One of the most interesting observations I have read about recently, which provides an interesting perspective of the role of culture and entrepreneurship in the energy sector, is that most renewable energy across the world is produced in places that don’t necessarily have the best natural resources. For instance, Germany is a global leader in solar energy production though it is not as blessed with sunshine as some of its southern neighbors. Moreover, looking at USGS surveys of the most windy locations across the USA that are feasible to develop are not the location of the most wind production in the country. How can this be?
Wesley Sine and Brandon Lee in their 2009 article, ‘Tilting at Windmills?: The Environmental Movement and the Emergence of the U.S. Wind Energy Sector’ argue that the reason why this exists is that entrepreneurship is enabled, and not only constrained, by community and government involvement in establishing markets. Social movements that emerge to champion a particular cause, in this case independent renewable energy, may be able to change the political perspective of citizens, communities, and political leaders. The resulting movement may create new formal rules, a demand for renewable energy, thus a sustainable market of those willing to buy such a product, and government support for the installation, competitiveness, and appropriateness of these new organizations.
Entrepreneurs identifying these changes in cultural understanding of energy, take action to build new organizations, value chains and offer a product at competitive prices. Therefore, driven by social movements and entrepreneurs, new markets are created and value added by replacing polluting fossil fuels. Indeed, we can see this same situation play out when we look at many markets that we now take for granted.
What is interesting then are entrepreneurial individuals that act not to build new organizations and offer new products, but champion cultural change through stigmatizing the status quo. The (in)direct positive interaction between these cultural entrepreneurs and market entrepreneurs provides a fascinating insight into cultural transmission and change.
The Case of Bill McKibben and 350org
Perhaps one of the most important and influential, although perhaps unlikely, cultural entrepreneurs at the moment is Bill McKibben, the founder of 350org. Mr. McKibben founded 350org based on climate scientist James Hansen’s argument that any atmospheric concentration of CO2 above 350 parts per million will lead to dramatic climate change. Today, the organization has offices and organizers in North America, Europe, Asia, Africa and South America. Using coordinated demonstrations and creative internet tools, it has been called the largest ever global environmental movement of any kind.
One of the more significant campaigns of Mr. McKibben and 350org is its push for divestment in fossil fuel company holdings. This campaign is organized to persuade global investors to take their money out of the fossil fuel sector. And its growing faster than any previous divestment campaign and could cause significant damage to coal, oil and gas companies.
According to a new Oxford report, the current fossil fuel divestment campaign, which has attracted 41 institutions since 2010, is modeled after campaigns against tobacco, apartheid in South Africa, armaments, gambling and pornography. An article in the Guardian newspaper reports that the direct financial impact of such campaigns on share prices or the ability to raise funds is small but the reputational damage can still have major financial consequences. “Stigmatisation poses a far-reaching threat to fossil fuel companies – any direct impacts of divestment pale in comparison,” said Ben Caldecott, a research fellow at the University of Oxford’s Smith School of Enterprise and the Environment, and an author of the report. “In every case we reviewed, divestment campaigns were successful in lobbying for restrictive legislation.”
These types of social movements, and the cultural entrepreneurs that create them, may just lead to new sources of legitimacy for market entrepreneurs. Rather than government policy intervention leading to social costs, in this case increased prices of energy, new entrepreneurs create new value by offering new products and services that have both a economic and environmental benefit. When investors value more than financial return and the status quo, a tipping point may be reached where investment in renewable energy projects benefits from a positive feedback cycle. However, going against the status quo is always a challenge as sanctions, punishment, and failure are a very real outcome. Moreover, real challenges exist in reforming the energy grid to make it more flexible to renewable energy sources. Cultural entrepreneurs play a significant role in pushing the boundaries of taken-for-granted legitimate practices and beliefs and replacing them with new understandings, theories, and symbols that allows us to invest passion. And passion is key for entrepreneurship.