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The Bottom Line Expert Opinion: Renewable Energy

Updated Thursday 28th January 2016

What are the economic consequences of climate change? Peter Bloom discusses the potential and limitations of 'green business'. 

Some solar panels and a personal wind turbine Creative commons image Icon Ed Suominen [ In the 21st century climate change is an increasingly important global concern. Its human and economic consequences could be dramatic and demand a decisive as well as co-ordinated response. However, the issue is far from controversial. A number of politicians, notably in the US, have challenged its very existence while others have argued for reduced action due to its perceived to be prohibited costs. Traditionally, businesses – especially associated with the fossil fuel industry – have seen to be either antagonistic or apathetic to this environmental agenda. However, recently a growing number of private sector actors have committed to “green” principles and policies. This episode of the Bottom Line discusses the potential and limitations of “green business”.

There is a conventional assumption that environmental sustainability and economic profits are not fully compatible. Yet increasingly prioritizing renewable energies is viewed as a business opportunity. Investing in green energy and business can allow countries to protect themselves from an insecure fossil fuel prices internationally. It can also allow nations to tap into an expanding global export marketplace for green products. Finally, it can reduce health and work costs associated with pollution and broaden a country’s manufacturing base. John Mathews and Hao Tan explore these green opportunities in the Chinese context in their article “Want to see the business case for green energy? Just look at China”.

Nevertheless, there are substantial challenges for fostering “green businesses”. It required a large amount of initial investment without a guarantee of an lucrative future returns. Many executives also complain of the high cost of complying with what they view as burdensome environmental regulations from governments. Such legislation, it is argued, can also impair businesses trade competitiveness with those from less environmentally regulated nations. It also means that a number of companies dependent on non-environmentally friendly goods and services risk being eliminated. A number of experts debate the obstacles to a “win-win” environmental and business agenda in the article “The Challenge of Going Green”.

In light of these challenges, the governments will have to be allowed to take a bigger role in promoting a “green” business culture. The popular wisdom – at least among corporate leaders and a portion of the general public – is that government action hinders a pro-market business strategy. However, the state is needed to help fund long term research into innovation and technology as well as build infrastructure. To this end, while market based policies such as carbon trading my reduce carbon emissions, massive government intervention is needed to positively fight climate change. Naomi Oreskes examines this issue in her article “Without Government, the Marketplace Will Not Solve Climate Change”.

 Is “green business” simply another way for corporations to put their private profits over the public good? This raises questions over just how positive business involvement is for fighting achieving environmental goals. Is “green business” simply another way for corporations to put their private profits over the public good? This concern has taken on special importance as a number of environmental charities and activist groups have begun taking money from “responsible” companies. Some critics charge that such donations simply act as good publicity for these corporations in order to cover over their broader environmental damage. Even more worrying, perhaps, is that this new relationship has shifted the environmental agenda towards more market friendly but less comprehensive approaches. Genevieve LeBaron investigates this problem in her article “Green NGOs cannot take big business cash and save planet”.

This highlights more fundamental critiques of “green business”. By turning sustainability into a business, this opens the way for corporations to maintain this market in ways that are often ironically less than idea. The move away from fossil fuels is used to promote potentially problematic industries like fracking and even nuclear energy. It also gives corporations greater power to decide the feasibility of these measures and what are appropriate environmental regulations and goals. Jeff Conant explores such concerns in his article "Why Market-Based 'Solutions' to Climate Change Can Cause More Harm Than Good".

This article was written to accompany the Winter 2015-16 series of The Bottom Line. For more information on the series, visit the series page.

 

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