By David Bank with Imogen Rose-Smith
(Originally posted in Impact Alpha on Dec. 21, 2015)
Climate-change deniers seem to be shifting from “It’s not real,” to “It’s too late,” as suggested by a recent Wall Street Journal editorial.
But even the Journal allowed “What will help is human invention and the entrepreneurial spirit.” So can’t we all just get on with meeting the trillion-dollar challenge and seizing the opportunities for a low-carbon economy?
The size of those opportunities and what this month’s COP21 climate agreement in Paris means for investors is the topic of ImpactAlpha’s latest Returns on Investment podcast.
Imogen Rose-Smith, senior writer for Institutional Investor, played the slightly more sober market analyst to my “raging bull” in regards the future growth of low-carbon sectors such as photovoltaics, wind, electric vehicles, LED lighting, and carbon-storing agriculture and forestry. Host Brian Walsh, head of impact for the financial technology firm Liquidnet, played the honest broker.
A very good Goldman Sachs report sizes a $600 billion a year revenue opportunity in the “low-carbon economy” and predicts solar and wind will generate more new energy capacity in the next five years than the shale-revolution did in the last five. And that report came out even before the U.S. Congress, with barely a ripple, extended the investment tax credits for wind and solar for five years, instead of the usual one.
In the podcast, we dissect the new Breakthrough Energy Coalition, the billionaire’s club led by Bill Gates that is backstopping government commitments to clean energy research debate. We air out the contrarian view voiced by energy entrepreneur Jigar Shah, even more of a raging bull than me, who says we already have the technology we need to fight climate change.
We also trace the “stranded assets” thesis, which in the last year has gone from activist tool to nearly conventional wisdom, with reports from Blackrock, Ernst & Young and others examing the scope of the potential impact. Whether or not they agree with divestment as a tactic, investors increasingly weighing their exposure to climate policies that are coming down the pike. That was the takeaway from the Paris announcement of a new low-carbon index from New York State Common Retirement System (see all of ImpactAlpha’s COP21 coverage here).