On February 12, 1990, Fortune published an article that heralded "Environmentalism: The New Crusade," and said: "It may be the biggest business issue of the 1990s." The magazine photographed the CEO of a gas and electric company to grace its front cover, thereby focusing keen attention on the growing environmental movement and smart companies eyeing new business opportunities.

The CEO was Richard A. Clarke, the head of PG&E and the business leader cited for the annual Richard A. Clarke Environmental Leadership Award, announced last week. PG&E developed the award in 2002 to honor employees who demonstrate a commitment to, and accomplishment in, environmental leadership. The late Mr. Clarke, who served as chairman and CEO from 1986 until his retirement in 1995, championed a variety of environmental initiatives at PG&E -- from energy conservation, to clean air programs, to natural resources stewardship.

PG&E got a bumpy start on the path to environmental leadership in the mid-1970s, Fortune reported. The Environmental Defense Fund fought PG&E's plans to build several coal and nuclear power plants and proposed smaller windmill and cogeneration plants and energy conservation. The utility eventually scrapped the plans for the plants and launched conservation efforts. Said an EDF attorney: "We spoke to them in their own language. We used their type of computer models, their financial analysis sheets. We weren't saying, do what's good for the environment and it will cripple you. We were saying, it will save you economically."

Fortune listed some of Clarke's guiding principles for pursuing a greener future: "Make environmental considerations and concerns part of any decision you make, right from the beginning. Don't think of it as some extra you throw in the pot." -- "Develop an internal cadre of environmentalists. They have minds of their own and will advocate things. They may not get everything they want, but there certainly are occasions when they prevail." -- "Have a continuing dialogue with environmental groups." -- "Put someone on your board to help you factor in environmental issues." -- "Do these things because they are the right thing to do, not because somebody forces you to do them."

In a much-discussed op-ed column in Monday's New York Times, Nobel laureate and former Vice President Al Gore declared his support for a crash program to modernize the nation's electrical system:

We should begin the planning and construction of a unified national smart grid for the transport of renewable electricity from the rural places where it is mostly generated to the cities where it is mostly used. New high-voltage, low-loss underground lines can be designed with "smart" features that provide consumers with sophisticated information and easy-to-use tools for conserving electricity, eliminating inefficiency and reducing their energy bills. The cost of this modern grid -- $400 billion over 10 years -- pales in comparison with the annual loss to American business of $120 billion due to the cascading failures that are endemic to our current balkanized and antiquated electricity lines.

Gore's vision sounds surprisingly similar to that expressed by the Bush administration's Department of Energy in its publication, Grid 2030:

The Nation's aging electro-mechanical electric grid cannot keep pace with innovations in the digital information and telecommunications network. Power outages and power quality disturbances cost the economy billions of dollars annually. America needs an electric superhighway to support our information superhighway.

Change of this magnitude requires unprecedented levels of cooperation among the electric power industry's many stakeholders. Hundreds of billions of dollars of investment will be needed over the coming decades to accomplish modernization of the electric system. National leadership is needed to create a shared vision of the future and to build effective public-private partnerships for getting there. Imagine the possibilities: electricity and information flowing together in real time, near-zero economic losses from outages and power quality disturbances, a wider array of customized energy choices, suppliers competing in open markets to provide the world's best electric services, and all of this supported by a new energy infrastructure built on superconductivity, distributed intelligence and resources, clean power, and the hydrogen economy.

But as DOE itself noted, "national leadership is needed" to turn vision into reality. President-elect Barack Obama says he's ready to step up to the plate. Here's what Obama told MSNBC host Rachel Maddow on October 30:

One of, I think, the most important infrastructure projects that we need is a whole new electricity grid. Because if we're going to be serious about renewable energy, I want to be able to get wind power from North Dakota to population centers, like Chicago. And we're going to have to have a smart grid if we want to use plug-in hybrids then we want to be able to have ordinary consumers sell back the electricity that's generated from those car batteries, back into the grid. That can create 5 million new jobs, just in new energy.

The media rush to highlight every major new renewable power project, but another clean energy resource gets far less attention, even though it's flexible, abundant, relatively inexpensive and valued overall at billions of dollars.

