Krystal Williams: Parsing the argument for equity in climate action

Krystal Williams: Parsing the argument for equity in climate action

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A discussion of the potential for economic and social equity in the climate economy with Krystal Williams, founder of Providentia Group.

Climate&Capital’s Leadership Interviews is an ongoing series of in-depth discussions with a wide range of leaders in the climate economy. It explores the nuance and tension in leading bold transformations — of individuals, organizations and markets — at the intersection of climate and capital. We hope these conversations give you food for thought and spark conversations as you lead in the climate age. We’re looking forward to hearing from you. (Twitter: @davidcgarrison)

Krystal Williams is an impassioned advocate on issues of energy, equity and social justice. Her work with public utilities and renewable energy developers as an energy attorney at Bernstein Shur and Pierce Atwood has deeply influenced her view of both the climate economy and systemic inequities. 

A member of the Maine Bar Association, Williams recently launched the Providentia Group, a law and business advisory firm “focused on creating economic belonging for traditionally underrepresented groups.” 

Climate&Capital’s publisher, David Garrison, spoke with Williams from more than six feet away on a porch in Maine. This is an edited transcript.

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What’s the burning opportunity in climate change?

That’s a big question with at least two responses. 

If you subscribe to the idea that for-profit companies exist to maximize shareholder value, then this is about finding opportunities to maximize shareholder value to make the most money in the climate space. 

But you can also look at this as identifying opportunities to move the nation forward and create climate-resilient infrastructure, irrespective of shareholder impact. 

I’m separating those out, because in the public utility space where I operate as a lawyer, there’s a lot of conversation around that second one — system resilience — and how quickly we can recover after a major climate event. Particularly for power systems (think electric public utilities), we’re concerned about what happens when, for example, a transmission line goes down. 

And there’s absolutely an opportunity to invest in system resilience. Developers, for example, if they’re building along a coastline, can create underground parking spaces that are high enough that that’s the area that’s flooded instead of the offices. 

Another example: For public utilities, the opportunity is in electrical infrastructure. When I was growing up, you’d buy a string of Christmas lights, and if one light went out, the whole string was worthless. It’s the same basic idea here, but on a larger scale: How do we protect the system from itself?  

Those are two specific ways we can be proactive in how we think about existing and new infrastructure, but these are both responding to common sorts of problems across the globe. 

But here’s the issue: If you’re only answering the first question (where is there an opportunity to maximize shareholder value), the range of activity gets a lot smaller. That’s because there is not an ability yet to fully recover the cost of building these structures. 

Why not?

I hate to make a statement like this, but there’s still enough of a debate around the reality and severity of climate change that it’s difficult to price a response into the infrastructure that private developers build — and then fully recoup that investment. 

You know, I live in the world of clean energy, and Maine has passed legislation to promote distributed generation. (It’s really focused on solar panels and commercial on-grid battery installations.) Getting to where we are now required that legislation, but we’re seeing solar developers flooding into Maine. 

What I’ve found in representing parties on both sides is that, for commercial owners who have solar installed behind the meter (meaning they’re getting a direct infusion from solar installed somewhere on their property), they’re still paying a slight premium — and they’re willing to — with the understanding that it’s moving the technology forward and bringing the overall price down. 

Now, there’s a cap on the premium they’re willing to accept. But what I’ve seen in the commercial market with net-energy billing (that’s basically when a solo developer builds a system, sells it to a large public utility, and the customer gets credits applied to their account) is that that’s a lucrative opportunity. 

It’s lucrative because once the structure is built, solar energy is largely free. So, the discussion is really about the installation and supply costs of the materials. In this model, the customer benefits from the lower cost of energy and the developer benefits because they have their debt serviced by selling energy to the utilities — they take the renewable energy credits and sell them into the market. In places like Massachusetts and Connecticut, where there’s a pretty robust market, they can make a nice return. 

If we’re going to accelerate the climate economy in a sustained and systemic way, it’s unlikely it’ll be done on the back of “musts” or altruism. It’s much more likely to be done on the back of a shift in what we believe is worth investing in. Where do you see that positive opportunity?

The positive story right now, particularly for businesses that have steady energy demand or who can map out their energy demand with some degree of specificity, is in having a solar system installed on your property — or even purchased virtually. 

A key point to make there is that, especially as businesses become more data-driven, costs can be quite high, and you move down the cost curve with solar panel systems. You also begin to enable large-scale battery installations, which is a bottleneck to seeing solar panels widely implemented and to shifting residential consumption.

