Change is accelerating in the green space. The United States, and, later, the global economy are being restructured into greener and more efficient economic structures. While these changes are driven by higher energy prices and better technologies, the primary driver is government. Since government has intervened into the economy and become more activist, we are seeing an accelerating trend line for the regulatory policy framework that will drive green faster and farther than many observers and industry analysts realize.
Environmental - or “green” - investing became a buzzword during 2008, particularly as energy prices spiked and environmental issues placed on the back-burner for the 8 years of the Bush administration were finally addressed during the US Presidential campaign. As the financial crisis has grown, environmental investing may have disappeared from the media spotlight, but not from the attention of investors...
Officially ringing in NASDAQ’s Opening Bell this Monday was Global Change Associates Chairman and Founder, Peter Fusaro and guests. The ceremony is NASDAQ’s way of recognizing Mr. Fusaro and Global Change Associates for their work in bridging financial companies and sustainable environmental projects.
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Emerging markets for environmental financial investment and trading continue to attract significant global investment interest but little investment capital as yet. According to Cleantech Venture Network, $5.18 billion was deployed for clean-tech investment in global markets for 2007. For research and development in the same year, U.S. energy companies committed only $4 billion and the U.S. federal government spent $7.5 billion. It is now estimated that underinvestment in U.S. energy and water infrastructure is over $2 trillion. This underinvestment has been held up by regulatory uncertainty of the United States on federal climate change legislation as well as the lack of attention by politicians. That will now change with the next U.S. administration.
It's the end of another year, an appropriate time for a forward look at energy and environmental issues. Many ideas are buzzing around Washington D.C. policy circles
now. What policies will be implemented, when will they be implemented and how will they be implemented? These are important questions.
The continuing financial storm is damaging investor portfolios, but there is safe harbor in this maelstrom and that safe harbor is green. The rising green investment sector is not correlated to many other asset classes. Green encompasses a variety of financial instruments and opportunities. While it can be argued that it is relatively small today, the uptrend will continue for many decades, despite all the analogies to the tech bubble and the dotcom crash. What is really being addressed is the decarbonization of the global economy. It is a decade-long process that will re-evaluate investments, assets and companies going forward. Green screens are beginning to emerge and they do some of this analytical work but the bottom line question is, "Will green bring green returns?"
Sometimes a great idea requires great timing to ignite public recognition and action. Energy efficiency has long been a great idea; however, not until the recent convergence of higher sustained energy prices and demand for carbon footprint reduction has the case for widespread adoption of energy efficiency measures become so compelling. Moreover, today's technology is better, more reliable and ready to be massively deployed in a new trading market based on energy efficiency portfolio standards and white certificates (a/k/a white tags, negawatts, energy saving certificates).
Peter Fusaro is on the cover of Exec Magazine, and featured in an
interview, discussing his career, work, and thoughts about the future.
I recently attended Goldman Sachs' third annual alternative energy conference in New York, along with 1,000 others. The take away is that is there is increased investor interest in the sector, but the key stumbling block is still the lack of regulatory certainty for the deployment of more capital. Public policy in the climate change arena is diffuse as a patchwork of state actions has replaced the lack of federal action on both energy and environmental issues. That's all about to change. What is imperceptible to the policy pundits is the power of the Internet to activate the polity to foment change at the grassroots. For example, today, 600 U.S. cities have taken the lead on climate change. As Al Gore stated at the Goldman Sachs event, "The world is awakening to the absolute necessity to adopt a carbon strategy." I will add, finally, the U.S. Federal government, just not this current administration.
The underinvestment in clean energy and clean technology is mind boggling, considering the market opportunity. Capital outlays on research and development seem not to be focused on the approaching carbon constrained world and the myriad opportunities presented.