You likely have heard the stories of the bankruptcies of Solyndra, Fisker Automotive and Evergreen Solar, heard about the green tech funds on Sand Hill Road that just didn't deliver and the less than rosy stock prices of clean energy companies that actually made it to an IPO ... So is green investing dead? This was the question at the heart of a panel discussion at the Aspen Institute's Action Forum and one that I am often asked. My answer is twofold, first, no, and second, it better not be -- for humanity's sake.
Human wellbeing depends upon earth's natural systems for our food, fuel, clean freshwater, protection from storms, shelter, and yet our current economic system does not effectively value nature -- either at all, or certainly at the level it is due. The White House just released a report on the costs of delayed action on climate change, estimating that "a delay that results in warming of 3° Celsius above preindustrial levels, instead of 2°, could increase economic damages by approximately 0.9 percent of global output" (approximately $150 billion in annual losses in the U.S. alone). Global energy demand is projected to require some $16 trillion in investment by 2030, and with climate change that needs to go largely to fossil-fuel-free energy sources.
Investment must rapidly flow to companies and projects that restore our natural system and optimize resource efficiency. The good news is that the companies and projects exist, and many with great profit-making opportunities in the near- and medium- as well as long-term. There are newer companies like Tesla and "super-food" company Nutiva (they sell healthy foods from sustainable agricultural practices) whose growth rates by far exceed the average. There are also new business models enabling all of us to benefit from the green economy: from SunEdison (SUNE and TERP) and Solar City (SCTY) putting solar on our homes and businesses with no up front cost saving money on our power bills immediately and providing us free energy within a few years, to Mosaic who's enabling crowd-funded investment to finance solar on military housing, churches and schools. Both community and utility-scale solar projects and solar funds are generating investment returns far above the rates of investing in the S&P 500.
Perhaps the business case for green can be made best by those who are in business: corporations large and small are saving money through energy-efficiency investments that pay back in as little as a few months, are innovating new planet-restoring business lines with strong profits, and are buying renewable energy to save money -- when Wal-Mart is the largest corporate buyer of solar energy in the country, you know solar pays! Who else gets green investing? China. In 2013, China became #1 in new investment in renewable energy, #1 in new solar PV and solar thermal capacity and #1 in total renewable energy capacity! Oh and who bought Fisker Automotive out of bankruptcy? A Chinese company that is bringing that beautiful car back to market. This is a globally strategic industry sector that creates high-quality jobs fast, benefits economies, and is growing fast. China gets it.
Even where I live in Idaho with some of the cheapest power rates in the nation, the first utility-scale solar projects have just signed deals with our electric utility, and our local solar energy installer Sagebrush Solar brings solar hot water systems that pay home and business owners back over shorter and shorter periods of time, giving them free energy. Like Tesla with its loan from the U.S. Department of Energy, our local health food store paid back its U.S. Small Business Administration loan ahead of schedule. Demand for smarter solutions for our lives and for our planet -- from energy to food -- is growing far faster than the rest of the economy. And renewable energy technology costs are falling far faster than predicted, with solar PV costs down over 80 percent since just 2008! (See more great examples of restorative companies and projects from my friend, fellow Aspen panelist and solar legend, founder of Sun Edison Jigar Shah's book, Creating Climate Wealth here.
The more we invest in these companies, projects and funds, the faster they will deploy and the more they will become even more profitable. Yet there are barriers in our system that prevent as much capital from flowing as it could and is needed. Our planet is getting hot fast, and resources are being depleted. It is long past time that we eliminated harmful energy subsidies ($500B/year estimated globally, $40B in oil and coal subsidies in the U.S. alone). We also need fair application of investment vehicles -- if the oil and gas industry is able to use Master Limited Partnership investment structures to benefit their investors, then the renewable energy sector should be able to as well.
Yet the good news is that even now, in our distorted system, there are profitable opportunities to invest in restoring the planet, opportunities that can also benefit our country: in 2013 the number of solar jobs grew 10 times faster than the U.S. economy as a whole. So join me in moving more dollars where it will benefit our wellbeing now and in the long-term (and benefit our bottom lines!).