Saturday, February 23, 2008

Profitability in Clean Energy Technology


Fighting climate change can be profitable. An article in the Christian Science Monitor, Business begins to see profit in going green, refutes the argument that combatting climate change will cripple the economy. Instead, clean energy technologies and the carbon-trading market appear likely to drive profitability and re-invigorate the economy.

Some of the indicators from the article:

A new study by international consulting firm McKinsey finds that half the necessary cuts in greenhouse-gas emissions can be achieved at a net profit. The study shows that investment in energy efficiency of about $170 billion annually worldwide would yield a profit of about 17 percent, or $29 billion. The Financial Times reports:

"Diana Farrell, director of the McKinsey Global Institute, said: 'It shows just how much deadweight loss there is in the economy in energy use.' She said the most inefficient sector was heavy industry in China, with the second residential housing in the US, where homes are large, poorly insulated ..."

At the United Nations Investor Summit on Climate Risk in New York last week, nearly 50 major US and international investors pledged to invest $10 billion in clean technology over the next two years. That's considerably more than two years ago when 26 funds made a $1 billion pledge.

Given the slow response by governments worldwide to taking any kind of action on climate change, it's a promising sign that businesses seem to be taking a leadership role in driving clean energy initiatives.