'Ecomagination' at Work: GE's Sustainability Initiative

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Case Details:

Case Code : BECG068
Case Length : 19 Pages
Period : 2005-2006
Organization : General Electric Company
Pub Date : 2006
Teaching Note : Available
Countries : The US
Industry : Diversified

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Ecomagination is GE's commitment to address challenges such as the need for cleaner, more efficient sources of energy, reduced emissions, and abundant sources of clean water. And we plan to make money doing it. Increasingly for business, 'green' is green."¹

- Jeffrey Immelt, Chairman and CEO of General Electric, in 2005.

"Ecomagination is a milestone for a number of reasons, including that it's a long-term commitment with specific targets made at the company's highest level. GE has taken this process seriously and done its homework to make sure its claims and goals are credible."²

- Joel Makower, sustainability consultant, in 2005.

Towards A Cleaner Environment

In March 2006, General Electric Company (GE), one of the largest business conglomerates in the world, announced that it had developed a prototype version of a new apparatus that could manufacture hydrogen through electrolysis.³ According to the company's estimates, the hydrogen produced with this equipment would cost around $3.0⁴ per kilogram to manufacture - considerably less than the $8.0 per kilogram it cost to manufacture using conventional processes in 2006. Although the device was still at an early stage of development, it was believed that it could play an important role in the future, as in the early 2000s, hydrogen was increasingly being considered as a feasible alternative to traditional fossil fuels for powering automobile engines.

By 2006, several major automobile manufacturers had launched, or were working on developing, vehicles that would run on hydrogen (Refer to Exhibit I for a list of some hydrogen-powered vehicles).

Hydrogen-powered vehicles were environment-friendly as they did not emit toxic substances, unlike vehicles that ran on fossil fuels. Besides, the use of hydrogen was also likely to reduce the pressure on the rapidly depleting global reserves of fossil fuels.

However, in the early 2000s, a major limitation to the use of hydrogen was that it was considerably more expensive than traditional fuels.

Therefore, if GE's apparatus caught on, it was expected to help make hydrogen-powered vehicles popular, by bringing the price of a kilogram of hydrogen down to the price of a gallon of gasoline.⁵

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1] "GE Launches Ecomagination to Develop Environmental Technologies," www.nema.org, May 13, 2005. (accessed on October 31, 2006)

2] "GE Taps GreenOrder to Help Create Ecomagination," World Wire, June 6, 2005 www.worldwire.com

3] In chemistry and manufacturing, electrolysis is a method of separating bonded elements and compounds by passing an electric current through them. (www.wikipedia.com)

4] Dollars ($) refers to US dollars in this case study.

5] Between January 2006 and October 2006, the retail price of one gallon of gasoline ranged from $2.25 to $3.0 in the US. (from www.wikipedia.com)