According to a recent report by the North American Electric Reliability Council (NERC), this unheralded resource is equal to 29,000 megawatts of capacity during periods of peak summer demand--as much as all U.S. wind, solar, geothermal, and biomass power combined.

The report calls it "an effective and efficient capacity resource, on equal footing with generation" and says it "will become a critical resource for maintaining system reliability over the next ten years."

What's not to like? Only the name: "demand response." You've gotta love the way the utility industry chose such a dull term to hide one of its hottest products.

Simply put, according to Wikipedia, "demand response (DR) refers to mechanisms to manage the demand from customers in response to supply conditions, for example, having electricity customers reduce their consumption at critical times or in response to market prices."

In most markets, matching supply and demand is no big deal. If supply exceeds demand, sellers build up inventory and sooner or later cut their prices, prompting additional demand. Sellers also regularly adjust prices based on predictable changes in customer demand--think movie matinees or off-season travel discounts.

But until recently, electric utilities had no comparable way to change prices for most customers or to store inventory (excess electricity). Utilities could mainly affect the supply side, for example by ramping up or down infrequently used gas-fired "peaking" plants.

Demand response programs now give utilities a powerful new tool for balancing supply and demand. By encouraging customers to curb demand during periods of extreme peak loads, utilities--and ultimately customers themselves--can save the considerable cost of backup generation capacity that may be needed only a few dozen hours a year.

There are other benefits of demand response.  System reliability benefits because generation and transmission capacity aren't stretched to the limit.  The environment benefits from fewer power plant emissions.  And, last but not least, demand response programs can help utilities manage renewable resources like wind power. When the wind dies down, getting customers to reduce their load can rebalance supply and demand efficiently.

As NERC said of demand response programs in a report issued today, "their critical role in supporting the integration of variable renewable resources will only increase their importance as climate change initiatives progress."

The total value of giving utilities nationwide the ability to shave just five percent off peak demand comes to $66 billion, according to estimates by Brattle Group consultant Ahmad Faruqui.

At PG&E, about 119,000 customers now take part in one of a dozen demand response programs. Together they can reduce the utility's peak load by as much as 1,246 megawatts, equal in capacity to about three sizeable gas-fired power plants that cost hundreds of millions of dollars to build.

One successful program, which launched last year, is called SmartAC. In return for a $25 incentive payment, customers let PG&E install a radio-controlled switch on their air conditioner or thermostat. During supply emergencies, when customer demand pushes the limits of our electric supply, PG&E can cycle those air conditioners off for brief intervals, preventing any risk of rolling blackouts. More than 9 in 10 customers in the SmartAC program say they never feel the difference.

Another innovative program is SmartRate. It is available to residential and small commercial customers with automated SmartMeter(tm) electric meters, which measure customer usage at frequent intervals-hourly for residential customers, and every 15 minutes for commercial customers. Participants enjoy a discount of 3 cents per kilowatt hour between May 1 and October 31--except a few days a year, when afternoon rates jump by 60 cents per kilowatt hour for residential customers, and by 75 cents per kilowatt hour for commercial customers. Simply by turning off appliances during those hours, no more than 15 days a year, customers and the utility both save money and spare the environment.

Smart entrepreneurs are finding ways to extend the reach of these programs. For example, Ice Energy, which just announced another successful funding round, sells air conditioning units that freeze water at night, when electric rates are low, and use the ice to cool buildings cheaply during the day. Its technology may let commercial buildings shift as much as 40 percent of peak energy demand to off-peak hours, when rates are cheaper.

Last year, Ice Energy and the City of Victorville won one of California's "Flex Your Power" awards. Ice Energy projected that the 31 cooling units it installed in municipal buildings would shift enough of Victorville's energy consumption to off-peak hours to reduce CO2 emissions by 335 tons and reduce NOX emissions by 985 pounds over the next five years.

NERC estimates that the growth of demand response programs through 2017 will slice about a year's worth of normal growth in summer demand. Combined with energy efficiency investments, peak demand growth will be slashed 80 percent over that period, it predicts.

