Investing in Climate Change Solutions – Blog Post 23 - Make-Up 2

A lot of my blogs discuss two possible solutions to mitigating climate change.  One is trying to convince the government to do something serious about the problem.  The other is trying to create an environmental movement, starting from a local movement that focuses on helping both the environment and local communities.  There is a third option though, and this option is sort-of in between the other two options.  This option is to make climate change mitigation look like an investment and to prod current companies to invest in helping to make these changes.  This option works with already established, bigger companies who can make a large impact if they decide to invest. 

            This week I read an article titled “Only $1 Trillion: An Annual Investment Goal Puts Climate Solutions Within Reach.”  It was about how the International Energy Agency (IEA) set a number of about $1 trillion that needs to be spent each year for the next thirty-six years to avoid warming the planet over two degrees Celsius.  Ceres, a nonprofit group, is running a campaign titled the “Clean Trillion” campaign, which is trying to work with companies and the government to fund this project.  Companies such as Toyota, General Motors, General Mills, and Nike have all begun to show interest in alternative energies and energy efficiency, realizing that fossil fuel prices could rise and climate change could damage their businesses.  Additionally, the article argues that there is plenty of capital for this $1 trillion mark.  The global bond market has $100 trillion, which can supply some of this money.  Green bonds are especially good because they can be payed off over time, which is what many energy investments do.  Corporations and insurance companies are other potential targets.

            The thing that makes this difficult is that climate change has always been viewed as a cost, so viewing it as an investment may take some convincing for many people, businesses, and governments.  Lack of government commitment in the United States also is making it less likely that businesses will invest because they want assurance that our country is moving towards an alternative energy future before they invest. 

            Overall, targeting large businesses with proposals of energy efficiency and renewable energies seems worthwhile because it helps the businesses to make more money, which is their main objective.  Countless energy efficiency projects are safe investments with high returns, as shown by the popularity of the Green Revolving Funds that are evolving on college campuses across the country.  Renewable energy sources many times have a lower payback period, but are also stable investments that can get better rates than other economic investments.  This option can change the world a great deal because these big companies can make big changes.  Once other companies realize the economic benefits of these actions, other companies are likely to follow suit.  When companies follow this, there is more of a chance that the United States government will follow through as well because it will have more support to do so.  That would make the first option on my list a lot more viable. 

            The option of making climate change an investment possibly does have some weaknesses though.  First of all, this plan does not get the rest of the United States’ population involved very much.  The idea of community and strengthening the environmental movement is lacking here, so people across the country may still continue to live their lives in the same ways as before.  In addition, trying to fix climate change is not always an investment.  Sure, energy efficiency and renewable energy are investments that pay themselves back over time.  Many changes that are needed for climate change to be prevented, such as carbon capture and sequestration technologies, are money intensive and probably do not pay much money back to the investing company.  Do they help fight climate change?  I would say yeah.  Does this help the globe economically?   I would say yeah.  But does this help the investing company?  I would say no.  This third option is great and could yield some really positive impacts, but it can’t do everything.  All three options need to be done to some degree in order to fully prevent drastic climate change.

Works Cited

Douglass, Elizabeth. "Only $1 Trillion: Annual Investment Goal Puts Climate Solutions Within Reach." Inside Climate News.org. N.p., 15 Sept. 2014. Web. 19 Dec. 2014. <http://insideclimatenews.org/news/20140915/only-1-trillion-annual-investment-goal-puts-climate-solutions-within-reach>.