By Kristen Moree

In 2004, University of California-Davis, the largest agricultural school in the country, sent out a Request for Proposal (RFP). The RFP was for the redevelopment of a 10-acre parcel on the university’s campus, referred to as West Village. The school intended for the development to be a mixed use project centered around student housing. Our sister company, Urban Villages, responded to the RFP. Rather than creating a traditional development plan with the most cost-effective design at its center, Urban Villages and its partner for the project, Carmel Partners, proposed something radically different. They would design West Village to be a 100% net zero energy community, meaning it would produce on-site all of the energy that it consumed. Fast forward seven years later to its completion and it would become the largest net zero energy community in the United States.

In terms of decarbonizing our economy, electrifying our energy industry has been targeted as the prominent strategy, and understandably so. When you look at sector-specific contributors to global greenhouse gas emissions, the energy industry is the biggest culprit, accounting for 35% of total emissions. However, that’s only a part (or roughly a third) of the story. Agriculture, forestry and other industrial land uses are a close second, contributing 24% of total global emissions. While both renewable energy and regenerative agriculture represent critical paths towards achieving a low-carbon future, only one of these industries has made substantial gains over the past 15 years in mitigating carbon emissions. The other, as Grant McCargo, CEO of Urban Villages and Bio-Logical Capital, likes to say, “hasn’t even left the parking lot.”

I sat down with Grant to learn more about this project, since it came before my time on our team. This project began when Bio-Logical Capital was just an idea and beginning to form as a ‘special project’ under Urban Villages. Some of our Bio-Logical Capital staff today played an important role in this project development and it feels important to me to understand our past and lessons learned.

Back in 2004 when Urban Villages was just beginning the visioning phase of the West Village project, renewable energy technology was still in its infancy. Concentrated solar power didn’t yet exist, and the total renewable energy supply outside of hydropower was only 7% of current levels. While the notion of renewable energy seemed promising, in reality it faced many challenges to reaching implementation at scale: energy storage, cost of construction and installation, reliability, grid connection, local policy and consumer perception were just a handful of these obstacles. Because of the field’s nascence, the design of the West Village project required the creative amalgamation of numerous (at-the-time) cutting-edge carbon reduction technologies thoughtfully pieced together. The design incorporated energy efficiency strategies combined with renewable energy production infrastructure in order to reach its goal of producing 100% of its energy demand. By these metrics, over the course of 25 years, the project was expected to offset the equivalent of 2,000 tons of carbon dioxide per year, equal to taking 9,000 cars off of the road – a herculean undertaking at the time.

How could a project achieve such gargantuan carbon reduction outcomes using such limited technologies? Rather than focusing solely on energy production, the plan included an astonishing 50% energy reduction pathway, all of which came from energy efficiency improvements, including:

Reflective roofing
High efficiency lights
Passive energy efficiency strategies
Heavy duty insulation

With a significantly reduced energy demand, meeting the supply of solar energy production was now attainable for the remainder of the energy generation necessary to be net-zero. A four-megawatt solar power system was sufficient. Lowering the demand is perhaps one of the most impressive elements of the project’s execution, because it enabled the design of the system to avoid needing to purchase any off-site carbon credits, as is typical of many large-scale net-zero development projects today, even with our advanced solar production technologies.

But West Village was not just a renewable energy development project. It represented a whole systems approach to land use, incorporating habitat, water and food into its design. All of the buildings that now house the 2,000 residents (including faculty, staff and students) are affordable housing. There are multiple parks and gardens, as well as a network of paths for pedestrians and bicyclists to enjoy these green spaces. These green elements of the design help to offer ecosystem services such as managing storm water retention while also reducing the number of cars driven throughout its streets. And while food production isn’t currently a component of the development, the initial plans kept this element in mind for potential incorporation at a later stage.

The total project cost came in at $280 million. With a grant from the energy utility company Pacific Gas & Electric to cover the solar costs, the renewable energy infrastructure added 5-6% in project costs compared to a conventional energy system. While this number may seem small, it actually represents a $14-$16 million difference in project costs. Compared to today, only eight years later, there would be no additional costs for achieving net-zero energy. In fact, there would likely be cost savings due to the continued fall of renewable energy installation prices and reduced operational costs due to enhanced energy efficiency technologies.

What were the contributing factors that created a pathway for such rapid advancement of renewable energy in terms of technological improvement and cost reduction over such a short period of time? According to Grant, the visionary behind West Village, “renewable energy is a competitive business today. It has consistent cash flow and has attracted large investment to subsidize its costs, mostly from China, both in terms of research and development as well as manufacturing.” While we are still lacking in infrastructure for renewable energy, it’s extremely affordable. Here in Colorado, the cost of producing wind-generated energy is actually lower than the cost of energy produced from fossil fuels. As these prices continue to drop, consumer adoption will quickly rise. Because of all of these combined factors, Grant believes that renewable energy will continue to grow as an industry, ranging from distributed micro-grid developments to utility-scale projects.

