Companies that used to shelve environmental initiatives when times got tough, are now likely to increase spending on green projects because of the high price of oil, says the Christian Science Monitor in a new report this week. As the story reports, Great Plains Energy, which recently built a $164 million 100 megawatt wind-energy project on the Kansas plains (pictured), is considering whether or not to build a second such project, and the economy is figuring into the discussion. But, in an unexpected twist, a slower economy might actually argue for the second wind project…
“In a downturn, some would back away from their current commitments,” says Dan Esty, a professor of environmental law and policy at Yale University in New Haven, Conn. “There could be stress in the next year or two, but I’m confident that investment in the environment will be higher.” He estimates that 80 percent of corporations’ green plans will go forward.
To date, the amount spent on such initiatives has been relatively modest. In 2005, US businesses spent some $3.5 billion in the US on renewable energy, says Allison Hannon of the Climate Group, a London-based nonprofit with offices in New York that is dedicated to reducing greenhouse gases. This compares with about $132 billion invested that year in conventional oil and gas, according to the American Petroleum Institute.
But spending on green projects is expected to accelerate. Mr. Esty estimates the total investment in the environmental area ranging from venture capital to actual investments will come to $100 billion in 2007. In March, for example, Bank of America announced it would commit $20 billion to green projects over 10 years. And last month at the Clinton Global Initiative, which is a project sponsored by the former president, Florida Power & Light announced it would spend $2.4 billion on energy-efficiency projects and install 300 megawatts of new solar-energy projects through 2012.
The newspaper points out that some investors may view the downturn as an investment opportunity. Allison Hannon of the Climate Group, a London/New York nonprofit dedicated to reducing greenhouse gases says investors burned by the real-estate slump or worried about slowing earnings growth should take a serious look at the long-term prospects of green companies.
“Clean-tech funds are showing massive returns,” she says. “When you look at the growth of renewables, it is projected to represent 20 percent of our energy supply by 2020. This is a massive opportunity.”
Interest in cleaner and renewable energy looks to be a long-term trend now.
Environmental Capital Partners clearly it that way. The firm announced last month that it has raised $100 million to invest in mid-size green companies.