Surely a high-achieving program like that deserves a name better than "demand response." Any nominations?

A roundup of green headlines that caught our eye this week:

• Environmentally-friendly shopping garnered attention at the Web 2.0 Summit in San Francisco this week, with start-ups pitching their companies to the venture capital crowd. The New York Times' Bits blog reports that an Internet start-up named GoodGuide rates more than 60,000 products on environmental, health and social impacts. The company's founder created the site when he learned his daughter's sunscreen contained carcinogenic chemicals. Bits also reports on a solar panel installation company and a video broadcast start-up.
• Green Wombat visited California start-up Cool Earth Solar for a Fortune Magazine story on a novel solar power technology to generate electricity from balloons. A single balloon of thin-film reflective plastic with a photovoltaic cell will generate one kilowatt of power. Put together 10,000 balloons and you can light up a town. Cool Earth is building a prototype plant and says a 1.5-megawatt plant will be built next year near Tracy, Calif.
• The U.S. military is marching ahead on the green energy front. My NEXT100 colleague Jonathan Marshall recently posted on the U.S. Army's energy efficiency and sustainable energy projects. Now Earth2Tech notes that the U.S. Navy has awarded a $3 million contract to Ocean Power Technologies to test the company's PowerBuoy system to generate electricity from ocean waves to power oceanic data and communication systems.

Despite its preference for the color green, the U.S. Army isn't the first organization that usually comes to mind when you think of environmental sustainability. But with annual spending of at least $3 billion on energy, the army says it's getting serious about energy efficiency and more sustainable energy production.

In addition to appointing a Senior Energy Council to advise the Army on energy policy, programs and funding, the secretary of the Army recently announced several new projects, including:

• the purchase of 4,000 small Neighborhood Electric Vehicles to replace gasoline-powered vehicles traditionally used by maintenance and operations staff for use on its posts;
• a major geothermal project at Hawthorne Army Depot, Nev., capable of producing 30 megawatts of clean power;
• biomass fuel demonstrations at six Army posts;
• a pilot energy savings performance contract with the private sector to serve as a model for monitoring and reducing energy consumption;
• and perhaps most exciting, a plan to partner with the private sector to construct a 500 megawatt solar thermal plant at Fort Irwin, Calif., in the Mojave Desert, to provide renewable power on the grid and provide the Army post with added energy security against disruption of power supply.

The Army's planned solar power installation enjoys a unique advantage: the Army owns its site and can thus streamline the permit process. Many solar pioneers are reportedly facing long and costly permit delays for projects on parcels controlled by the U.S. Bureau of Land Management. Oakland-based BrightSource Energy has warned that if the review process isn't speeded up, delays could send "a chilling signal to large-scale solar developers and their investors."

A roundup of green headlines that caught our eye this week:

• Tesla To Delay New Car: The credit crisis has forced electric car developer Tesla Motors to delay its launch of a five-passenger battery-powered sedan and lay off a "modest" number of its 250 employees to save cash. Tesla, which sells the spiffy Roadster, faces stiff competition for electric cars with GM, Nissan, China's BYD Co. and possibly Chrysler, Reuters says.
• Pedaling For Progress In The Bailout: EnviroWonk reports the $700 billion bailout bill has a provision to allow bicycle commuters to get a $20 monthly credit for maintenance, repairs and purchasing, thanks to Oregon Congressman Earl Blumenauer, who bikes daily to his Washington office.
• What's Fresh Is Not The Only Factor: Environmentally conscious sushi lovers now can get a lot of information about sustainability of the seafood from three new pocket guides, says the New York Times' Dining & Wine page. The guides -- from the Monterey Bay Aquarium, Environmental Defense Fund and the Blue Ocean Institute -- agree on which fish are sustainable but present the information in different ways.
• Another Reason For Bats To Like Halloween: The Reuters Environment blog notes that bats may get some help from the Bats and Wind Energy Cooperative, an unlikely group of conservationists, wind power companies and the federal government. They want to know if stopping spinning turbines during low wind conditions will reduce bat deaths at wind farms.

