Turning the World Green without Kyoto

Turning the world’s businesses towards sustainability and energy efficiency has been posed as one of the great most recent challenges, left untouched. I don’t have to tell you about climate change, I am sure you had already had the pep talk about how climate change is a looming threat, but taking that as an initial premise, where does that leave the world? Recently I have been reading Hot, Flat, and Crowded by Thomas Friedman. Within it, Friedman gives a pitch that climate change and America’s oil dependency calls for actions in the form of legislation, to put America on track. What he suggests, is taxes and fixing a higher price for oil, and charging polluters for the damage they do to the environment. He does so arguing it plays a critical role in fostering demand for American businesses to become energy efficient. This kind of position reeks of a focus on the state to solve the problem, and create the demand for businesses to turn green. As Pierre-Francois Besson puts it in an article for swiss.info, businesses are lost without a new Kyoto Protocol; the business world lacks the signals of demand to gather investment for green and sustainable business. But is all this really fair, and the world needs to work outs the issues that currently prevent the Kyoto Protocol holding weight after 2012, and business is simply waiting around for a new Kyoto and fixing of prices? Or can businesses accumulate the investment needed to get a green tech revolution rolling without Congress or a Kyoto?

It would certainly seem so with companies like Google, and GE entering the market of developing sustainable energy. GE has been filling in the slack, according to Bryan Walsh from TIME Magazine, saying that GE is keen to pick up some of the huge demand in the United States for solar power, and become an expanding player in that market. In doing so, GE has been investing in venture companies with the best ideas on moving solar energy, and sustainable energy from the far future to the present. With businesses keen to cut down on power bills, and save money, the demand for solar panels is astronomical, with Nick Engelfried from GreenAnswers.com reporting that 2011 was a record year for solar in the United States, with a 66% increase in sales. There seems much potential on the horizon for that increase to simply be the tip of the iceberg however. A number of companies like First Solar have been growing on this demand, not just in Germany, but also in the United States. Google is another company making huge investments in sustainable energy, keen to see new and innovative energy generated that is good for the environment, but with a catch; it has to be very cheap so that such a business can be exported to the developing world, like India and China, increasingly the next big polluters. And it’s not simply solar feeling the investment, nor is it just Google and GE, with Ford, and Intel eyeing green tech. According to Jon Swartz from USA today there is little doubt the focus is on new innovation with energy, with 4.9 billion invested in US start-ups, up 40% from the previous year. But all this leads me to my next question: Is this like the great revolutions of the past, like the internet investment bubble, quickly mounting to shrivel when the realization hits that this is the utility to create the revolution, rather than the revolution itself. What do I mean by that?

Thomas Friedman in Hot, Flat and Crowded suggests this in his book, which puzzled me. For someone trying to advocate a revolution in green energy, why would they suggest there is no money to be made? For example when it comes to smart grids, which would allow homes and businesses to make money off power they generate and don’t need and use. Such a grid however will be increasingly important to growing demand for sustainable energy, because if they can sell it, investment in such a grid means money to be made by those keen to grow the sustainable energy market share, and sell solar panels, or sell businesses windmills or green energy machines. There is plenty of money to be made on both sides, and suggesting it’s the next ‘crash and burn’ isn’t just a really bad way of trying to convince a need for investment, but also off the mark: there is plenty of money to be made. When it comes to Thomas Friedman’s argument in favourability of having government or having a Kyoto solve the worlds energy demands, it seems clear these positions have jumped the tracks and are missing the revolution happening right under the nose of all keen to see the world become more green. It’s true that demand is necessary, but with the variously stocks like Google, taking a hit as oil prices increase; companies are increasingly becoming aware that one cannot rely on old sources of energy like oil into the future. Oil prices might go up and down, but it’s a continual roller coaster ride I’m sure many companies will be keen to get off, sooner rather than later. Because the next rise could be a record, and that would mean torture for the share price of many if not any big company flouted. Not only that but the state is not the one who should be looked at to solve the world’s problems, particularly with mounting global state debt, and slow recoveries worldwide. Economic forces are much better in full steam without government clogging the prospect of growth with a new tax, and making its slow legislative process the backbone of the revolution on our doorstep; they are already getting there without a carbon tax. In my view Thomas Friedman is preaching to the converted; the green revolution has already begun.