Maine has a goal of 100% renewable energy by 2050. And the reality is that we won’t get there solely by the large companies shifting to renewable energy. 

We’ll get there by building infrastructure — for things like electric vehicles — and that requires not only charging stations along the highway but also that more individuals own electric vehicles and install batteries in their homes to charge them. 

In the past, you’ve emphasized the importance of social consciousness and understanding the implications of the choices we make. Are we putting too much of the burden of this transformation on consumers? 

Ultimately, consumers have to decide whether or not products meet their needs at a price they’re comfortable with, but I don’t think the responsibility is entirely theirs.

As we’re talking, it makes me wonder if there’s an opportunity — in the same way that we now recognize B Corps as a distinct business structure — to form an organization specifically focused on advancing renewable energy usage. Now, I have no idea what that would look like, but it gets at the question of how we focus on the responsibility business leaders have (or could have) to address issues of climate change.

Like every leader, I struggle with the tension that exists between a desire to do good and the profitability of a company. There’s a sliding scale there, because if a company isn’t profitable, it’s not going to exist for very long. But at what point does profitability go too far? When and how do we know it’s taking more from the system than it’s giving back?

This is complicated. You know, renewable energy is one of the primary ways we can combat climate change, but profit margins in the energy sector are very low. Often, deals are structured to cover debt with less than a 5% profit margin. 

So, where energy developers are making money isn’t on an individual project; they’re making money by turning out project after project. My understanding is that the margins on wind-energy projects aren’t all that different.

People want to move in the direction of clean energy; they don’t want to doom the environment every time they turn on the lights.

I don’t know what more can be done to de-risk investments in renewable energy for smaller scale, commercial and residential customers. Anecdotally, shifting to off-grid is still too expensive for people. Even with federal tax credits and state-level incentives, it’s still just not at a price point that the middle-class can afford. And that’s clearly a problem: People want to move in the direction of clean energy. They don’t want to doom the environment every time they turn on the lights. 

So, people want to take action, but there are issues of cost and income disparity. What steps do we need to take? 

One step is figuring out how we make the leap from legislatively mandated programs to something that is truly market-driven.

Another is how we look at our supply chains and sourcing strategies to ensure that the products we’re creating don’t feed negatively into climate issues.

A third is to understand what happens to a product at the end of its life.

If we know those three steps are important, why aren’t they happening? 

I don’t actually know that they’re not starting to. My worry is that, in our need to keep business moving forward, the long-term and important generally loses out to the short-term and urgent — because this is a bit squishy, because there aren’t clear answers, and because it all depends on other factors, these kinds of actions fall to the bottom of the priority list.

With solar panels and windmills, for example, I’ve worked on contracts with a twenty- to thirty-year useful life. And questions inevitably come up around what happens when a solar-powered system reaches the end of its useful life. Do we scrap it? Do we break it down and mine materials from it? 

This is a very real issue, but because we don’t have hundreds of projects that are reaching the end of their useful lives, no one has dedicated serious time to thinking about whether the footprint of the solution is perpetuating the issues we have. 

You mentioned virtual power purchase agreements earlier. Why is that an opportunity?

There’s a huge opportunity for medium- and large-scale commercial consumers to further renewable energy development through virtual power purchase agreements — and behind-the-meter solar, in particular. 

Virtual power purchase agreements are essentially where a company — let’s say they’re in Maine — pays a developer in, say, Texas a fixed price for the energy generated by a solar system. In doing so, they cover the developer’s debt load. 

The developer takes that energy and sells it into the grid. And the developer gets the benefit of any pricing excess if the price it sells the energy into the grid at is higher than the contract price. 

Typically, the price the company pays is less than the cost of energy that they’re purchasing from their utility. There’s always a true-up mechanism in the contract, so there’s an opportunity for both the developer and the company to win. It’s a managed-risk way companies can proactively contribute to the installation of more solar systems.

What has our greatest success been?

I believe the greatest success in recent history has been the positive action taken at the state level when the U.S. government decided to pull out of the Paris Agreement.

I see leaders in influential states being convinced of the science and the impact of climate change. I see them taking action both in putting infrastructure bonds on ballots and legislation to promote renewable energy sources. 

These are leaders stepping up to say, “We believe this is a problem, and in the absence of clear federal guidance, we’re going to move our states.” This is where you see the beauty of the U.S. federal-state split — it’s in states’ ability to test out different ideas.

