Never mind altruism: 'Saving the earth' can mean big bucks
Some $1 trillion in 'green' business opportunities await creative entrepreneurs, a report finds.
Bruno D'Hommee produces a compass from his pocket and points it toward a bright, blustery autumnal sky. "Good," he says, " the roof is facing southwest. It's just about ideal – it will catch the full arc of the sun."Skip to next paragraph
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The sun is one of Mr. D'Hommee's most important assets. It does, after all, work long hours for his company, beating down on the solar panels he sells to heat household water. And judging by the growth of his business, which has expanded from one local office in southern England to almost national coverage in recent years, he's selling the idea rather well.
"In 10 years time, I would think most homes in the UK would have either a [solar] device, a wind turbine, or a geothermal unit" for domestic energy, he predicts.
As the international community faces costs in the trillions to address climate change, businessmen are increasingly becoming aware that changing the world – its fuels, technologies, energy sources, and waste disposal practices – can be an opportunity as well as a cost.
For small- and medium-sized British companies, it could mean $55 billion worth of business opportunities over the coming decade, according to a new report commissioned by oil giant Shell UK. And globally, the market could be worth $1 trillion over the next five years, the report found. Such conclusions challenge President Bush's assertion that adopting the Kyoto Protocol, which compels signatories to cut greenhouse gases, would seriously damage America's economy.
"President Bush is right to argue that tackling climate change will cost us money," notes Robin Smale, director of Vivid Economics, the London consultancy that produced the report for Shell. "But for every pound or dollar consumers spend on [green technology or services], this is going to the people who are doing something about it: the people making the biofuels or building new environmentally friendly housing or putting up the windfarms."
While the costs are substantial, and some people will inevitably lose jobs as industries adapt to new regulations and demands, dithering could prove even more costly. An authoritative report by a former World Bank vice president, Sir Nicholas Stern, due out imminently in Britain is expected to argue that the future economic costs of failing to act will far outweigh the cost of action today to mitigate climate change. Another recent report by Friends of the Earth in conjunction with Tufts University argued that spending £1.6 trillion ($2 trillion) a year now could avert £6.4 trillion ($8 trillion) in annual damages further down the line.
According to Dr. Smale, 90 percent will stem from government action. The authorities have already moved to: tighten energy efficiency in buildings, force energy providers to use renewable sources in their supply, force gas stations to source some of their product from green fuel; and encourage more vigorous recycling.
Some leading British industrialists and businessmen are already getting the message. Sir Alan Sugar, the tycoon star of the British version of The Apprentice, put his latest recruit in charge of the ecological disposal of old computers.
Entrepreneur Sir Richard Branson announced last month that he would invest a decade's worth of profit from his Virgin travel business – $3 billion, give or take – in major research efforts into alternative energy sources. Hailed as an act of great charity, it may prove a shrewd business investment. Consumers and companies voluntarily taking action to save the planet could also contribute to the rise in "green" business profits.
"If you are going to take action to tackle climate change, it will not necessarily reduce economic growth, just give you different economic growth," says Beverley Darkin, a senior research fellow and climate change expert at London's Chatham House think tank.
Ms. Darkin cites as an example a recent trip she took to Montreal. Concerned about the "carbon cost" of her trip, she paid a small "fee" of around $20 to Climate Care, a company that mitigates carbon emissions by planting trees in developing countries. Climate Care has enjoyed exponential growth in recent years. Indeed, the global offset market is expected to leap fivefold to more than $500 million in the next three years.
But not everyone is a convert. A recent survey found few of Britain's biggest companies are actually adapting to climate change. Big companies are still showing reluctance to chase the new opportunities.Greenpeace points out that even though Shell is encouraging small green businesses to develop their technologies, it still devotes around 98 percent of its capital expenditure to hydrocarbons.
"They are not positioned very well," says Charlie Kronick, a Greenpeace spokesman. "The bulk of their activity is focused on hydrocarbons."
In its defense, Shell said it wanted "both to build on its oil and gas presence and to be well placed to capitalize on these opportunities as they develop."