Frederick Reese
It has been said that great change will not come to this world unless a profit can be drawn from it.
The world’s climate patterns are changing. Massive quantities of greenhouse gases have been released into the Earth’s greenhouse gas layer by the world’s hydrocarbon-addicted industries, raising average temperatures around the world. It has altered oceanic and atmospheric currents, increased the rate of major storms and unseasonable weather and destabilized precipitation patterns for most of the world. In the American Midwest and Great Plains, persistent drought has set in. The Gulf of Mexico hurricane belt has grown to include the mid-Atlantic states and New England. Kansas is seeing temperatures in the low teens in April. The Arctic ice cap has lost more than half of its surface area.
Despite this, the world’s governments have been slow to respond to the crisis. In accordance with the dictates of austerity, many nations that once had indicated they would invest to reduce global greenhouse gas levels have since rolled back their contributions or stopped them altogether. According to the U.K.’s Stern Review on the Economics of Climate Change to HM Treasury, the cost to significantly reduce the global atmospheric carbon impact to the point that it no longer would pose a critical threat to the climate or life on Earth is 1 percent of the global domestic product (GDP). That would amount to about $718 billion in 2012, according to the Central Intelligence Agency (CIA) World Factbook.
Saving the world, one company at a time
Enter Billy Parish. Parish is one of a new school of entrepreneurs who are investing in for-profit “green” projects. Parish’s company, Mosaic, has been involved in “crowdfunding” commercial solar power projects, offering a 4.5 percent rate of return to investors. The company’s first three projects met funding expectations within 24 hours of their initial offering, and this month, California authorized Mosaic to offer up to $100 million in loans for future solar projects. The first project under the new authorization — a 114-kilowatt solar array for a San Diego-area Ronald McDonald House — met funding expectations in just six hours.
“I think … that there’s a certain pragmatism in the Millennial generation,” Parish told Yale University’s Environment 360. “I think they recognize it’s business that provides virtually all the goods and services that we all enjoy, but there are smarter and better ways to provide those things, and they want to be part of doing things in a better way.”
Parish continued: “…We kind of grew up with corporate social responsibility. We saw companies changing and companies doing good things and saw the potential for a different kind of corporation. There’s been growing excitement about the B corporation, the benefit corporation. Businesses can be about something other than a single bottom line and young people are excited about that and believe that.”
Mosaic is far from alone. At the University of New Hampshire, the Green Launching Pad initiative — started in 2010 with $1.5 million in federal stimulus money — has provided seed money for 14 new “green” businesses. According to the venture capitalist group’s homepage:
“The Green Launching Pad will bring together and support interdisciplinary teams of scientists, engineers, economists, faculty, entrepreneurs and others. They will work to accelerate the development of new “green” businesses and growth of existing businesses that will directly reduce energy use and carbon emissions while creating new jobs and economic opportunities. The teams will broaden the use and applicability of commercially available energy efficiency and carbon reducing products and services.”
One of Green Launching Pad’s biggest success stories, Revolution Energy, is a turnkey alternative energy developer, which plans, develops, implements and operates alternative energy solutions for businesses and institutions at a fraction of the financial and environmental cost of “traditional” energy. When asked about the growth of the “green energy” industry, Revolution Energy’s founder Mike Behrmann responded:
“Our growth has been quite exceptional over the past couple of years. To try and quantify it, it’s basically like saying we’ve grown 1,200 percent each year. Because of the scale of the projects that we’re developing now, because of the dollar figure that we’re working with, it’s enormous. And certainly there are challenges to that type of growth as well. We’re at an opportunity in our economy where entrepreneurs should be encouraged and supported, and this is one form where we’ve been able to see the benefit of that support in what we do, and the industry that we work in.”
The challenges ahead
The conversion of the existing infrastructure to an environmentally-friendly, energy-minimal one offers near-limitless opportunities for the entrepreneur. Such efforts, however, require large amounts of up-front capital for development and implementation, and an extraordinary amount of additional training. However, for those willing to accept the challenge, the opportunity for success is immense.
“[Stanford University researcher] Mark Jacobson reports on what it will take to get to 100 percent clean energy,” Parish explained when asked why the world needs companies like Mosaic and Green Launching Pad. “He uses a rough number of $100 trillion to build out the generating capacity for 100 percent clean energy globally. Globally in 2011 and 2012, about $250 billion was spent on investments in clean energy capacity. So if you hold that line steady, it would take 400 years to switch to 100 percent clean energy. I think that’s at least one way to see that our current financial system is not deploying capital at sufficient rates to transition to clean energy in the time frame we need to avoid catastrophic climate change.”
“You can talk to any solar developer and they’ll say that at least one of the top issues for them is access to capital and because there are so few sources of capital, the providers are able to charge interest rates that are greater than the risks of the asset class justify,” Parish continued. “It’s a pretty well understood asset class at this point and there’s just a huge premium in the capital markets because there are so few players.”
The United States — who signed the 1997 Kyoto Protocol, but did not ratify it into law — has initiated a 10-year, $15-billion-per-year clean energy development plan, based on the sale of greenhouse gas emission credits. Under a proposed cap-and-trade program, the United States would auction off all greenhouse gas emission credits, generating a minimum of $78.7 billion in revenue, starting fiscal year 2012.
However, with sequestration in place and in light of extreme partisanship — including Republican criticism of the government’s investment in A123, Solasta and Solyndra, three “green” energy companies that went bankrupt — such lofty plans are no longer viable. It is now commonly held that leadership on this issue must come from the private sector. As stated in the Organization for Economic Cooperation and Development’s (OECD) working paper, “Private Sector Engagement in Adaptation to Climate Change: Approaches to Managing Climate Risks”:
“Climate change will present businesses with a range of risks, which may significantly affect their business operations, their competitiveness and their profits. Given that businesses face these risks, the rational self-interest of businesses should be a major driver of adaptation actions.”
“It’s a lot easier to hack together a solution now,” Parish said. “You have access to all the information in the world through the Internet and services that have developed to support that. There’s been this movement toward a lean startup approach. You don’t need to start with a cathedral. You start with the first couple of bricks.”