The One Thing That Changes Everything in the Climate Fight
Business is on board
Since the 1970s, environmentalists have always been challenged to justify "the extra costs" of doing the right thing for the environment. When that justification came on a macro scale, the argument turned to who exactly pays. It created an uphill battle. The only people undertaking true environmental stewardship were those whose brands were enhanced by such actions. They could view it as an investment in their reputations of doing the right things. Organic companies, outdoor companies, and selected agribusinesses tended to lead the way. Others continued with efforts to greenwash their businesses, but this again was viewed as an investment in reputation management. Sometimes it worked, and sometimes it didn’t. But one thing was always clear: Doing the right thing by the environment was always more expensive.
Until now.
As David Wallace-Wells described in his October article Beyond Catastrophe: A New Climate Reality Is Coming Into View (published in the New York Times Magazine),
“Since 2010, the cost of solar power and lithium-battery technology has fallen by more than 85 percent, the cost of wind power by more than 55 percent. The International Energy Agency recently predicted that solar power would become “the cheapest source of electricity in history,” and a report by Carbon Tracker found that 90 percent of the global population lives in places where new renewable power would be cheaper than new dirty power. The price of gas was under $3 per gallon in 2010, which means these decreases are the equivalent of seeing gas-station signs today advertising prices of under 50 cents a gallon.”
This is stunning, and I can confirm its veracity. I spent three years as VP Sales for a rooftop solar company. The company I worked for sold rooftop solar systems in 2010 for as much as $12-15 per watt, usually with a 80-90% subsidy from government entities. When I left a year ago, we commonly sold similar large rooftops systems for $1.50 per watt, and the industry was often installing large ground mount systems for under $1 per watt total.
Why does this matter? Simple. Only people with a desire to do the right thing for the environment will go through the process of getting huge subsidies and take on the risks of new technology. That’s who was buying solar as little as ten years ago. As a salesperson, you would have to qualify customers based on that commitment because there was no other way to sell your product.
Today, the sale is completely different. Business people of all stripes are intrigued by the opportunity to save money by making an environmentally-friendly investment. Better yet, the cost savings are so significant that for many, the fact of being environmentally friendly doesn’t even factor into the equation. Operations executives love the savings, and when they present to their CFO colleagues, the CFOs become intensely interested because of the enormous cost savings that accrue to the business that installs it.
The same dynamic is happening in utility-scale solar and wind projects. As utilities around the world consider constructing additional generating capacity, those defending coal-fired plants are on the defensive. Solar and wind farms are both cheaper to build and cheaper to operate. Justifying coal is nearly impossible.
Great Climate News!
This is the best climate news we could hope for right now. As both the construction and the operating costs of these systems becomes less than that of coal and gas power plants, everything changes. Now, for the first time in the climate fight, business is on the side of the environment. They are not taking a moral stand on this, but rather a hard-nosed financial stance. Solar for both individual businesses and large generating facilities is a cheaper way to provide energy than the old, dirty way. Wind is cheaper for utility-scale generation. In other words, as an institution, business is on our side. People who hate capitalism might say it has come around for all the wrong reasons, but from the standpoint of emissions reduction, business logic is on our side. That shift is HUGE.
Business’s change means that its institutional weight is going behind it. Suddenly, all projects trying to develop better systems of storage are far more viable because the market is more reliable. All projects developing better, more efficient panels have a bigger payoff when they succeed. These innovations will drive costs down even further, and soon the standard adoption model for global corporations is behind solar and wind.
This isn’t to say that every organization in every location will do this. Far from it. Some monopoly-empowered utilities will fight it just because they can. But rather than trotting out the old “higher cost” objection, they will be forced to resist against an ever-strengthening logic—it is cheaper to build solar and wind than to stay with your current situation. As large industrial companies reduce their costs by going solar, those who don’t do the same will find themselves at a competitive disadvantage—the complete reverse of those who adopted clean environmental policies at extra cost before.
To summarize, the wind is at society's back on this. We have a long way to go, but when costs are lower, no one in the system can justify building coal or gas to meet consumer demands anymore because the best way to met those needs is with solar or wind. On a macro level, this is incredibly good news because large-scale climate solutions that work cannot be achieved without the active support and participation of business. And there is no better way to get that than by being the low-cost alternative.
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