If you are as reliant on your morning cup o' joe as I am, you will be just as happy to hear that coffee has a new ally in the fight against climate changes that can put the precious crop at risk.

According to the October issue of BioScience, and as seen on the Medical News and Health News blog, shade trees can actually help improve crops' resistance to the higher temperatures and changes in precipitation that have resulted from intensified production over the years. Starbucks: take note.

The Daily Green takes the power of java one step further in its recent post, which cites Ivette Perfecto of the University of Michigan School of Natural Resources and Environment, who makes the claim, "Shaded coffee is ideal because it will buffer the system from climate change while protecting biodiversity."

So, not only is shade-grown coffee more resistant to the elements, it also fights climate change by contributing to a richer ecosystem.

Make mine a double!

California's Gov. Schwarzenegger yesterday signed a pioneering bill to reduce California's greenhouse gas emissions--not by controlling energy use directly, but instead by curbing sprawl development that makes long car trips all but inevitable.

SB375, authored by State Sen. Darrell Steinberg (D-Sacramento), aims to reduce the number of miles people drive by promoting housing and land-use plans that foster sustainable communities, alternative transportation options (including walking), and healthier lifestyles.

The new law is the first of its kind in the country. "This landmark bill takes California's fight against global warming to a whole new level, and it creates a model that the rest of the country and world will use," Governor Schwarzenegger said.

To learn more about some of the planning options Steinberg has in mind, check out the new report Smart Infill, published by the Bay Area conservation organization Greenbelt Alliance. Steinberg says it gives "local leaders practical tools to encourage climate-friendly development in their communities."

Billionaire investor Warren Buffett is making another energy play, announcing on the weekend that his MidAmerican Energy Holdings Co. will purchase about 10 percent of China's BYD Company Ltd., a maker of rechargeable batteries and automobiles, for $230 million. The move -- Buffett's first strategic investment in China -- follows MidAmerican's announcement earlier this month that it would acquire East Coast utility Constellation Energy Group Inc. for $4.7 billion. 

MidAmerican and BYD will work on new rechargeable battery technologies for vehicles and to store electricity from wind and solar power generation. "The rationale behind this investment is BYD's unique exposure to both lithium-ion batteries as well as its related hybrid electric vehicle business," Merrill Lynch analyst Daniel Kim told Bloomberg News. The "HEV market growth is exploding."

BYD aims to sell gasoline-electric hybrid cars in China later this year and to introduce hybrid vehicles in the U.S. and Europe in 2010. The Big Three U.S. automakers are scrambling to develop hybrids, and they got a boost on the weekend when the Senate approved a spending bill that included $7.5 billion to start a $25 billion low-interest loan program to retool old plants and help the industry develop new fuel-efficient vehicles. The House has already approved the bill.

A roundup of green headlines that caught our eye this week:

• Sustainable is one of the top categories featured on NEXT100, so Andy Revkin's post on sustainable cities on his DotEarth blog seemed right for this week's roundup. Portland, Oregon, again topped a list of 50 U.S. cities compiled by SustainLane.com, a publisher that reviews things that are supposed to be good for you. The Rose City has topped the list for social and environmental sustainability since it began in 2005. San Francisco was No. 2 for the second consecutive year.
• Another piece on sustainability:environmental and aid groups are urging wealthy industrial countries to pay poorer nations to preserve their forests and jungles. Tropical forests absorb carbon dioxide, the main greenhouse gas. Deforestration releases large volumes of CO2, threatening to cancel out emission reductions elsewhere. 
• A U.N. report this week -- "Green Jobs: Towards Decent Work in a Sustainable, Low-Carbon World" -- says more than 20 million jobs could be created as countries move toward new energy sectors, including wind, solar and geothermal power. Some 2.3 million people are now working in alternative energy jobs, with half in biofuels, according to the report.
• Shifting gears to plug-in vehicles, Montreal-based Dorel Industries is introducing a lithium-ion-battery-powered "e-bike" -- the Schwinn Tailwind. It claims to recharge the battery in only 30 minutes compared with four hours or more for a standard e-bike. The price: $3,200 (U.S.).