This blog post is the third of an eleven-part series on CSRwire that summarizes key lessons from the new book Cold Cash, Cool Climate: Science-based Advice for Ecological Entrepreneurs.
By Jonathan Koomey
If you’ve read some of my preceding posts, you’re either working on a new climate-related business venture or thinking about it. So why is this a fertile area for new ventures, anyhow? I boil it down to three things: it’s big, it’s urgent, and it’s widely misunderstood.
The Climate Problem Is Big: Good For Entrepreneurs
The changes needed to solve this problem are so pervasive that opportunities abound. To achieve climate stabilization, all parts of the economy will need to be examined, evaluated, and re-engineered to wring every last gram of emissions from the system. That doesn’t just mean the energy system; it means every process by which we wrest value from the universe, which is why the opportunities are so vast.
The Climate Problem is Urgent: Delay Costs Money And Market Share
There’s real urgency to this problem, but you’d never know it from the U.S. public debate on the topic. As I discuss in my book Cold Cash, Cool Climate climate change is driven by cumulative emissions of greenhouse gases. That means that it’s not just annual emissions that matter — our actions up until now constrain the possibilities, and acting sooner is cheaper than “wait and see”.
To keep the earth’s average temperature within comfortable limits we’ll need to turn emissions downwards this decade and rapidly reduce them in absolute terms over the next 40 years, in spite of increases in GDP, population, and other important economic drivers.
That won’t be easy, and waiting will increase the costs of taking action (according to the International Energy Agency, every year of delay will add another $500B to the costs of solving the problem from 2010 to 2030).
Our competitors in Europe and Asia recognize the reality of the climate problem and are racing to invest in the industries of the future, by some measures outpacing us handily. If we don’t get with the program, we’ll be left far behind as the world retools for a low carbon world. It need not work out that way, as the U.S. still has many entrepreneurial advantages, but if we don’t change our direction soon, our competitors will eat our collective lunch.
One example is that of wind power, where China installed half of all new wind installations in 2010, and in that year surpassed the US in total installed wind capacity. China also spent almost three times as much as the US did on energy R&D in the 2004 to 2008 period (for details, see Chapter 24 in IIASA’s Global Energy Assessment).
The Climate Problem Is Misunderstood: That Means Opportunity
Due in part to an extraordinary propaganda campaign funded by the fossil fuel industry, misconceptions about climate abound. Most folks on the right think that this is all an elaborate hoax perpetuated by a cabal of scientists all in it for the money, that reducing emissions will be horrendously expensive, and that there are few options available to us (even if climate were a problem).
Most folks in the political center have no idea just how many changes will be required if we’re to preserve anything close to the world we grew up in. Many folks on the left think the climate problem can be solved by requiring industry to fix it or by simple personal actions like recycling. And the pessimists among us think this problem will be impossible to fix at all, so we’re doomed to destroy the world (they always have been sourpusses, and there’s nothing we can do to change that).
None of these views is remotely accurate, but that means opportunity. When people misperceive reality on a vast scale, it creates an opening for clear-minded entrepreneurs to change the world.
The most important misconception relates to humanity’s options for mitigation. They are many and varied, and not particularly expensive. Current technology already gives us the ability to substantially reduce emissions at modest costs, so it’s not just a question of inventing our way out of the problem (although we will need new technologies and institutional innovations to keep the pace of emissions reductions continuing in the next few decades). And even if fixing the climate problem costs society a modest amount, there will be great profits to be made in the transition.
Next: I’ll explore the scope of the problem, explain the need for modifications of both existing capital and current institutional arrangements, and describe the entrepreneur’s challenge related to replacement of existing capital stocks.
Cold Cash, Cool Climate: Some Fundamentals
Jon Koomey explains the premise of his new book Cold Cash, Cool Climate