue [of climate change] for the last ten years has been incredibly hard – making a few steps forward, stumbling, falling, facing setbacks, and then having to get back to fighting the battle again. I think one important leadership lesson is that, in the face of a challenge or setback, you cannot give up; you have to keep trying. This issue is simply too big. One way of looking at it is, when a door closes, somewhere else a window opens, and you’ve got to keep going. That is so true in entrepreneurship with a startup, as well. I have been fortunate enough to have been part of some really successful businesses, but I’ve also been a part of failures and things that didn’t work out. As disappointing as that can be, you’ve got to scrape yourself back up and keep going.
What advice do you have for entrepreneurs, scientists, engineers, and organizations as far as having impact in today’s world?
JK: The biggest change we will see in the next 25 years is the transition to a low-carbon energy future. There will be huge opportunities, and also huge losses. Those that move to make themselves part of that revolution are likely to do extremely well, and will play a part in preserving this planet as a safe place for future generations.
Follow your passion, follow your dream, and go for what you believe in. There is something to be said about learning the basic skills, the tools, the things that you need in order to be successful in the world. That can be a hard trade-off, whether you go to learn those skills or whether you go to follow your heart. Is it possible to do both at the same time in the same place? Follow your heart is the one piece of advice that I can give, though.
“BUSINESS CAN BECOME MORE COMPETITIVE, PROFITABLE, AND RESILIENT BY LEADING THE TRANSFORMATION FROM FOSSIL FUELS TO EFFICIENCY AND RENEWABLES. THIS TRANSITION WILL BUILD A STRONGER ECONOMY, A MORE SECURE NATION, AND A HEALTHIER ENVIRONMENT.”
Efficiency and renewables can end our addiction to fossil fuels, create the core industries of the new energy era, generate $5 trillion in new economic value, and enhance resilience and security