By now the Volkswagen emissions scandal has been widely reported and analyzed, and the consequences the German carmaker will face for using software to cheat on emissions tests will be determined, at least in part, by a mass of lawyers.

What interests me is how Volkswagen’s actions fit into the broader context of greenwashing.

The U.S. Environmental Protection Agency found that Volkswagen intentionally programmed a number of its diesel vehicles to activate emissions controls only during testing.  The vehicles’ software allowed the nitrogen oxide (NOx) output to satisfy U.S. emissions standards during testing while producing much higher emissions during actual driving conditions.

In one sense, this comports with a theme we’ve encountered before in greenwashing, i.e., a product’s real-world performance does not live up to its testing results.

The most common example is the charge that a car’s actual gas mileage is considerably lower than the EPA’s fuel efficiency estimates.  These allegations have been made against Ford, Toyota, and Honda (see previous posts here, here, and here).

A variation on this theme is the allegation that the testing protocols themselves are flawed, e.g., in lawsuits against Hyundai and Kia about supposedly overstated fuel economy figures due to testing methods that were not compliant with EPA requirements.

But just as troubling as the result of the deception (actual NOx output being considerably greater than the tested output) is Volkswagen’s method of deception.

This seems be part of a new trend of technological greenwashing.  Rather than making false or misleading statements in ads and other marketing materials, or providing express statements of inflated numbers, this new form of greenwashing uses technology to deceive.

We’ve seen technological greenwashing at least once before in a lawsuit accusing Ford of claiming that a software update for the Fusion Hybrid would increase performance and mileage (see previous post here).  According to the plaintiff, the car’s monitor displayed better mileage and less gas usage after the upgrade but the numbers were inaccurate and the vehicle’s actual mileage did not improve.

This Volkswagen high-tech greenwash is more insidious because the entire deception is cloaked in technology; there isn’t even an affirmative misleading display as in the Ford case, so government agencies and consumers might have no idea there are any representations being made.

This probably is not the last we’ll see of the high-tech greenwash.

Back in 2012, hybrid vechicle technology company Paice filed a lawsuit against Hyundai and Kia in federal court in Baltimore accusing the Korean automakers of infringing three of its patents.

The patents-in-suit were U.S. Patent Nos. 7,237,634, 7,104,347, and 7,559,388.  All three patents are entitled “Hybrid vehicles” and cover hybrid electric vehicles utilizing an internal combustion engine with series parallel electric motors, regenerative braking, and control circuitry.

The Paice technology is called the Hyperdrive System and provides seamless switching between power from an electric motor and an internal combustion engine.

Recently, a Maryland federal jury returned a big verdict for Paice, deciding that Hyundai and Kia owe $28.9 million in damages for patent infringement.  The jury found that all of the asserted claims of the patents were valid and willfully infringed (see the report here on Autoblog and by Bloomberg news here).

The trial lasted eight days, but the jury needed just one day of deliberations to reach a verdict.

According to Paice’s press release, the $28.9 million sum represents a payment of $200 for each infringing hybrid vehicle sold by the defendants through June 30, 2015.  The cars at issue were the Hyundai Sonata Hybrid and the Kia Optima Hybrid.

Paice has successfully enforced its patents before, most notably licensing its hybrid technology to Toyota, which signed a global licensing deal in 2010 covering all of Paice’s technology.

Hyundai and Kia are likely to appeal the decision.

The Federal Trade Commission (FTC), America’s consumer watchdog agency, has historically been ahead of the curve on greenwashing.

In 1992, it first published its Guides for the Use of Environmental Marketing Claims, commonly know as the Green Guides, which provide a framework for green marketers to formulate permissible environmental benefit claims for products and services.

Since then, the agency has been actively pursuing greenwashers, with an aggressive campaign in the 1990s against deceptive environmental marketing claims including enforcement actions targeting ads for plastic grocery bags, aerosol cleaning and beauty products, packaging and tableware products, laundry detergents, and disposable diapers.

More recently, the FTC has occasionally taken alleged greenwashers to court; it brought a recent action for misleading environmental benefit claims against an LED manufacturer.

