Investors see climate opportunity to make money, create jobs

UNITED NATIONS — In the language of the 450 large institutional investors meeting at a conference here Thursday, climate change is a risk to avoid and also an opportunity to make a good return on investments.

The investors, who control more than $20 trillion worldwide, are looking at climate change from a business perspective even as Washington steers clear of the issue. Clean energy investments worldwide grew 5 percent in 2011 over 2010, despite financial turmoil in Europe and a wobbly economy in the U.S., according to a report released at the conference.

"I think the key message is that the narrative is changing. The private sector is taking the lead in addressing climate change," said Mindy Lubber, the president of the investor and environmental coalition Ceres, one of the conference sponsors. "This is a premier issue that's being followed like a laser by the financial community."

Global clean-energy investments reached $260 billion in 2011, some five times more than the $50 billion in 2005, according to a Bloomberg New Energy Finance report. The analysis looks at renewable energy, energy efficiency technology and biofuels, but doesn't include natural gas or nuclear power in its assessment.

After trailing China for several years, the U.S. in 2011 moved up to the No. 1 country for attracting this investment, said Bloomberg analyst Ethan Zindler. Much of that success, however, derived from the Obama administration's stimulus spending, which largely ended by December.

Globally, solar attracted much more investment than any other source of renewable energy, Zindler said. But clean-energy stocks declined last year because of a large oversupply of photovoltaic modules and wind turbines. The excess supply meant that costs went down, particularly for solar, which was good for people who bought solar equipment. Zindler said that as prices continue to decline, it will become economic for people in more places to install solar even without subsidies.

Speakers at the conference all said they were investing for good financial returns, not for social reasons. But they also talked about how the two goals could mesh.

AFL-CIO President Richard Trumka said in an interview that the union coalition started investing its pension funds, along with money from other investment partners, in energy efficiency and clean energy. The AFL-CIO has spent $1.2 billion in what Trumka called green spending for infrastructure projects such as water and sewage. The labor group also has invested $200 million in retrofits to make buildings more efficient.

"If you put your money, as a lot of banks have done, in fixed income, what do you get, a percent? This is a 6, 8, 10 percent return on these investments, and it creates jobs so you can create more money and have more investments," he said.

"Addressing climate risk is not a distraction from solving our economic problems," Trumka said in a speech.

"Addressing climate change means retooling our world," he said, adding that includes factories, homes, offices, hospitals and transportation systems. All must be modernized or replaced with "something cleaner, more efficient and less wasteful," he said.

But Trumka, a former coal miner and United Mine Workers president, whose father and grandfather also worked in mines, said the nation couldn't move away from coal immediately.

"In many places, and not just places coal is mined, there's a fear that the green economy will turn into another version of the radical inequality that haunts our economy," he said.

Janet Cowell, the treasurer of North Carolina, a state with a top-rated pension fund, said that when looking forward decades in evaluating investments, it's necessary to look at stress on water and other natural resources, and energy efficiency.

Pension funds have been more careful in looking at risks since the recession started in 2007, she said, and environmental risks are one type they consider.

Cowell also said the state fund has gotten double-digit returns in funds that invest in such things as energy efficiency.

Other speakers said that the world's growing population and declining natural resources created a large market for better use of energy.

"If your job is to grow faster for shareholders, this is a marketplace you can't ignore," said Mark Vachon, who directs GE ecomagination, General Electric Co.'s clean-tech program.

GE invested $5 billion in research and development in clean energy and efficiency technology, he said. In the program's first five years, it delivered $85 billion in revenue and grew twice as fast as the rest of GE's portfolio, Vachon said.

Timothy Wirth, a former U.S. senator from Colorado and president of the United Nations Foundation, a co-sponsor of the conference, said that clean energy was a top priority of U.N. Secretary-General Ban Ki-moon.

Ban convened an international group that will meet next week on how to bring electricity to the 1.3 billion people who don't have it, and double the world's use of renewable energy from 15 percent to 30 percent. The target for both goals is 2030.

Much of the new energy will come from coal, oil and nuclear power, but the program will try to promote the use of cleaner energy as much as possible, said U.N. Assistant Secretary-General Robert C. Orr.

Kenya, for example, with help from U.N. agencies and the World Bank, is scaling up solar, wind and geothermal power so quickly that it expects to produce all of its electricity from these renewable sources by 2020, Orr said.


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