Weaving through Hyderabad's morning commute traffic on her scooter, Katie Hill found herself both exhilarated and apprehensive. The spectacle of so many people in trucks, cars, and motorcycles was a vivid sign of India’s economic progress. But the fumes from all the tailpipes created a haze on the horizon that reminded her of a troubling question pervading the globe: Progress at what price?
That was June 2009 when Hill was living in India while investing in clean energy companies for Acumen Fund. Now, she is a Stanford student pursuing joint master's degrees in business and environmental science. Her experience in Asia and Africa has taught her, she says, that 'the exponential growth in the demand for energy is a key driver of economic development, but it’s also a key culprit in climate change." And while economic growth and climate stabilization goals are commonly pitted against each other, she says they do not have to be, especially in parts of the world where conventional energy costs are currently so high.
Hill's career has focused on new financing models for energy infrastructure in emerging markets. Having spent six years living in Asia and Africa (India, China, Nepal, Uganda, Botswana), she maintains that a win-win situation addressing both energy scarcity and climate change is possible. "The key to the solution is the fact that in most developing countries there isn't enough energy, and what's available is not cheap," she says.
Moreover, energy transmission is frequently unreliable, leading to blackouts that damage machinery and raw materials, and force businesses to invest in expensive diesel generators for back-up power. "It makes business sense for companies and outside investors to be investing in clean and efficient energy," Hill maintains.
As energy portfolio manager for the Acumen Fund, she evaluated more than 300 clean technology businesses and managed $4 million in investments. She has also worked for McKinsey & Company, Generation Investment Management, Dalberg Global Development Advisors, and the China Greentech Initiative.
Last year, she spent six months exploring the demand for captive biomass power — that is, self-generated electricity, rather than relying on the grid — for manufacturing companies in Kenya. There she visited factories ranging from massive enterprises such as Mabati Rolling Mills, which produces most of the corrugated steel roofing that covers Africa, to smaller outfits like the Chandaria Industries Ltd paper factory. She concluded that all of them were paying far too much for energy — two or three times what manufacturers pay in the United States on average. At these prices, Hill suggests that developing renewable energy –– biomass, wind, solar, and geothermal –– along with tackling huge energy inefficiencies, would be economically compelling and positive for climate change.
The same holds in Indonesia, Bangladesh, and Ghana, to name a few countries, she says.
Hill presented her perspective based on her business sojourns in India and Kenya to executives, nonprofit leaders, policymakers, and academics at the Socially and Environmentally Responsible Supply Chains Conference held at the Stanford Graduate School of Business on October 10.
"This story of economic development versus climate change will be written over the next couple decades –– even the next few years," Hill says. "Companies can make more environmentally sound choices about how they run factories and facilities abroad or who they source from. They also have the ability to make policymakers listen. It’s important that they step up those efforts."
- Marguerite Rigoglioso