Businesses seize green initiative
State companies see big gains ahead tackling greenhouse gases
By THOMAS CONTENT

Oct. 6, 2007
Sixth part in an occasional series
What's good for the planet, it turns out, could be great for Wisconsin's largest company.
Global Warming and Wisconsin

Energy experts with Glendale-based Johnson Controls Inc. are busy crafting their first proposal aimed at winning a piece of an ambitious $5 billion plan to reduce global warming by retrofitting energy-wasting buildings in 16 of the world's largest cities. Step one: Houston, one of the country's most polluted cities, where more than 270 buildings could see upgrades.

Meeting in Milwaukee last week, managers and experts from Johnson Controls offices around the country scoured slides of aging boilers and control systems in buildings they had toured in Houston, including fire stations, libraries and the downtown convention center, where the city once housed 5,000 people who fled New Orleans after Hurricane Katrina. Johnson Controls plans to show how energy use in the buildings can be cut 30% to 50%. The cities participating in the Clinton Climate Initiative will invite Johnson Controls, Trane - a leading employer in western Wisconsin - and several other competitors to bid on their energy-efficiency overhauls. Upgrades will be financed by multinational banks that have pledged $1 billion each.

"We have a real responsibility and a real opportunity," said Clay Nesler, global vice president of energy and sustainability at Johnson Controls.

The initiative, spearheaded by former President Bill Clinton's foundation, seeks to accomplish with energy-efficiency upgrades what the foundation did, with pharmaceutical companies, to cut the cost of AIDS drugs and boost their use in the developing world. It aims to double the world market for highly efficient building systems. It's also a striking example of how an issue linked with peril, with forecasts of rising sea levels, devastating storms and droughts, can open up markets and create jobs in Wisconsin and elsewhere.

Steve Roell, chief executive of Johnson Controls, said helping governments and corporations comply with mandates to reduce greenhouse-gas emissions will be a potent growth driver for the company. Roell said the company is poised to increase sales by 10% a year and hit $50 billion in four years. Milwaukee will see investment, and likely more white-collar jobs, he said, because it is home to the "thought leaders" for Johnson Control's worldwide efforts to improve energy efficiency and reduce global warming emissions.

Johnson Controls, which also is working to develop more-efficient batteries for hybrid cars, isn't the only Wisconsin company addressing global warming. Modine Manufacturing Co. in Racine is helping design fuel cell systems that can power and heat homes or supply electricity to a business. That work could produce $200 million in sales within five years, said Mark Baffa, director of Modine's fuel cell group.

In a former pots-and-pans factory in Manitowoc, Orion Energy Systems is making high-efficiency lighting used in warehouses, schools and gymnasiums. After Bemis Manufacturing Co. replaced all of its lights with Orion's bulbs, the company got a call from the local utility, wondering what had happened - the factory's lighting switch had cut power use in the city of Sheboygan Falls by 8%. Last summer, Orion announced plans to raise $100 million in a public offering.

A start-up company hatched by researchers at the University of Wisconsin-Madison, Virent Energy Systems Inc., is creating "green" gasoline - using sugar as the feedstock. Investors have noticed: Virent recently enjoyed one of the most successful rounds of venture capital financing ever, pulling in $21 million.
Riding a wave of investor enthusiasm about the promise of clean technology, Virent and Orion together now employ more than 238 people in Wisconsin, up from a few dozen five years ago.

Clean tech is the hottest area in venture investment, and the Milwaukee 7 economic development initiative this year targeted "clean and green" as a key growth opportunity for the region. While some businesses worry that regulating carbon dioxide and other greenhouse gases will drive energy prices higher as utilities build costly nuclear or next-generation coal plants, other businesses see an opportunity.

"The message to businesses about global warming is 'Jump in, the water's fine.' This is not something anyone has to be afraid of," said Terry Tamminen, former climate adviser to California Gov. Arnold Schwarzenegger. "When it comes to global warming, what we're asking people to do is to put money in their pockets - to pick $100 bills up off the ground."

