Low interest rates, mature clean technologies, and global business trends are creating a perfect storm for investment in cutting emissions, but will business and political leaders seize the opportunity
The temptation to maintain a watching brief is obvious. Brexit uncertainty will dominate the rest of the decade, energy and climate policy awaits crucial decisions on Hinkley Point and decarbonisation, the Paris Agreement is yet to be ratified, a Trump presidency is still a terrifying possibility, and, besides, its August - sometimes the 'wait and see', 'steady as she goes', 'business-as-usual' approach makes perfect sense.
But this temptation, captivating as it may be, is dangerously misguided. Sometimes, during a period of flux, the worst thing a business can do is stand still, especially when business-as-usual is catastrophically unsustainable. You can't throw punches when you're sitting on your hands.
The reality is that for all the current policy and investment uncertainty there has never been a better time to invest in clean technology, emissions reduction, and greener business models, both at a national and an individual business level.
Over the past week a number of stories have coincided to highlight the huge opportunities that are on offer. Firstly, yesterday's Clean 200 list adds to the ever expanding library of evidence showing companies that are transitioning towards low carbon business models are outperforming those wedded to unsustainable models based on planet-choking pollution. All companies will have to adapt to this reality as clean tech trends, legislative measures, and climate impacts combine in the coming decades to shift markets ever more I favour of greener operations. It makes sense to get a jump on this transition, as the strong financial performance of the Clean 200 and numerous environmental and low carbon investment indexes demonstrate.
Secondly, it will not have escaped anyone's notice that interest rates have been cut again fuelling speculation that negative rates could eventually be adopted. Consequently, companies (and individuals) with cash to hand have little to gain from accruing negligible amounts of interest when there is a viable alternative available in the form of productive investment in energy saving, clean energy, or green infrastructure measures that offer significantly more attractive and increasingly safe long term returns.
Conversely, companies looking for finance to help with the upfront cost of emission-saving measures have never had it so good. Interest rates are so low that pay-as-you-save energy efficiency schemes or new clean energy generation projects are more financially compelling than ever, even before you consider the continued likelihood of higher energy prices in the future.
Thirdly, the maturity of the green technologies and services on offer to the business community has also never been more compelling. From renewable energy technologies to LEDS and energy-saving upgrades through electric vehicles and demand response services the real world examples of effective and financially rewarding green business initiatives are manifest. It has been informative to watch how some commentators have framed their opposition to Hinkley Point by heralding the emergence of the low cost renewables-smart grid-storage triumvirate. Sure, some of them are praising new technology as a means of justifying increased investment in fossil fuel infrastructure in the interim, but when even formerly hostile voices start acknowledging the potential of clean technology it is clear change is afoot.
The effectiveness of these technologies are now underpinning new business service models and investment opportunities that are the very definition of a 'no-brainer'. For example, we have seen in the past week how energy performance contracts and their promise of long term net reductions in energy bills, enabled through energy efficiency upgrades installed with no upfront cost to the customer, are now so obvious even an organisation as conservative as the US Army is using them to save itself a billion dollars. It is the kind of money-saving business logic even Donald Trump could get on board with, presuming he can be kept away from the nuclear button for long enough.
Similarly, pay-as-you-save models, aided by those low interest rates, are offering guaranteed financial savings, technology upgrades, and environmental benefits. With such offers widely available it will soon be the sign of a market failure for any business or council to operate without the use of LED lighting and smart building controls.
Exactly the same arguments should now be being applied at the macro-level.
The debate about the merits and pitfalls of austerity versus deficit denial retained a glaring blind spot for green infrastructure even before the whole hopelessly binary 'discussion' was flattened by the Brexit steamroller.
The overarching and seemingly unanswerable argument proffered by deficit hawks repeatedly asked 'why should future generations pay for our largesse?' It is a slightly more reasonable but still disingenuous question when applied to day-to-day spending, but what if the answer (never once adequately espoused by the Labour opposition to its not inconsiderable and on-going cost) was 'because our current 'largesse' is in fact spending on infrastructure designed to benefit those future generations'? What if the goal was to protect the future generations deficit hawks insist they care so very much about from the climate impacts bequeathed them by past generations?
Under such a scenario, asking future generations to foot some of the bill is the very least of the many injustices heaped upon them and one they are likely to be happy to pay to bear given the alternative is runaway climate change. Besides, they would barely even notice the cost if, as mounting evidence suggests, a low carbon economy delivers a healthier and more prosperous economy for all. We didn't quibble too much as we spent decades paying off the bill run up during the Second World War; we understood the costs were necessary.
Now George Osborne's deficit targets have been jettisoned along with his love of meaningless soundbites and the need for a post-Brexit vote stimulus plan becomes ever more obvious, the Treasury finds itself in a similar position to many businesses. For all the uncertainty there has never been a better time to invest in the green infrastructure that is capable of boosting productivity, aiding exports, curbing environmental impacts, and reducing long term energy costs.
As the Treasury's former head of economic forecasting Dimitri Zenghelis argued last week the UK is missing a massive opportunity through its failure to borrow to finance an ambitious programme of low carbon infrastructure. As he puts it such a programme would have a negligible impact on inflation and would "boost the value and resilience of public assets [while also offering] private investors, in particular pension, insurance and sovereign wealth funds, a much sought-after reliable source of long-term income".
Theresa May wants an industrial strategy and clean technology should sit at its heart, not just because it is environmentally essential, but because it offers the best long term economic returns at a time when every sensible economic analysis going dictates the government use historically low interest rates to mobilise investment.
For businesses and policymakers this is no time to sit on hands. There has never been a better time to invest in climate action.
All the key green business news from around the world this week
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Green transition efforts should be integrated into Covid-19 recovery plans, according to European Council statement