Geo-engineering: should renewable energy investors worry?

Posted on 07 August 2009

For now, most renewable energy costs more than fossil fuels, but investors have been backing renewables for at least two good reasons.

(1) The fossil fuels will inevitably become harder to find and more expensive to extract, although official government projections are more optimistic than most observers, and (2) carbon emissions from fossils are a serious problem for the future of humans, according to the prevailing scientific wisdom.  Some proposals to find cheaper ways to cut GHG levels are getting some press today:

FT: Call for cheap ways to stem climate change.

and

WSJ: Geoengineering: It’s a Great Idea, It’s a Terrible Idea.

Investors should keep an eye on geo-engineering proposals because there is a small chance that this could undercut the support for cutting carbon emissions by switching to renewables.  Should a consensus emerge that a large scale engineering intervention is the cheapest and most direct path to averting climate change, investment capital would move away from renewables in rapid fashion.

At this point, we think the risk is too small to adjust investing strategies but something to consider.