27 December, 2014

Food for Thought

The Harvard Business Review recently ran an interview with Robert B. Shapiro, chairman and CEO of Monsanto, on the subject of sustainability.

Sustainable development is the term for the dual imperative—economic growth and environmental sustainability—that has been gaining ground among business leaders since the 1992 United Nations Earth Summit in Rio de Janeiro. 

As Shapiro puts it, “We can’t expect the rest of the world to abandon their economic aspirations just so we can continue to enjoy clean air and water. That is neither ethically correct nor likely to be permitted by the billions of people in the developing world who expect the quality of their lives to improve.”

The interview with HBR editor-at-large Joan Magretta, discusses how Monsanto has moved from a decade of progress in pollution prevention and clean-up to spotting opportunities for revenue growth in environmentally sustainable new products and technologies.

HBR: Why is sustainability becoming an important component of your strategic thinking?

Robert B. Shapiro: Today there are about 5.8 billion people in the world. About 1.5 billion of them live in conditions of abject poverty—a subsistence life that simply can’t be romanticized as some form of simpler, preindustrial lifestyle. 

As many as 800 million people are so severely malnourished that they can neither work nor participate in family life. That’s where we are today. And, as far as I know, no demographer questions that the world population will just about double by sometime around 2030.

Without radical change, the kind of world implied by those numbers is unthinkable. It’s a world of mass migrations and environmental degradation on an unimaginable scale. At best, it means the preservation of a few islands of privilege and prosperity in a sea of misery and violence.

Far from being a soft issue grounded in emotion or ethics, sustainable development involves cold, rational business logic.

Current agricultural practice isn’t sustainable: we’ve lost something on the order of 15% of our topsoil over the last 20 years or so, irrigation is increasing the salinity of soil, and the petrochemicals we rely on aren’t renewable.

Most arable land is already under cultivation. Attempts to open new farmland are causing severe ecological damage. So in the best case, we have the same amount of land to work with and twice as many people to feed. It comes down to resource productivity. You have to get twice the yield from every acre of land just to maintain current levels of poverty and malnutrition.

Now, even if you wanted to do it in an unsustainable way, no technology today would let you double productivity. With current best practices applied to all the acreage in the world, you’d get about a third of the way toward feeding the whole population. 

The conclusion is that new technology is the only alternative to one of two disasters: not feeding people—letting the Malthusian process work its magic on the population—or ecological catastrophe.

We don’t have 100 years to figure that out; at best, we have decades. In that time frame, I know of only two viable candidates: biotechnology and information technology. I’m treating them as though they’re separate, but biotechnology is really a subset of information technology because it is about DNA-encoded information.

How does biotechnology replace stuff with information in agriculture?

Shapiro: We can genetically code a plant, for example, to repel or destroy harmful insects. That means we don’t have to spray the plant with pesticides—with stuff. Up to 90% of what’s sprayed on crops today is wasted. Most of it ends up on the soil.

If we put the right information in the plant, we waste less stuff and increase productivity. With biotechnology, we can accomplish that. It’s not that chemicals are inherently bad. But they are less efficient than biology because you have to manufacture and distribute and apply them.

I offer a prediction: the early twenty-first century is going to see a struggle between information technology and biotechnology on the one hand and environmental degradation on the other. 

Information technology is going to be our most powerful tool. It will let us miniaturize things, avoid waste, and produce more value without producing and processing more stuff. The substitution of information for stuff is essential to sustainability. 

B.t. Cotton. In ordinary soil, microbes known as B.t. microbes occur naturally and produce a special protein that, although toxic to certain pests, are harmless to other insects, wildlife, and people. If the destructive cotton budworm, for example, eats B.t. bacteria, it will die.

With products like B.t. cotton, farmers avoid having to buy and apply insecticides. And the environment is spared chemicals that are persistent in the soil or that run off into the groundwater.

The Roundup molecule has smart features that contribute to sustainability. It is degraded by soil microbes into natural products such as nitrogen, carbon dioxide, and water. It is nontoxic to animals because its mode of action is specific to plants. Once sprayed, it sticks to soil particles; it doesn’t move into the ground-water. Like a smart tool, it seeks out its work.
How do you react to the prospect of the world population doubling over the next few decades? First you may say, Great, 5 billion more customers. That is what economic development is all about.

That’s part of it. Now, keep going. Think about all the physical implications of serving that many new customers. And ask yourself the hard question, How exactly are we going to do that and still live here? That’s what sustainability is about.

