Clean Energy Trends Have Deep Roots

Note: On the advice of friends, I'm going to try and break up my posts into small bite-size chunks. I tend to like complex ideas with some heft, so this will be a challenge for me!

It’s been helpful to me when trying to understand clean energy markets to think about market drivers alternately in terms of fundamental changes in attitudes and changes in the behavior of market actors. In terms of fundamentals, the last 10 years has seen a huge shift in attitudes about the environment, acceptance of climate change, and awareness of the finite nature of natural resources. Whether these are the result of generational changes, years of environmental activism, or growing scientific fact is really irrelevant—the salient issue from a marketing perspective is that the shift is underway.

From a behavioral point of view, I believe a tectonic shift is occurring. Whether you call it a “tipping point” or an “inflection point” doesn’t really matter. The important point is that in three powerful communities—business, government, and the finance industry—critical decision makers are thinking about sustainability, and thus about clean energy, in a new light. The realist in me finds it hard to believe this is because they’ve suddenly gotten religion. I think there are really two things happening:

• Business and government have simply realized that the constituencies they serve—voters, customers, employees, and shareholders—are placing a bigger value on sustainability and it’s just politically/economically wise for them to do the same.
  

• There is dawning realization that emissions and climate change represent a new category of risk that has to be factored into long-term planning. For business, the risk looks like looming emissions regulation and/or new liabilities associated with emissions-causing activities. For the finance industry, those risks are an area of intense focus and the associated liabilities may start to be priced into company valuations. And for elected officials, the political risk of doing nothing is beginning to look potentially as perilous as doing something.

I don’t want to paint an overly rosy or naïve picture of the current market for clean energy. The above market trends are preliminary and, frankly, the markets are small relative to the scale of global energy markets. I certainly don’t mean to imply that these are mainstream trends. However, I believe they are fundamental and significant trends—deeply rooted in underlying changes in social values—and they give me a great deal of confidence that the long-term direction is towards ever more demand for clean energy rather than less. Clean energy’s premium value is not “trendy” or whimsical; it’s fundamental and real.