President-elect Obama recently pledged strong and swift action to address climate change.  He promised to enact a federal cap and trade system to reduce global warming pollution, and to create millions of “green jobs” through business incentives for alternative energy and environmentally friendly technologies.

But with the economy in a tailspin and the deficit pegged at a staggering $1 trillion, some business groups argue that restrictions on carbon emissions will raise electricity prices and harm companies at a vulnerable time. Climate change, they say, must wait until the economy is humming again.

Other business and investor voices aren’t singing the same tune. They get the scientists’ near unanimous warnings that the world must begin cutting carbon emissions today—not tomorrow—and they see climate change as an opportunity.

As Mark Fulton from Deutsche Asset Management sees it, “The current crisis is making the necessity of tackling climate change an opportunity to stimulate growth through investment opportunities.”

Deutsche recently completed a report, “Investing in Climate Change 2009 – Necessity and Opportunity in Turbulent Times,” that provides a detailed analytical framework for understanding the opportunities for investing in climate change.  It concludes that “governments have before them a historic opportunity to ‘climate proof’ their economies’ as they upgrade infrastructure as a core response to any economic downturn.”

Modernizing our aging power grid to bring more renewable energy on line, making our buildings more energy efficient, expanding public transportation systems—these are the types of investments that could boost our flagging economy while providing millions of new well-paying jobs.

Energy efficiency investments are especially promising. Saving a kilowatt-hour of electricity costs on average three cents, but it costs three to four times as much to produce electricity from a new power plant. Why not include incentives for improved air conditioning systems and building control systems, or for higher performance appliances in the economic stimulus package?
A particularly compelling reason for making green energy incentives part of the stimulus is to ensure that the U.S. emerges from the economic downturn as a world leader in clean technology. We are now woefully behind, placing fifth in solar-cell manufacturing, behind Japan, Germany and most recently China, which tripled production last year.  With clean tech investment reaching $148 billion globally last year, and expected to quadruple over the next decade, the U.S. has to get off the sidelines if it is to remain a global economic leader in the 21st century.

National climate legislation with mandatory carbon limits will provide the necessary market signal to galvanize large-scale clean technology investment that will ultimately improve the competitive positioning of U.S. companies in the global low-carbon economy.

President-elect Obama cannot back down from his pledge.  The risks of inaction are too great, and the opportunities too promising.

This entry was posted on Monday, December 1st, 2008 at 12:00 pm and is filed under Uncategorized .