James Murray

First, the bad news - 2008 will prove far tougher for the green business movement than 2007.

We're in for a bumpy ride and despite their continually growing influence executives committed to sustainable business models will have to work as hard as ever to make their views heard.

The primary cause for concern is the outlook for the global economy, which economic experts reckon is about as bleak as waking up on News Year's Day with a hangover and facing the prospect of cleaning up after that ill advised house party. No one wants to mention the R word, but if a recession materialises green business investments will inevitably face renewed challenges.

Some optimistic environmentalists have tried to argue that a recession would drive corporate cost cutting and as such stimulate spending on green initiatives designed to reduce energy use and slash electricity bills. But while this might prove the case at a few enlightened firms, energy bills remain a relatively small overhead for most companies and they are more likely to adopt their traditional recession strategy of slashing that far more visible symbol of corporate costs - head count.

The managerial focus on downsizing is likely to make it far harder for firms to justify flagship environmental projects, regardless of the long term business case for such investments.

Meanwhile, business leaders hoping that 2008 is the year the legislative framework required to drive the green business movement forward finally materialises will be sorely disappointed. Despite some progress at Bali and a continuing stream of new environmental regulations the development of a coherent and clear framework that will allow businesses to make green investment decisions with real confidence remains a distant prospect.

The fact is that without a clear price on carbon and more stringent environmental regulations green investments are subject to far too many variables.

Energy prices are just one example. The pace of adoption of renewable technologies is intrinsically linked to the price of conventional fuels. If oil having just broken through $100 a barrel continues to climb to $150 a barrel and beyond, as some experts predict, then wind and solar energy investments will pay for themselves pretty sharpish and adoption rates will soar. However, if OPEC opens up the taps and the price of oil slips back again then on the simplest cost analysis alternative energy technologies investments start to look ever more marginal.

This uncertainty is repeated in every sector of the green economy. Will we see tight fuel efficiency standards for European cars? Not if Angela Merkel has anything to do it. Are globally binding emissions targets going to be agreed? Not while Bush is in the White House. Will biofuels prove our environmental saviour? Not if you believe the green groups.

The green business movement is subject to so many variables that making specific short term predictions with any confidence is all but impossible and anyone who says different is either lying or has one impressive crystal ball. The predictions we can make with confidence are long term, macroeconomic assessments based on undeniable realities: manmade climate change is happening and could prove disastrous if carbon emissions are not curbed within 15 years, and oil is a finite resource, meaning energy prices will soar when the inevitable supply peak is reached. These two realities mean that at some point we will have to transition to a low carbon economy if we wish to avoid disaster and there are strong risk mitigation reasons to begin this process as soon as possible.

But whether we will pay enough attention to these realities during 2008 remains less than certain.

The conventional wisdom is that the current interest in green business is the beginning of this transition to a low carbon economy. But if that really was universally accepted then every business and government the world over would be showing far more urgency than they are currently in their attempts to decarbonise their operations.

If we take the automotive sector as just one example concerns over climate change and oil prices mean that ultimately a new generation of low carbon vehicles will emerge and car companies are even now investing heavily in developing those alternative technologies. But it is impossible to tell if these green cars will be in place in 10 years time driven by stringent new efficiency standards in both the US and EU or if industry lobbying will water down those standards and push back the green motoring revolution by a couple of decades. Meanwhile, the car companies are hedging their bets, investing in developing new petrol guzzling SUVs even as they research hybrid engines, fuel cells and electric cars.

These reservations about the political and legislative backdrop against which the green business movement will have to develop are repeated in industry after industry and as such many businesses and governments are still waiting to authorise the large scale low carbon investments that are needed.

In addition to the dual challenge of recession and investment uncertainty there is also a very real sense that the environmental agenda is due a backlash.

In our accelerated media culture few zeitgeists last longer than a couple of years and if we take autumn 2006 and the launch of the Stern Report and An Inconvenient Truth as the rough starting point for the current corporate interest in sustainability then it is fair to assume a backlash is on the cards.

Ipsos Mori recently warned there are signs of "green fatigue" emerging among both consumers and firms, adding that while growing numbers may accept that climate change poses a serious threat they are unwilling to make changes to tackle the problem. Unfortunately, media trends that don't lead to real action have a habit of burning themselves out pretty quickly.

Worryingly, there are precedents for just such a backlash. The first green wave of the 60s and 70s, most commonly dated from the publication of Rachel Carson's Silent Spring, died a death at the hands of the energy crisis of the late 1970s, while the interest in alternative energy sparked by that period soon passed when oil prices fell again.

More recently the second green wave of the early nineties - when initiatives to tackle CFCs and acid rain coincided with the emergence of a scientific consensus on climate change and the build up to Kyoto to push the environment onto the front pages for a few years - soon burnt itself out as globalisation, the consumer revolution, the economic emergence of China and India, US intransigence and an obsession with Bill Clinton's sexual proclivities quickly restored the status quo.

And yet despite these multiple challenges to the green business movement it is not all doom and gloom as we move into 2008.

Those who lived through each of the previous green waves insist the current climate feels very different and as we approach eighteen months with the environment at or near the top of the business and political agenda there are still surprisingly few signs that the green movement is about to burn itself out.

Specific detailed predictions on how the green business movement will evolve this year are too reliant on the personal whim of inconsistent politicians and business leaders to be made with any confidence, but look at wider trends and it is clear there are plenty of grounds for green business optimism during 2008.

Energy prices will remain volatile, as evidence by this week's news that oil is trading at $100 a barrel; consumer and investor demand for sustainable business models will continue to grow, stoked every few months by weather events that can almost invariably be linked back to climate change; the expansion of the carbon market will make a price on emissions more widespread; VCs will continue to pump money into cleantech firms; and government's will accelerate their clampdown on environmentally damaging businesses.

Moreover, when you look at the long term macro economic picture and socio-political meta-narrative it becomes evident that the green business movement now has that most powerful of characteristics – a sense of inevitability.

There will be numerous challenges to face during 2008 and if the green backlash doesn't come this year then it will in early 2009. But despite these potential stumbling blocks, the drivers for greener business models are now entrenched and, recession or not, sustainable business practices will continue their inexorable move towards the mainstream throughout 2008.