What’s our biggest failure been?

One of our big failures is that lack of a federally coordinated effort. A big problem in our energy infrastructure is regional — not state-specific. So you don’t have ISO Maine, you have ISO New England, which looks at the energy infrastructure for the New England states; you have PJM

What you’re seeing there is an implicit recognition that — at least in our energy infrastructure — we’re all interdependent; that this isn’t a solution one state is going to figure out by itself. 

What you’re seeing there is an implicit recognition that we’re all interdependent; that this isn’t a solution one state is going to figure out by itself.

In order to effectively address climate change, we need a concerted effort across states, across geographies, and across country lines. I believe that lack of coordination has slowed down growth at a time when we need to be moving with purpose and urgency.

No change happens without first a shift in belief. What data, information, or experience do leaders still need in order to take bold stances?

It’s not clear to me that companies know about opportunities like behind-the-meter energy usage or virtual power purchase agreements. So, I think they need more visibility. 

Companies like Amazon and Google are very aware — that’s driven in part by consumer backlash — but I don’t know that smaller companies have lifted their heads up from daily business operations enough to scan the landscape. 

Is this an opportunity for leadership? I think so. 

Is this an opportunity for legal service providers or environmental consultants to point these solutions out? I think so. 

Action comes down to two drivers. First, the financials of purchasing renewable energy and mitigating our environmental footprint — I’ve seen companies move because of how they measure costs and benefits. 

But the other place I’ve seen shifts is where people have a personal experience with the negative effects of climate change. 

And I suppose there’s also a third piece: consumer backlash. Action happens there when a company wants to proactively go out into the market and, as part of their branding, talk about their investment in climate change. 

That sometimes happens with materials-based companies (like forestry companies) that are purchasing renewable energy. They want to be able to say that not only do they responsibly harvest timber but they’re expansive in their view of the environment; that they operate in a sustainable and socially responsible way.

What legal structures and discussions do you see rising in importance over the next couple of years?

My knee-jerk reaction is that we’ll see more hedging. 

Let me draw an analogy. In agribusiness, there’s hedging for weather because it impacts crop output. Solar is the same: The contract value is based on a projection of how many sunny days or how much wind there will be.

So, what happens when those sunny days don’t materialize? Right now, risk is allocated between the developer and the consumer, who we call the “off-taker.” But as more and more of these contracts are put in place and as more renewable energy sources get installed, I see hedging mechanisms rising in prominence.

Are there structures or discussions we’ll see less of?

It’s not a legal structure, but I truly hope we get to a point as a society where we’re less demanding; where we don’t require energy 24/7.

I first became aware of solar energy in the Peace Corps. I lived in a remote village, so when I got there, I bought a solar panel from another volunteer. Like everyone else, I got a book on electric wiring, set up the solar panel on my house, and hooked it up to a battery. 

We’ve become so used to shaping the world to fit our needs, but that solar panel system taught me to be judicious in my use of lights — I adapted my behavior to not overtax it. 

If we truly want to address climate change, we have to allow the natural resources themselves to shape our demand. Right now, we’re just imposing our needs on the world, and that dynamic is always going to lead to exploitation. 

If we truly want to address climate change, we have to allow the natural resources themselves to shape our demand.

We’re living with the effects of that dynamic: We’ve reached a tipping point — one where resources we’ve been exploiting aren’t replenishing — and something has to give. 

You know, solar energy is a great alternative to fossil fuels. So is wind energy. But these are all intermittent resources, which means they’re only available a certain number of hours a day. Battery bridges the gap, but it’s still just finding solutions to feed the beast. We’re not questioning whether or not the beast needs to exist. 

Battery bridges the gap, but it’s still just finding solutions to feed the beast. We’re not questioning whether or not the beast needs to exist.

When I think about the intersection between climate change and capital markets, the part of me that was in the Peace Corps wonders if our premise is flawed. We’ve gotten off balance in how we interact with the world, and I struggle with what business can do, because there are limitations to correcting a problem from within the same system that created it.

Part of this is that we’re increasingly separated from the impact of our choices; that we need to have some way of drawing energy creation back into our immediate surroundings.

I’m so glad you articulated it that way. Yes. And that need is actually supported by the upgrades we’re capable of in our energy infrastructure because people can now see their energy usage. 

