19 February 2008Financial Post
Global warming may soon get a saviour more effective than Al Gore and his doomsday Power-Point presentations: capitalism.
The former U.S. vice-president, who was awarded the Nobel Peace Prize last year for his work on climate change, is credited with bringing widespread attention to the issue. But the huge moneymaking opportunity in going green will be the big driver that leads to the reining in of the release of greenhouse gasses, experts say.
Money already is pouring into environmental initiatives and technologies in the United States. Experts expect investment in the area to explode over the next few years if, as anticipated, the government here imposes restrictions on the release of gases believed to be behind climate change.
"Capitalism will drive this," said Vinod Khosla, founding chief executive of Sun Microsystems and a longtime venture capitalist.
Mr. Khosla, speaking on a panel at a recent investment summit on climate change at United Nations headquarters here, said getting consumers to curb their energy use has never worked -- unless they've had a financial incentive. "If we make it economic, it will happen," he said.
The expected government-mandated cap on carbon emissions already is fueling innovation.
Venture capitalists, for instance, are investing in new technologies that would make cement -- a major producer of carbon emissions -- actually absorb carbon instead. Cement makers could practically give the product away and reap the financial reward from government carbon credits.
Peter Darbee, chief executive of U.S. energy giant PG&E Corp., said it's foot dragging on the part of public policy-makers, not a lack of technology, that's slowing efforts to address global warming.
"In conversations with other business leaders, I've heard more times than I can count that it's impossible or impractical to make much headway on greenhouse gases until we have better technology," Mr. Darbee said during the panel discussion. "That is not the case. It's a red herring.... The biggest obstacle right now is a lack of will--not invention."
Many environmentalists at the summit were pessimistic about prospects for attacking the threat of greenhouse gasses, pointing to the coming surge in energy demand as countries such as China adopt Western habits.
Mr. Khosla doesn't share that gloom. He said it's not the first time he has seen widespread skepticism of a looming sea change. In 1996, for example, it was impossible to convince telecom companies that the Internet was important. They also resisted the notion that long-distance calls would be free.
"The point is change happens, and it happens quickly," he said. "Technology caused dislocations."
A surge in investment will speed the development of such technologies. It also isn't hurting that energy is an increasingly hot area for the college-bound, with an estimated 10% of top students looking to get into the field.
"A crisis is a terrible thing to waste," Mr. Khosla said.
