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Energy Crisis Presents Opportunity for Jobs, Profit

6/23/2008 --

Conference addresses business case for sustainability in transportation.

ANN ARBOR, Mich.—Growing thirst for energy. Soaring fuel prices. More cars on the road. Increasing urbanization. Demands to reduce carbon emissions.

Those global trends have stressed countless industries and are projected to intensify in the coming years. But these same trends create new business opportunities, and some companies have developed more sustainable models to tackle problems while creating jobs and profit.

"We have this huge set of problems, yet there are great opportunities," said Robin Chase, founder of ZipCar and CEO of GoLoco, a ride-sharing service. Her comments came during a June 11 panel discussion at the Sustainable Mobility Summit, co-sponsored by the Frederick A. and Barbara M. Erb Institute for Global Sustainable Enterprise at the Stephen M. Ross School of Business.

The conference was presented by the University of Michigan's Sustainable Mobility and Accessibility Research and Transformation (SMART) initiative. Executives representing large, multinational firms, real estate development, and the entrepreneurial sector outlined strategies to make transportation more practical, affordable, and energy efficient.

The diverse mix of businesses needed to create these new systems melds with U-M's interdisciplinary mission, said President Mary Sue Coleman, who opened the panel discussion.

"We know the power of collaboration," she said.

Collaboration is the approach Ford Motor Co. will take in a pilot program to establish transportation hubs connecting rail, buses, car-sharing, mopeds, and other modes of travel in urban settings. The auto giant announced plans to launch the first of its Urban Mobility Networks in Cape Town, South Africa, and Chennai and Bangalore, India, later this year. The goal is to link commuters to all transportation options, scheduling, and fares via cell phone or PDA. Ford's partners in the pilot include Cisco Systems Inc., Siemens AG, Royal Dutch Shell, and U-M.

While it may seem odd for an auto manufacturer to be part of a system that uses public transportation, the initiative is "perfectly aligned" with the company's heritage and expertise, said Sue Cischke, Ford's group vice president of sustainability, environment, and safety.

"One hundred years ago, we made mobility possible for the average person by making it economically affordable," Cischke said. "We want to do the same with this program."

It makes good business sense for Ford to coordinate the system and create the transportation hubs, said David Berdish, manager of sustainable business development for Ford. If the Urban Mobility Networks succeed, people in emerging economies will have a built-in allegiance to Ford, he noted.

Global pressures even have big oil companies seeking ways to deal with the prospect of doubling the amount of energy produced globally by the middle of the century while cutting Co2 emissions in half.

"The impact of our product is much higher outside the refinery, so how do we reach and impact those customers," said Niel Golightly, vice president of downstream communications and sustainable development for Shell International Petroleum Co. Ltd.

Shell sees two future scenarios playing out, he said. There's the "scramble" scenario in which most of the decisions by world leaders will center on energy security, energy nationalism, and making sure they have access to energy sources. Then there's the "blueprint" scenario where leaders take a longer view on energy policy and mobility, study local solutions, and demand collaboration between government and industry. Shell is "actively advocating a blueprint scenario," Golightly said. A more diverse mix of fuels and lower overall consumption, coupled with a deep study of consumer behavior, would be a good start, ne noted.

"Biofuels are going to be part of our future," Golightly said. "But there are good biofuels and there are bad biofuels."

Energy and mobility challenges also create opportunities for small entrepreneurs. Chase, founder of ZipCar, helped create two businesses that capitalized on the need to ease urban congestion. ZipCar allows members to rent vehicles by the hour. GoLoco is a carpooling and ride-sharing network.

Even those businesses not involved in transportation or energy are can capitalize on current trends. Cherokee, a private equity firm that redevelops brownfield sites, has evolved its business model in response to consumers' shifting needs. These days, Cherokee is trying to marry access to transportation and land use before it invests in a project, said Paul Morris, the firm's vice president of sustainable planning and development.

"Nothing can operate in isolation anymore," he said. "Everything we do implicates or alters everything else around it."

An emphasis on sustainability in today's market can be a direct route to profitability, Morris noted.

"We make money through sustainability," he said. "We believe that's right. If you don't make money, then how can it be sustainable?"

Written by Terry Kosdrosky

For more information, contact:
Bernie DeGroat, (734) 936-1015 or 647-1847, bernied@umich.edu