Most reasonable scenarios of the future suggest that expected increases in population and economic growth will outweigh the low-hanging fruit of decreases in per-capita energy use and reductions in the carbon-intensity of the energy provided. As a result, only dramatic technological and behavioral change is predicted to break the linkage between rising global population and economic aspirations, and increasing carbon emissions and climate change. This blog post examines how some corporations can benefit from this change and how to best prepare for climate change as a business opportunity rather than a regulatory or environmental obstacle.
There is an obvious upside to all this carbon cap and carbon tax stuff. Those who position themselves to profit from the required technological breakthroughs will benefit handsomely from climate change solutions. This sounds optimistic and certainly investing in unproven technologies can be risky business but there is plenty of reason to start taking this market very seriously.
Under many probable futures for the North American carbon markets, including cap and trade programs, the cost of improving operational efficiencies is likely to decrease. Efficiency improvements may start to offer new revenue streams from the sale of carbon reduction and offset credits/allowances. Creating additional value for technologies, projects, and practices that reduce emissions makes these projects more financially attractive and thus more likely to spread. Here is where future regulations may create the most opportunity for existing and entrepreneurial businesses.
It is anticipated that future climate policy will include a strong technology component both to focus public sector investment on productive areas of science and technology, and to stimulate private sector investment into energy innovations. Here are some questions shareholders ought to be asking management and strong leadership should have answers.
Is your company positioned in its products, services, or other key areas to take advantage of this shifting “clean tech” capital?
How about risk assessment? For instance, when you compare the costs and benefits of expansion and/or relocation, are you considering how climate change can impact your choices?
Are there opportunities to improve current facilities and technologies that either will improve efficiency or mitigate GHG emissions?
Are your shareholders aware of the cost savings and likely new revenue streams made possible in a carbon-constrained world; e.g. carbon credits and clean tech investment and subsidies?
Are there building improvements that should or should not be made in light of potential weather changes or extreme weather events?
Are there products or services your company currently offers that are more climate-friendly or energy efficient than other competing products or services?
As you prepare to answer these questions and put a strategy in place, keep in mind that these markets have and will continue to have risks. Currently, for instance, there are no international standards in place for validating offset projects and what one invests in today may not hold in the markets of tomorrow. There are ways to minimize this risk by working with the most widely accepted international standards. Often the best way to proceed is with caution and to consult experts in the field who can help you determine the best strategy for your double dividend objectives.
ClimateCHECK is a greenhouse gas (GHG) management services and solutions company. The firm’s solutions support all facets of the carbon commodities market, including the verification, validation and consultation of GHG inventories and program portfolios, as well as quantification protocols for emissions reduction projects and clean technologies. ClimateCHECK is a sponsor and co-founded, with World Resources Institute and Carbon Disclosure Project, the Greenhouse Gas Management Institute (www.ghginstitute.org). Founded in March 2007, the company has locations throughout North America. For more information visit www.climate-check.com.