The Future of Business Is Climate Change
The big problem with fighting climate change is simply that replacing fossil fuels is hard to do. If it was easy to solve it would’ve been done already. Because solving climate change is so hard, and because the solution is so needed, it means the solution is extremely valuable.
Replacing fossil fuels with new technology is the solution the future is looking for, and the investors and entrepreneurs who manage to create those new technologies will become rich in the process.
Why the Stock Market Might Push Businesses Out of Carbon
Getting rid of fossil fuels and carbon pollution requires new technologies if people don’t want to go back to pre-industrial lifestyles. This transition is hard, but increasingly inevitable according to researchers.
A 2018 study from the University of Waterloo found that as climate change worsens, governments will be forced to enact strict pollution regulations on carbon emissions. This will hurt the value of companies still dependent on carbon by 2030.
Study author Mingyu Fang, in a press release to Eureka Alert, said that traditional energy companies, such as coal and oil companies, are very vulnerable because their reserves will be, “stranded by stricter environmental regulations as part of a sustainable, global effort to mitigate the effects caused by climate change.”
Why Climate Change Is So Hard to Stop
Modern life is dependent on fossil fuels. Burning coal is how industry smelts steel. Burning oil allows long-range transport of goods. Turning oil into other chemicals in energy intensive processes is part of many things taken for granted, such as detergents and plastics. All these processes release carbon into the atmosphere which helps trap the suns heat and warm the planet.
Only the most extreme of self-sufficient survivalists make do without modern products dependent on these industries. In the interconnected web of the modern economy, almost everything you own relies on carbon pollution.
But, as climate change forces governments to crack down on carbon emissions like never before, alternative ways to smelt steel, transport goods, and create modern plastic will be necessary to avoid disastrous climate change problems.
Some Carbon Alternatives Are Already Viable
Economists, scientists, and increasingly business leaders are pushing for new alternative technologies in order to avoid climate disaster or a return to pre-industrial lifestyles.
Fossil fuels might currently be essential to modern life, but new research suggests that it is possible for carbon-intensive industries to cut carbon completely by 2050, reports BBC. This would go a long way, along with sustainable power generation, to avoid the worst of climate change. The researchers predict that it can be done at a cost of less than one percent of global GDP.
Many companies are already moving ahead with test projects. In Australia, GFG Alliance is building a steel mill that runs entirely on electricity from a 280-megawatt solar energy project. Traditional steel mills release coal smoke into the atmosphere, but this new Australian steel mill will run on 100 percent renewable energy, reports Fast Company. Company CEO and billionaire Sanjeev Gupta said to The Guardian that it’s already cheaper to produce steel from electricity than coal and that, “we will prove it”
Big Name Investors Are Looking To the Climate Change Future
Billionaire and former Facebook executive Chamath Palihapitiya made big news near the end of 2017 when he said in an interview at Stanford that he regretted his role in creating social media. He lamented that the, “short-term, dopamine-driven feedback loops we’ve created are destroying how society works”.
But beyond riding a growing wave of resentment against social media, what Palihapitiya is really interested in is his new approach to investment that looks outside the Silicon Valley bubble. Instead of looking for the next Facebook or Google, high-powered investors like Palihapitiya are looking for companies that are trying to solve the biggest problems coming down the line.
Entrepreneurs and investors should take note when high-powered people are not only taking seriously the threat of climate change, but are looking for ways to profit off of it by getting out ahead of the changes that must be coming.
Profitable businesses solve problems — they provide a benefit to customers by doing things better than they had been done before. The companies that provide profitable ways to produce steel, transport goods and create chemicals without emitting huge amounts of carbon will be the masters of the future economy. These will be the companies that offer value to people as carbon regulations make carbon-intensive industries unprofitable.
Entrepreneurs and investors looking for new ventures should seriously consider the promise of nascent technologies for the low-carbon future, such as metal production with electricity instead of coal, electric vehicles, and chemicals and plastics made from recycled products or plants.
Climate change is going to change the economy, whether businesses like it or not. Better to plan for the future with your investments and initiative now, rather than getting left behind as everyone else moves to the future of low-carbon industry.
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