The New Energy Landscape Part II: Growth Areas for Impact and Sustainable Energy Investment

Editor's Note: This is the second post in a two-part series on the new energy landscape. In case you missed it, you can read the first post here.

By Marta Maretich

Energy is set to be a key global concern for the foreseeable future—and to continue to be an important focus for impact and sustainable investors. In this post, the second in a two-part series on the new energy landscape, Marta Maretich highlights further growth areas for energy investment. 

In a recent report, the U.N. Intergovernmental Panel on Climate Change (IPCC) weighed into the debate about energy by offering its top picks for alternative energy sources to lead climate change mitigation measures. Their list of top technologies is controversial (even deeply flawed, according to some critics), yet the IPCC’s recommendations may turn out to be influential and so could be significant for impact and sustainable investors operating in the energy sector.

Nuclear power

In a post-Fukushima world, nuclear power is more controversial than ever. Germany, a global leader in greening its energy sector, is set to phase out nuclear power entirely by 2030.

Nonetheless nuclear power is central to the IPCC’s plans for climate change mitigation. Though certainly not a “renewable,” as the report claims, nuclear is a zero-carbon source of power. Despite its drawbacks, it appeals to countries worried about energy security as well as those trying to wean themselves away from using polluting coal. For these reasons, worldwide nuclear capacity is increasing, with countries such as Spain and the USA stepping up production.  New reactors are going up in many counties including Taiwan, China, South Korea and Russia.

This activity may hold opportunities for impact and sustainable investors who believe that nuclear may offer the best hope for a carbon-neutral future—as well as those who are willing to back an unpopular industry as it develops better, safer technologies. Molten salt reactors—which so far exist only on paper—could produce 20 times more power per plant, cost half the price of existing reactors and consume, rather than produce, nuclear waste.  It's worth noting that China has pledged to build one before 2050.

Energy efficiency

The drive toward greater efficiency is already underway as rising fuel costs push consumers to find ways to get more out of their energy spending. The quest will create business opportunities in a number of industries including construction, where energy-saving design is becoming the norm, and transportation, where more efficient vehicles are cutting fuel bills for individual consumers, companies and municipalities.

Manufacturing will be an important growth area. Energy use is becoming an issue for top managers who now see it as key to bottom-line success. This will create opportunities for growing businesses in consultancy and service delivery as companies seek expert advice on how to optimize their specific processes.

Biofuels

Biofuels have come in for a lot of criticism in recent years and now the United Nations has released a report officially warning that growing crops to make “green” biofuel harms the environment and drives up food prices.  Still, biofuels are central to the mitigation pathways proposed by the IPCC, a fact that some critics, like environmental groups Biofuel Watch and the Global Forest Coalition, have attacked.

This may not be sufficient reason to exclude biofuels from a green energy future, however. Promising new technologies, particularly those that convert waste into biofuel, may put this sector back on the map for impact and sustainable investors. A recent study found that biofuels derived from paper, wood and food waste could provide 16 percent of fuel needed for road transportation in Europe by 2030.

BECCS

Bioenergy with carbon capture and storage (BECCS or Bio-CCS) is another controversial technology central to the IPCC’s mitigation measures report. The process involves power plants burning biomass to generate electricity with the carbon created being extracted and stored underground for “geological timescales." BECCS could provide large amounts of carbon-zero electricity, yet there are doubts about how viable it would prove in practice and so far no plants are up and running. It may be years before BECCS can prove its worth—but watch this space as the idea of carbon capture as a necessary measure for achieving carbon neutrality gains ground.

And more…

The IPCC recommendations are notable for the many technologies they leave out. A quick scan of the alternative energy sector reveals a wealth of new approaches and processes the report ignores: micro-generation, hydrogen fuel cells and smart grids -- to name only a few. There’s evidence, too, that large public utility companies are starting to change the way they provide energy, making them justifiable investments for impact and sustainable investors. Lifestyle changes leading to reduced energy consumption will also create attractive business opportunities, for example in the areas of smart metering, transportation and green building.

The list of possible investments for impact and sustainable investors is long — and, happily, getting longer. But there is much to do if the world is going to meet increasing global energy demands while at the same time cutting emissions—and the need to accelerate change is urgent if we want to avoid the worst-case scenarios described in the latest IPCC reports.

Image credit: lightwise / 123RF Stock Photo

About the author: Marta Maretich writes about impact, sustainable and social investing for Maximpact.com, a deal listing portal and information hub for the new finance sector. She is Chief Editor of the Maximpact blog.@maximpactdotcom

About Maximpact: Maximpact is a free global portal for the social, impact and sustainability sectors. It operates as a secure web-based listing service that allows sustainability, philanthropy and CSR professionals, as well as entrepreneurs, intermediaries, and funds to share information about initiatives and impact investment deals, online. For more information on the platform or to review latest impact projects visit: www.maximpact.com. This article first appeared on Maximpact’s blog.