As the turmoil continues in the world’s financial systems and countries brace for an economic downturn, many environmentalists and green tech entrepreneurs are posing the question: How will this crisis impact the young renewable energy sector?
Some worry that ambitious projects won’t be able to get the financing they need from troubled banks wary of lending money, while others note that oil prices have dropped fast based on predictions of lower demand. Advocates are concerned that if the prices for oil and gas keep falling, the incentive for utilities and consumers to buy expensive renewable energy will shrink. That is what happened in the 1980s when a decade of advances for alternative energy collapsed amid falling prices for conventional fuels [The New York Times].
In Europe, environmental ministers are meeting to finalize the European Union’s goals for cutting the greenhouse gas emissions that cause global warming, but new discord has broken out. Nations like Italy and Poland have begun to argue that emission cuts must be scaled back to avoid further hardship for industry during the hard economic times. Italian Prime Minister Silvio Berlusconi said: “Our businesses are in absolutely no position at the moment to absorb the costs of the regulations that have been proposed” [BBC News].
But so far, other European nations have insisted that the EU will commit to deep greenhouse gas cuts, and have argued that the financial crisis offers an opportunity for growth. The global economy and the climate system are linked and the current slowdown represents a unique opportunity to use public sector investment to kickstart the economy and, at the same time, build the low carbon infrastructure we need for our long term prosperity [Telegraph]. They argue that the current financial crisis was brought on by ignoring financial risks and focusing on short-term gains, and that following a similar policy on environmental risks would be setting the world up for another, inevitable crisis.
In the United States, presidential candidate Barack Obama has pledged to create 5 million “green jobs” by investing in renewable energy, energy efficiency, and next-generation cars. A recent study of California’s policies to promote energy efficiency over the last 30 years bolsters the idea that doing the environmentally responsible thing can also help the economy. Study author David Roland-Holst said the lower use has enabled Californians to save $56 billion on energy since 1972. That money was spent in the local economy, he said, instead of on imported oil, out-of-state electricity or building new power plants. The result: 1.5 million additional California jobs with a total payroll exceeding $45 billion [Los Angeles Times].