Now, energy consumption is generally pretty mindless. But with the smart meters that utilities are installing on existing infrastructure, companies and consumers are now able to see how changes to their behavior changes usage. That makes the experience of consumption more prominent in our minds. 

The problem, though, is that these solutions require a certain economic level to take advantage of. The simple truth is that every home and every business has a finite amount of money and people like to maximize disposable income. And that brings us to a conversation around wealth, inequality, and people’s ability to fully participate in the climate economy.

Talk to me about the connection between our decisions and the greater vision of a diverse and sustainable climate economy. 

Because of what I’ve experienced in my own life, what I know to be true is that it doesn’t take a lot of economic space to have a huge impact. And when we continually reinvest in incremental improvements, we create a sea change for individuals and across communities. 

I grew up in a Habitat for Humanity community in North Carolina. Our home was heated by propane, and I remember that, particularly in the winter, the thermostat would be really low to save money. We would cry that we were cold, and our parents would holler back, “Well, go put on another pair of socks!” 

Now, imagine a future — somewhere like in Brookline, MA — when there’s a tenement run on solar energy with batteries and electric heaters installed. Imagine that the residents of that building pay a fraction of our electric and heating bills, because the costs are offset by the energy the solar panels produce — and the summer months offset the winter months. 

The residents of this tenement use that economic space to invest in better food for their family. They’re moving up Maslow’s hierarchy of needs. They’re not eating processed food; they have a touch more income for a local farmers market.

People’s health improves, and because their health improves, we see a decline in things like ADHD. Their kids are able to pay more attention in school. Graduation rates improve and people think about college or trade schools. 

This model of change can be found in an urban setting or it can be rural. We’ve already seen good instances of it in Africa, where instead of bringing large public utilities into remote villages, they’re using solar panels. 

Over time, and in small shifts, the quality of our life improves. What we’re talking about here is analogous to the leap from landlines to cell phones. And the benefit, particularly for people in lower economic brackets, is huge. This, I wholeheartedly believe, is possible and it can be started by something as simple as the installation of a solar panel system. 

This, I wholeheartedly believe, is possible and it can be started by something as simple as the installation of a solar panel system.

As we think about the climate economy, that’s where I see the biggest opportunity. That’s the vision I’d love to see come about. 

What’s stopping us from realizing that vision?

The challenge, of course, is the upfront cost. These communities usually don’t have the disposable income to fund installation. So, how do we get past that? Is the answer something like a Tom’s of Maine model, in which you buy a solar panel for yourself and give one to a community?

You know, throughout the industrial age, communities of color are the ones most severely and negatively impacted by industrial development.

I remember when I was through-hiking the Appalachian Trail. As we made our way through New York, we crossed the Hudson at a point where there was a big energy project proposed. And I remember learning that the members of that community (all of whom were wealthy) were able to band together to lobby and prevent that development. 

I remember thinking that communities of color don’t typically have a voice to prevent infrastructure developments that are harmful to their community. So, not only do these communities face economic disenfranchisement, but there’s an additional burden of living next to polluting infrastructure. 

Communities of color don’t typically have a voice to prevent infrastructure developments that are harmful to their community.

Look, I’m not saying that what I was just describing is an overnight switch. But there’s an opportunity to move the climate agenda forward as well as the economic agenda in these communities. Whatever we invest in these communities to improve quality of life and reduce economic load is incredibly powerful. 

As you pointed out, renewable energy is still perceived as premium. Is there a danger of renewable investment in communities being just virtue signaling?

If someone wants to invest money in helping low-income communities become more energy- and economically independent and is willing to put money behind it … I say, virtue signal all you want.

The death of George Floyd shifted something fundamentally in society in a way that we perhaps haven’t seen since the 60s. And as horrible as it is to think about someone’s murder as having created an opportunity to advance equity, that’s exactly what’s happened. 

His murder pulled back the covers on systemic inequalities and how they manifest. And as people learn about how those inequalities manifest in police brutality towards black and brown bodies, people are also slowly becoming aware that it manifests in other areas like economic inequality. 

One modern day version of redlining is not having to worry about particular types of development. And if learning about these inequities creates a desire to do something — no matter how small and even if only to virtue signal — well, I would hope that that could be leveraged into positive impact. Because, again, having come from one of those communities, I can tell you that it doesn’t take a lot to make a big difference

In climate, we often bounce between narratives — whether they’re science-based or morals-based — that are either about fear or responsibility. Do you see potential for a third narrative?