The Coal Seam Gas Industry

Quite the clearest, balanced description I have read-

World-first export LNG bonanza poised to set sail

Gas bonanza poised to set sail
Methane Rita Adrea enters Gladstone Harbour yesterday to take on the first shipment of LNG gas from Curtis Island. Picture: Murray Ware Source: Supplied
AUSTRALIA’S export liquefied natural gas industry on the east coast has begun with a large ship berthed in Gladstone Harbour filling up with the first batch of LNG made from coal-seam gas in western Queensland.
The British Gas-owned Methane Rita Andrea is bound for Asia when it leaves Gladstone in the next few days, its final destination depending on who is willing to pay top dollar for its liquid cargo.
Australia exports about 24 million tonnes of LNG worth about $14 billion from the North West Shelf off Western Australia, but what is happening in Queensland is a world first: converting coal-seam gas to LNG for export.
Combined, the two industries, one off the west coast and the other one the east coast, have the potential to make Australia the biggest exporter of LNG .
The federal government has forecast that LNG exports could rise to 80 million tonnes by 2018, valued at $60bn.
The new Queensland industry promises much. A 2013 study claimed it would deliver $22bn in revenue to the state government through royalties and payroll tax and $162bn in revenue to the federal government over the next 20 years.
The BG plant is the first of three $20bn plants being built at Curtis Island on the northern shore of Gladstone Harbour that will convert the coal-seam gas to liquid natural gas. The other two are set to come on stream in the next year.
While the output of the other two plants will largely be sent to specific destinations, BG is a large spot trader and already sends ships into Asia carrying liquid natural gas. The specific destination of the Methane Rita ­Andrea will be guided by which buyer needs the LNG next week.
The construction of the three giant plants has led to 40,000 people being employed; after the construction phase tapers off, the industry estimates it will employ up to 18,000 in long-term jobs.
The industry looms as Queensland’s economic saviour. At a time when coal prices are down and the coalmining industry is shedding jobs, the arrival of the coal-seam gas into liquid natural gas industry is forecast to lift the state’s economic growth from 2.5 per cent this year to 5.75 per cent in 2015-16, taking Queensland from one of the slower growth rates to the fastest.
It is also an industry that many see as putting groundwater in farming areas at risk and possibly contaminating much of Aus­tralia’s most productive farmland.
So far, about 5000 farmers have signed access agreements with coal-seam gas companies that will allow the companies to place wells, many only the size of a basketball court, on the farmer’s property. There are 6000 wells on Queensland’s western Darling Downs, but as the industry grows, more wells will be drilled as others dry up — in total, there could be up to 40,000 wells sunk in the gasfields around Chinchilla and Roma over the next 20 years.
The movement of Australian gas into the global market will also push up domestic gas prices. People overseas are prepared to pay more for gas than in Australia, so local prices will also rise.
Gas has been running through the specially-built pipeline from the gasfields to Gladstone for about a year, and once it reaches Gladstone, it is placed in what is effectively a giant freezer and converted to liquid form for transport. When it reaches the other end, the process is reversed and the liquid is heated until it turns into gas again.
A spokesman for BG Group, which came into the industry when it took over Queensland Gas in 2008, said the mechanical testing of the plant had finished and the storage tanks were yesterday being cooled, ready to produce and store sales LNG.
“This is done by cooling the gas to -162C. The process reduces the gas by about 600 times its original volume, making it easier to transport economically over vast distances. There remains work to do, but we are on schedule to start loading LNG into the first ship to carry a cargo from Curtis Island.”
It’s taken about 10 years to get the industry to this point, after coal-seam gas was seen as a far more environmentally friendly fuel source than coal as its greenhouse gas emissions are considerably less than coal.
The original proponents of an export coal-seam gas industry were all Australian companies, but all have partnered with large overseas energy giants to make the projects viable.
The opposition to the industry has come together under the banner of Lock the Gate, and its president, Drew Hutton, said there had been an unseemly haste to push the industry.
“In years to come, people will look at the decisions made now and the way we’ve sacrificed good farmland and water for an industry which has such a limited ­future,” he said.
“Coal-seam gas, like coal itself, will end up as a stranded asset as people realise that the future is in renewable energy … what we’ll see in the next 20 years is the ­impact on the underground water supply, which will put at risk some of our best farming land.”

18 December, 2014

Christmas Greetings and 2014 Review

Once again we use the "late and easy" way by conveying our Christmas greetings electronically. Gail and I sincerely wish all our friends a very happy Christmas and a healthy and successful 2015.

Not sure that I want to bore you with our health issues and somewhat mundane activities over 2014, so will strive for brevity as I did last year. However, the year did have its highlights-

  • an enjoyable, albeit sad, weekend in Bourke in May to mark Swire's final withdrawal from the agricultural industry, following the sale of the Barwon/Darling River cotton farms,
  • the removal of my colostomy bag and closure of the stoma in June,
  • various Tandou events during the year culminating in a fascinating Snowy Hydro conducted tour of the Snowy Scheme in November-see my Blog,
  • election to Chairmanship of the McGarvie Smith Institute in mid year,
  • August saw the loss and funeral of our very good Walcha friend Sue Archdale, after the bravest fight with cancer that one could ever see; a brief visit to the ever impressive Australian Cotton Conference, a trip to Gunnedah with son Mike for AgQuip, and 2.5 weeks at Moololaba,
  • a great five days in Adelaide last week for the India Test Match,
  • two excellent school reports for our two eldest grandchildren-Mike and Georgie's- Charlie and Heidi- followed by Charlie's election yesterday as School Captain of Mosman Primary,
  • the diagnosis yesterday of what can most simply be described as a very large hernia below where the colostomy was closed, which will almost certainly involve further surgery to repair; the good news is that there is no sign of cancer.
Sorry if I have offended anyone by not including something that they thought was important!