Contributed by Peter C. Fusaro, Chairman, Global Change Associates
Sustainability Solutions Need Scaling
The uncensored rhetoric of coal making a return in the US as well as the Trump Administration efforts to cripple environmental laws and regulations are antithetical to the sustained forces of history. Momentum has shifted to sustainability with these opponents fighting last century’s wars.
Today, the financial markets are focused on market acceleration of sustainability in clean energy, clean water and sustainable agriculture. That momentum is focused more and more on the values of Millenials who “get” sustainability in all its manifestations.
As one who has taken the long view since Earth Day 1970, I know what I am talking about.
The problems are one of scaling solutions not finding next generation solutions. For example, 1.3 billion people globally do not having access to the electricity grid. 700 million people have no access to clean water. And 1.5 billion people do not have adequate sanitation. The need is great to scale existing technologies and not wait for the “next new thing.”
This arena is set against massive demographic shifts that dwarf the myopia of North Americans. 52% of the world’s population is under 30 years old and growing. Urbanization is a given with massive rural to urban migration over the past 50 years. Job creation i.e. economic development is seminal and something politicians can wrap their arms around.
Money is readily available. It is looking for good ideas to scale. And as the technology scales, gets better and is connected, market acceleration is inevitable for sustainability.
Behavioral change is the hardest part of this equation. Changing behavior requires incentives, values and “doing the right thing.” But most importantly, it requires leadership that is not focused on quick bucks and immediate photo opportunities but the long-term.
The market drivers are real and material. Climate Change is real. The stressors on the environment with growing population needs are energy, food and water. Technology is accelerating but it needs to scale by a factor of 3.
The Energy Back Drop
Energy is a $6 trillion global business, $330 billion invested in clean energy in 2017, $52 bn in US. 19% of US energy is renewables today, driven by cost reductions and state renewable energy mandates. New York is 29% renewable and California is 25%. That will rise to 33% in 2020 in California, And 50% by 2030 for both states.
Passage of both Investment Tax Credit and Production Tax Credit on December 19, 2015 extended the runway for both projects and investors in wind and solar; and they still remain.
There is no correlation of renewable energy to lower oil prices. In 1978 the US burned 3.8 million barrel/day of fuel oil and now none due to environmental regulations. The world only burns 4% of its oil for electric power generation.
This transition to low carbon economy will take decades. The good news is that innovation continues to reduce the cost of low carbon technologies and energy efficiency is ratcheting up as well on the hardware and software sides. Larger picture is that renewables will account for half of additional global generation by 2030 and overtake coal. In the US renewables were 61% (solar and wind) of new capacity followed by natural gas. Global investment needs to make this transition are estimated at $13.5 trillion by 2030.
Sustainability Has Now Arrived as a Life Style Change and is Accelerating
It took almost 50 years to make this great leap forward to sustainability, but the evidence is all around us in the form of car sharing, no plastic bottles, and organic food. The shift to the low carbon economy is now underway and is accelerating as evidenced at the greening of the supply chain. But corporations are also buying renewable energy and that doubled in 2017 for the Fortune 1000.
Still, it’s just the beginning or as Churchill said, “It is the end of the beginning.” 48 years after Earth Day and over 50 years since Silent Spring, we are just getting started.