I think so.

No. Actually, I know so. 

I know what the narrative looks like in Maine, a state with abundant lakes, abundant forests, and abundant natural resources. And I’d hope that climate entrepreneurs and legislators are asking how we might leverage existing natural resources to move to 100% renewable energy. 

That’s a powerful question. And if we ask it, it leads to very different conversations; conversations that are no longer about incremental change within the existing system. Instead, we’re asking what is the highest and best use of the resources we have? How do we use them in a responsible way to sustain an appropriate and reasonable quality of life for the inhabitants of this state or region? 

That is a fundamentally different conversation than we’re having. Because conversations around the perils of climate change, investment, and moving forward normally center on how we change our development standards — our system requirements — in order to mitigate and respond to climate change. But they don’t ask how we reset our consumption to mitigate and reduce our impact on our natural resources.

Your legal work is often about balancing rights, freedoms and obligations. And companies are beginning to think more broadly about who they serve. Do you see a shift in how leaders prioritize and make trade-offs?

If we’re narrowly defining “legal” as the documenting of transactions, no, I haven’t seen a shift. 

But if we expand “legal” to include policy and legislation, then yes: In the absence of a unifying federal vision, states are implementing visions of their own — that’s where I see the shift. 

Particularly here in Maine, where the previous administration was not open to investing heavily in or opening up the market for renewable energy, there’s been an aggressive shift. That’s been great to see, but it’s also a challenge because it points to how advancement in the climate economy depends on who’s sitting in the executive seat. 

If we truly want to make an impact, whoever is sitting in those seats must influence the pace and the direction, but they shouldn’t be a bottleneck; they shouldn’t be the deciding factor in whether we’re moving forward or not. 

Is that shift happening because of short-term political pressures or are we seeing the role of the state changing? Are we becoming better citizens of the world? 

I’d say yes, but I don’t know that the intent is to be a better citizen of the world. I think that’s just a byproduct of state leaders recognizing a need to act on a problem they see other world leaders acting on.

Part of what’s happening is that companies are getting called out as bad actors more publicly and more quickly — there’s a lower threshold and there’s a lower tolerance level. And the market’s reaction can be swift. 

There’s always going to be a segment of the population that’s investing in the climate economy because they’re being forced to do something in a sustainable way. That still advances the climate economy in a positive way.

There are also opportunists who watch the leaders and say, “Oh, this is now within my price point and I’m seeing a bit of a benefit. OK, fine, I’ll do it.” 

And there’s a third group that’s frankly just being dragged along because the alternatives are cut off. 

What all this means is that the people who put pressure — economic or legislative — on the system are making this a priority. And if we get strong action there, the rest will come along. 

Unfortunately, there’s noise right now because, in the U.S. at least, we lack consensus on the reality of climate change. And that creates an out for people who don’t want to make the investment yet.

What do you wish the market were paying attention to that it’s not?

Climate change is a magic-wand problem: If I could wave a magic wand to fix a problem in the world… 

But the challenge of climate is that every person has a footprint; every lifestyle choice of every person has an impact. And those impacts are magnified when people come together in an organization. And those organizational impacts are magnified when you have several large companies in a state. Our impact isn’t linear — it’s exponential. 

Our impact isn’t linear — it’s exponential.

And so, the question becomes, how can we change people’s actions at each level — at the individual, organizational, state, country level. And that… Well, when you have a large portion of a group focused just on survival, they’re not able to think about purpose and priority in the same way as people whose needs are amply met. 

Part of the challenge facing those people who are thinking about climate in a broad way is that they’ve already made changes to reduce their impact. But they’re not typically thinking, “How can I use my wealth to make it easier for others on the bottom rung to make this transition?” Their perspective tends to be instead, “Well, I’ve made the change. Now you need to make the change.” That’s the tension we’re facing.

Written by

David Garrison

David is a co-founder of Climate&Capital, where he guides the business, strategy, and brand as publisher. An advisor to leaders on the most difficult challenges of building meaningful brands, he previously founded the Brytemoore Group, a brand consulting firm focused on bold transformations, and has led teams in markets as diverse as healthcare and music, advertising, and management consulting. David speaks on topics ranging from strategic leadership to organizational empathy and writes a regular column for Climate&Capital that shares insights from conversations with leaders. A Canadian living between Maine, NYC, and Toronto, he has an MBA from the Tuck School of Business at Dartmouth. Twitter: @davidcgarrison