Where to Look for Sustainable-Environment Investments

Focus on existing technologies entering the marketplace.....not brand new breakthrough technologies that could be years away from commercial deployment.

That's a crucial point that Joseph Romm made again this morning in his Climate Progress blog.  Personal Investors who are holding out to invest in totally new technologies will miss the highest-return investment opportunities available to them -- existing in recently-commercialized technologies, as we've seen (for example) in the past couple of years with wind and solar power.  Focus on existing technologies -- the ones that are being deployed commercially now or are about to be commercially deployed.

Romm writes:

• A critical historical fact was explained by Royal Dutch/Shell, in their 2001 scenarios for how energy use is likely to evolve over the next five decades (even with a carbon constraint): "Typically it has taken 25 years after commercial introduction for a primary energy form to obtain a 1% share of the global market."

• Note that this tiny toe-hold comes 25 yeas after commercial introduction. The first transition from scientific breakthrough to commercial introduction may itself take decades. We still haven't seen commercial introduction of a hydrogen fuel cell car and have barely seen any commercial fuel cells -- over 160 years after they were first invented.

• This tells you two important things. First, new breakthrough energy technologies simply don't enter the market fast enough to have a big impact in the time frame we care about. We are trying to get 5% to 10% market shares -- or more -- of the global market for energy, which means massive deployment by 2050 (if not sooner).

• Second, if you are in the kind of hurry we are in, then you are going to have to take unusual measures to deploy technologies far more aggressively than has ever occurred historically. That is, speeding up the deployment side is much more important than generating new technologies. Why? Virtually every supply technology in history has a steadily declining cost curve, whereby greater volume leads to lower cost in a predictable fashion because of economies of scale and the manufacturing learning curve. 

We believe it has become much easier than Romm says to develop a totally new technology and bring it to market, but we strongly agree with his overall point.  Leave the investing in totally new technologies to institutional investors such as venture capital firms to seed arrays of technologies in order to achieve one big hit that pays for all the misses.  Individual investors don't have access to arrays of seed-capital opportunities, or the ability to fund the investments -- unless they're entrepreneurs founding one of those businesses.