The growth of renewable energy has been unparalleled by any other industry that has emerged as a field to combat climate change. Renewable energy now accounts for one third of the world’s total power capacity. This stunning accomplishment is largely due to the sheer magnitude of capital that has been injected into the industry. From 2004 to 2014, global investments in renewable energy increased from $47 billion to $286 billion, respectively - a 600% increase in just ten years. Even BlackRock, one of the largest wealth managers in the world, announced its commitment to begin incorporating climate and sustainability analysis into the structuring of its investment portfolio.

However, when you look at decarbonizing the land use and agriculture sector, our progress as a society has waned in comparison. While it is notably more difficult to quantify the total level of investment into regenerative land use and agriculture, recent estimates point to a comparatively significantly smaller amount than renewable energy investments. A 2019 land use investment report estimated that there are currently $47.5 billion in assets under management dedicated to regenerative agriculture. This is equivalent to renewable energy investment levels of 2004! By other standards, there are a startling few number of farms that use regenerative growing practices (less than 1% of farmland in the US is organic), and this is especially true when it comes to raising livestock. The meat industry continues to be dominated by a few enormous, industrialized, carbon-emitting players.

Regenerative farmers and ranchers competing with those economies of scale appear to require either some form of technological adoption into their operations to drive down costs and increase efficiency, or large sums of capital to expand their production and/or innovate their model. And yet how many regenerative farms do you know of that are adopting agricultural technology to their advantage? What about the number of large-scale regenerative grazing operations? The general perception of technology use in organic and regenerative agriculture is that it comes with high up-front costs, with sufficient speculation about its potential to pay for itself in the near term. What is it about agriculture as opposed to energy that makes it so difficult for the field to advance its carbon reduction technologies, costs, adoption rates and economic models? The opportunity is glaring, and yet execution seems to be lagging.

When I took this question to Grant, he responded, “Energy has more consistent cash flow than agriculture. There are too many variables with agriculture to have a reliable cash flow.” However, he emphasized, “Population and climate will force agriculture to advance technologically.” Favorable economics are an extremely strong indicator of technological adoption when you look at historical trends of technology use over time. When economics are sound, financial investment will follow, which creates the ideal environment of research and development co-conspiring with private market execution to create industry wide change. Unfortunately, when cash flows are slow to develop or require high-risk capital, it is usually nothing short of an ecological crisis that can grab our attention to develop and adopt technological solutions at the necessary rate. The role of capital mobilization in technology advancement then transfers from one of pure execution to one of speed of execution.

Unfortunately, it is largely the latter pathway that is beginning to carve the way for sector wide advancement in regenerative agriculture. With the loss of our planet’s biodiversity, continued deforestation, food scarcity, extreme soil loss, and other land-related catastrophes, land use is finally being recognized as both an important contributor and a critical solution to climate change. Multiple peer-reviewed research studies are beginning to provide evidence of the potential for soil to work as a carbon sink when the ideal mix of growing and grazing practices are applied. Private investors are finally starting to recognize large financial returns in agriculture technology businesses.

It is not a coincidence that all of these trends are emerging at the same time and solutions are gaining traction. Here we are again, racing against the clock, but almost unknowingly. While the world is slowly beginning to wake up to this food and agriculture crisis, our team at Bio-Logical Capital is developing unprecedented regenerative land use models that rely on complex synergies between the whole ecological, economic and human system that they embody, in hopes of generating increased cash flow for the land where the food is grown. While the financial risk of investment into regenerative agriculture models (such as ours) is perceived by some to be relatively large compared to traditional asset classes, we feel the risk of inaction is decisively greater.

Back in 2004 when designing West Village, Grant didn’t know if the project would succeed. There weren’t any other projects nearby of that nature or scale to refer to as a model— there only existed glimpses of ideas to serve as inspiration, such as a biophilic design project happening next door. In fact, Grant reflects back on the project as being so high-risk that, if given the same opportunity today, he says he may not have taken it, given all of the unknowns and obstacles he ended up encountering throughout the project’s life cycle. But because of that leap of faith, West Village ended up setting a bold, new precedent for real estate developers and planned renewable energy projects across the world.

Similar to the risk incurred with the West Village project, the current economics of the majority of farms and ranches also don’t inspire much confidence for interested investors or young entrepreneurs in terms of risk-return profiles. But learning from the energy industry at large, this predicament isn’t actually a hurdle – it’s an incredible opportunity. Coal powered plants are now becoming stranded assets because their economics of producing power can’t keep up with those of renewable energy. Similarly, the historic model of how we grow and consume food – where each part of the value chain is separated by a markup in price and a subsequent loss in profit for the farmer – is ripe for intervention in terms of developing and scaling new economic models that are regenerative in nature and profitable in execution. Catalyzing the development and expansion of these models will take a healthy appetite for risk and a bold vision for the future. Many models will fail, but some will succeed.

15 years after its initial conception, West Village is now a nexus of renewable energy research and development, whose technological developments are contributing to the advancement of the field far beyond the project’s initial footprint years ago, and perhaps even beyond its original intended impact. It was a new model for renewable energy development 15 years ago, and still today is a catalyst for progressing the field even further. Grant humbly attributes some of West Village’s success to luck, but his same adage then rings even truer today, “We didn’t have all answers when we started this project, but we knew that we could figure it out, and that these types of solutions are where the world needs to move to, and that we want to be part of that shift.”