So it comes as no surprise that the agency would be proactive in the area of green certification seals.  Recently, the FTC sent warning letters to five providers of such seals and 32 businesses using those seals.

Certification seals, or marks, are a special species of trademark.  Unlike ordinary trademarks, which indicate the commercial source of a product, certification marks communicate to the consumer that the products to which they are affixed meet certain manufacturing or quality standards.

Examples of popular certification marks are the LEED certification, owned by the U.S. Green Building Council and Energy Star, owned by the U.S. Environmental Protection Agency:

This preemptive move consisted of the letters, which alerted the providers and businesses that the certification seals at issue could be considered deceptive and may not comply with the Green Guides.

The FTC announced the warning letters last month, but noted that it was not conducting any enforcement actions at this time.  The FTC did not disclose the names of the companies to which it sent the letters.

The press release provides examples of two hypothetical green seals, potentially deceptive on the right and not deceptive on the left:

The press release also mentions the agency’s new blog, Performing Seals, which helps marketers understand how certification seals can comply with the Green Guides.

The Globalization of Clean Energy Technology:  Lessons from China is a thoroughly researched and well-written book and an important contribution to the subject of clean tech innovation.

Five years in the making, Kelly Sims Gallagher’s book uses case studies of four clean energy industries (gas turbines, solar PV, coal gasification, and advanced batteries) in China to learn lessons about international technology transfer.

To guide her research, Gallagher asked these questions:

Which barriers most inhibit the global diffusion of cleaner and more efficient energy technologies?

Which incentives or conditions are necessary to motivate the global diffusion of these technologies?

Through dozens of interviews with individuals in firms, academic experts, and government officials, as well as focus groups, patent analysis, and comparative policy analysis, the book does much to uncover which commercial and policy factors have positive or negative effects on the clean energy industries examined.

I particularly like the organization of the book.  After an introduction and a chapter on China’s energy and environmental policies and innovation system, Chapter 3 presents the case studies as “complete stories” and introduces barriers and incentives to global diffusion of clean technologies.

The case studies represented both “successful” (solar PV) and “failed” (gas turbines) technology transfer and some mixed results (advanced batteries for vehicles and coal gasification).

Subsequent chapters provide detailed analysis of three of the most critical actual or perceived barriers – policy, intellectual property, and cost/finance.

The conclusions Gallagher draws are that national market-formation policies and access to capital are the most important factors needed for global diffusion of clean technologies.

Intellectual property is not generally found to be an impediment to clean tech innovation and transfer:

One set of barriers/incentives that this research does not find significant for the cross-border diffusion of cleaner energy technologies is access to or infringement of intellectual property.

However, there have been some refusals to license, including Toyota HEV patents:

The Chinese have not been able to obtain licenses from Toyota for hybrid-electric technology, and they further think there is no room for Chinese innovation because the Japanese firms have defensively patented the entire space.

But even this may be a blessing in disguise as the Chinese may be leapfrogging to EVs.

One refreshing thing about this book is that Gallagher has no apparent agenda (a marked departure from some literature on the subject).  She writes in the mold of some of the economists who have studied the effects of patents on clean tech such as John H. Barton.  The book is empirically focused; Gallagher wants to find the facts and get to the bottom of it.

And get to the bottom of it Gallagher does.  She finds “widespread agreement that the most important incentive is national-level, market-formation policies.”

The Chinese and foreign experts she interviewed agree that such incentives have encouraged cross-border transfer of the four clean technologies studied – policies including clear targets over time, lack of significant barriers to trade and foreign direct investment, strong innovation policy, stable market-formation policy, and strong export promotion policy.

An extra feature, and another reason to buy this book, is the nearly comprehensive list of case studies on clean tech transfer in Appendix B.

In conclusion, Gallagher’s book is a major contribution to the clean tech innovation literature.  She explains the nature of the contribution concisely:

One of this book’s contributions is to clarify which barriers and incentives for the global diffusion of cleaner energy technologies are most important in the Chinese context, and, ideally, more generally.