Energy efficiency and renewable energy are creating jobs for entrepreneurs who have left other work to become home energy-efficiency consultants and solar panel installers. Two years ago, Andrew Bangert of H&H Electric Co. in Madison was an electrician who dabbled in solar power. Now, interest in solar power has increased so much that Bangert spends 95% of his time on solar, and he's hired two other electricians to install panels. It's still a small piece of the revenue pie at H&H, but the solar business has doubled in the past year, with projects installed at the Urban Ecology Center and a wastewater treatment plant in Milwaukee.
Still, the most high-profile and high-stakes attempt by the private sector to tackle global warming through energy efficiency is ramping up at Johnson Controls and its rivals.

Within two weeks, Johnson Controls and other companies must submit detailed proposals on how they would improve energy efficiency in the Houston buildings, including every police and fire station, every library, City Hall and five convention and entertainment centers. The scale of the project is daunting. But so is the $5 billion in up-front financing pledged by the banks, which would be paid back over time from the saving generated by the energy-efficient buildings.

"That's a big enough number to be interesting to everybody and can have a significant impact, certainly, on climate change," Nesler said. That will translate into jobs, both for companies such as Johnson Controls and for contractors, electricians and others who would do the work in each city.

In the past, in any given city, "we might have been doing work, onesy-twosy, a couple schools here, a couple office buildings there," Nesler said. "The value proposition here is let's combine a lot of these into a single large project and allow those buildings to be greened."

Since Clinton announced the project in May, Johnson Controls has put teams in place in all 16 cities that are signed on to participate, he said. The push for businesses to do more is coming not from the federal government but from corporate America and local governments. Efforts are arising from California, the world's seventh-largest economy, to Milwaukee, Madison and hundreds of other cities that have vowed to cut greenhouse emissions.

"We see it top-down, from Fortune 100 companies," Nesler said. "We also see it bottom-up, from a school district in Illinois with three schools saying, 'How can I make an impact?' " To gear up for more business, Johnson Controls this year created a renewable-energy team as another way to help clients reduce emissions. The company sold a geothermal heat pump system for a Silicon Valley green office building unveiled Friday as "one of the first net-zero energy, zero carbon emission commercial office buildings in the nation."

Beyond buildings, Johnson Controls sees markets opening for greener and more fuel-efficient products in its auto-parts businesses. That includes development of next-generation batteries for hybrid vehicles and the use of renewable soy foam as a material in car seats. A joint venture with Saft, a French company, won a contract to build lithium-ion car batteries for Mercedes sedans that will be built next year. This fall, plug-in hybrid Dodge Sprinters outfitted with its batteries are being tested on the road in New York and California.
Experts say a massive infusion of hybrids that plug into the power grid could, by 2050, have the effect of taking 83 million cars off the road. But plug-ins are years from hitting dealerships, and the attention they get has masked the emissions that could be prevented if automakers sold more conventional hybrids.

"In the next 23 years, if we put mild hybrids in 25% of the general fleet, that would be equivalent to taking 64 million vehicles off the highway today," said Mary Ann Wright, who heads the Johnson Controls hybrid business. Other area manufacturers are working to make cars more fuel-efficient and comply with tough regulations in Europe.

Actuant Corp. of Butler expects by 2010 to double sales - to $100 million - of systems that would reduce emissions of another greenhouse gas, nitrogen oxide, from diesel truck engines, said Karen Bauer, director of investor relations. Modine, which makes heating and cooling systems for cars and off-road equipment, has developed a way to use carbon dioxide as a refrigerant in vehicle air conditioners.

Anthony de Vuono, vice president and chief technology officer at Modine, said using carbon dioxide will phase out a different greenhouse gas, a hydrofluorocarbon that is 1,300 times more harmful to the atmosphere. "It's going to be a very, very big market, and you just don't want to get left behind," he said.

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