❝Saving the world isn’t going to be cheap. If you sell oil, coal or old-fashioned cars, that threatens disaster. For makers of stuff like solar panels, high-tech home insulation, and efficient lighting, it’s a potential miracle.
That’s the bottom line from this weekend’s climate deal in Paris, which commits 195 countries to reducing pollution in order to head off dangerous climate change.
Global governments and companies are counting the costs and benefits from the agreement, which calls for wholesale transformations of energy, transportation, and dozens of other lines of business. Fossil-fuel producers and countries that depend on them face massive, costly disruption. Players in up-and-coming industries like renewable power and energy efficiency are looking at an unprecedented opportunity.
❝The Paris pact, which also calls for a review of ever-tightening pledges every five years, is the most significant global climate agreement ever, outstripping the 1997 Kyoto Accord in its scope and ambition…The deal will likely accelerate investments in technologies like renewable energy and electric vehicles — especially if more countries join the European Union and parts of North America in imposing a price or tax on carbon. The United Nations estimates upward of $1 trillion a year in spending is required to de-carbonize the global economy and prevent temperature rises scientists say could flood coastal cities, disrupt agriculture, and destroy ecosystems.
❝That means companies with business models threatened by a low-carbon world need to re-focus, and fast, said Lyndon Rive, CEO of SolarCity Corp., a U.S. provider of home-solar systems…Rive said on the sidelines of the Paris summit, “you’re going to defend that job because that’s your livelihood. But your livelihood is going to be destroyed.”
Executives from more traditional companies have a similar, if less stark, view. Peter Terium, CEO of German utility RWE AG, said companies like his would have to learn from the successive transformations of International Business Machines to stay relevant in a new energy system. RWE on Friday approved a plan to split into two companies, one focused on renewables and grids and the other managing declining conventional assets.
❝That doesn’t mean Big Oil will be closing up shop anytime soon. According to a relatively optimistic forecast of emissions cuts by the International Energy Agency, fossil fuels will still account for about 75 percent of energy demand in 2030, with coal hitting a plateau, oil growing slightly and natural gas surging…
❝Energy investment, though, will increasingly shift toward green power. Under another IEA scenario, renewables will attract about 59 percent of capital in the power sector over the next decade, rising to about two-thirds from 2026 to 2040. France’s Total, for example, is building out its solar business, shifting investment to gas, and expanding energy-efficiency services to cope.
Executives at companies that have moved early to get themselves ready for a lower-carbon world argue there’s nothing new about the energy transition except perhaps its scale; after all, changing technologies have been obliterating business models since at least the invention of the wheel.
“Really high-carbon industries have had their day,” said Steve Howard, Chief Sustainability Officer at furniture retailer Ikea. “If they can adapt and reinvent themselves, fantastic! If they can’t, maybe some will just return cash to shareholders and slowly close up shop.”
One of the advantages of a globalized economy is that progressive tech – if a firm is capable of moving into global competition, planetwide distribution and sales – becomes widely accepted, faster and easier. Backwards portions of any industry will no doubt continue to drag their feet. Even more backwards politicians – the Republican Party and other wholly-owned subsidiaries of the Koch Bros. – will do their damndest to hold back time, deny any progress offered by science and technology. But, a global market offers the opportunity of scale sooner to bona fide enterprise. A global market doesn’t grow itself over time on the path of selling for cheap and dirty.
It would be great if our political infrastructure still believed sufficiently in American talent for innovation and invention to help out. Poisonally, I think too many of our politicians are owned by the two most reactionary wings of capitalism: the types who consume Earth’s resources regardless of the result and those who unblushingly are out to make a quick buck, especially with runaway shops. The first will rely on political flunkies to defend their diminishing global role. The second are already running hard to be importers instead of efficient, competitive manufacturers.