Esty planning to launch an energy-use revolution

For many people, the image of the state Department of Environmental Protection is frozen in the 1970s, when it was established to clean up the earth, air and water. For the man tapped to lead the merger of DEP with the state’s utility regulation agency, the new mission is to use the environmental imperative to restore the state’s economy.

Daniel C. Esty has been saying for years that businesses need to be green. In interviews following his appointment by Gov. Dannel P. Malloy last month, the environmental law and public policy professor at Yale said green is good for business because diminishing resources and pressures to emit fewer greenhouse gases will encourage growth, and jobs. Out of hardships come innovation, the idea goes.

esty at davos

Dan Esty speaks at the World Economic Forum in Davos earlier this year (World Economic Forum)

Esty’s vision is that the proposed Department of Energy and Environmental Protection-a union of DEP with the Department of Public Utility Control-will tackle business-related concerns like Connecticut’s highest-in-the-nation electric rates.

And it will, he hopes, encourage businesses and people at home to use less energy-beyond any programs now in place. His goal is to engage businesses as leaders in a sort of energy-use revolution.

Particulars are few–his confirmation hearing is taking place Thursday, and until Monday he was still teaching trade law and globalization at Yale–but he talks enthusiastically about his commitment to the idea.

“My whole career has been working on the interface of business and the environment,” Esty said. In 2006 he founded a Boston-based consulting firm that guides businesses to greener practices, Esty Environmental Partners. “I have spent a good amount of time in recent years helping companies understand the opportunity that exists” in sustainable operations.

Esty, author or editor of 10 books, has been at Yale for 17 years and has been nationally known for a few years now for his theories that cleaner business and industry save money and create a new economy.

In his 2008 book, “Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage,” Esty and co-author Andrew Winston write that major corporations have used both their environmental mistakes and ideas to innovate.

Other ideas in “Green to Gold”:

  • The environment is not a “fringe issue,” and business leaders should always examine their work “through an environmental lens.” To do so not only saves money, because saving energy can save money, but also creates new ways of doing things, making companies more competitive.
  • “Smart companies seize competitive advantage through strategic management of environmental challenges,” Esty and Winston wrote. That is, how a company deals with getting in trouble with regulatory agencies can make or break it. The book is full of specific examples, such as the Sony PlayStation flap last decade, when outlawed amounts of cadmium showed up in cables, costing Sony millions to replace them.

He and his wife, former state Rep. Elisabeth Esty, live in Cheshire and have three children (ages 15, 18, and 21). The Estys have known Gov. Dannel P. Malloy since 2006, when daughter Sarah, now a sophomore at Harvard, was a field representative in Malloy’s first gubernatorial campaign.

His last public policy job was as deputy assistant administrator for policy at the U.S. Environmental Protection Agency, for three years during the Clinton administration. He likes to mention his four-year service on the Cheshire Planning and Zoning Commission. At Yale he heads the Center for Business and the Environment and the Yale Center for Environmental Law and Policy.

For an Ivy League brain, he’s something of a media sensation. When his book came out he sparred with Stephen Colbert on Comedy Central’s “The Colbert Report.” He called that show “the longest 5 minutes of my life.” After the University of East Anglia’s hacked emails cast new doubts on the methods of presenting temperature trends, he was back on the Colbert show trying to explain why greenhouse gases still should concern the world.

He also talked about “the sustainability mega-trend” on the public radio program “Marketplace” last year.

As Esty works to establish an energy-policy framework that supports new jobs, he is looking to Massachusetts as one model. Three years ago the state created an energy and environmental affairs department which, Esty said, “focused on trying to achieve not just policy coordination, but live growth, and in particular a focus on clean energy.”

“I think that’s the best model out there,” Esty said. “I’m not sure they got everything right. In fact I don’t think they did. But it has some potential. They did a good job of building economic growth around a clean energy agenda.”

The idea of saving resources to help the economy seems to depart from the general sense the public has of environmental regulation-the approach of finding and fining polluters that sprang out of the problems and attitudes of the 1970s, when the Connecticut Department of Environmental Protection was born.

In the 21st century, Esty has said, resources are dwindling and more expensive and, even without a federal policy about climate change, business owners know, or ought to know, that reducing greenhouse gas emissions is not only the right thing to do, but that it will help their businesses.

He insisted that pro-business does not mean lax permitting. His idea is not just to give businesses carte blanche to innovate in whatever way they want. “We need to reframe how we do our regulatory program,” he said, “and one of the goals has got to be to make sure everyone knows what the expectations are from the law and that everyone is held to that standard.”

The traditional regulatory way, “command and control,” ought to evolve into one where businesses pay for the right to pollute. The old method, he said, was, ” ‘You can’t pollute above this line, but pollution below this line is all done for free.’ I don’t think that’s right.” Businesses should “pay for every increment of harm.” This means that someone who invents a better pollution control device brings that new product to the market, and sustainable practices become strongly linked with the free market.

In order to have businesses pay in increments for emissions or discharges, this would require a major overhauling of regulation. “This is a theoretical concept at this point,” he said. But he wants standards that help companies help themselves.

“A good bit of my time has been spent in recent years trying to understand how to motivate companies,” he said.

He isn’t one of the critics saying the DEP’s rank-and-file, its scientists and engineers, are wrong in their dedication to environmental standards.

“I think there are issues within the organization that need to be addressed,” he said. “I think there is a morale question that I want to dig into and understand. We have a lot of hard working folks who have been burdened with a lot of expectations, from the legislature and the public” as their staff has been cut and budget remained flat for decades.

“I saw this at the EPA,” he said. “We have to make choices. Some things we’ll have to shift people away from. I’m not going to give specifics today. I have to do my homework. I am quite certain we need to make sure the staff is not overstretched and have them delivering on the most critical jobs.”

Finally, he said he will form a team to study Connecticut’s electric rates. “There is something of a mystery why we pay such a high rate,” he said. “Something has gone terribly wrong in the structure of electricity deregulation.”

In December, two months before his nomination, Esty took the flag for his private sector-environmental mission to the year’s largest gathering of environmental advocates in Hartford, the Connecticut League of Conservation Voters’ annual summit. His keynote speech came first on the agenda. He told them that environmental regulation needs a new “structure of polluting charges” set up with the cooperation of business and that the budget crisis provided an opportunity for growth.

“There will be a lot of nervousness about this,” he said. “I think there’s an opportunity.”

Esty now admits that he had already talked to Malloy about “the possibility of helping him.” A week later, Malloy’s transition team called to set up an interview.