Climate Change: Good for Business?

While some see the threat of climate change as pitting the needs of the planet against those of progress and business, some brave entrepreneurs will seize the opportunity that efforts to build a more sustainable future will create.

Even those who question the scientific consensus around global warming may quickly find themselves on the wrong side of history -- arguing in favor of pollution because, in addition to water vapor, combustion exhaust includes large amounts of nitrogen and carbon dioxide. Exhaust also contains carbon monoxide, hydrocarbons, nitrogen oxides, ozone and particulate matter (like soot). Even as some remain skeptical about the impact of these on the environment at a macro-level, we can all agree that these are not healthy things to breathe.

Sir Richard Branson, billionaire-adventurer-entrepreneur, knows something about making money and about seizing opportunities. He founded the Carbon War Room because he sees the opportunities created by the threat. "I have described the increasing levels of greenhouse gases in the atmosphere as one of the greatest threats to the ongoing prosperity and sustainability of life on the planet," he says. "The good news is that creating businesses that will power our growth, and reduce our carbon output while protecting resources is also the greatest wealth-generating opportunity of our generation."

History seems to bear witness to his point. A high percentage of the wealthiest people in history -- excluding despots and conquerors -- have made their fortunes in the areas of energy, transportation and construction. The Rockefeller fortune was based on oil (energy), Andrew Carnegie (steel), and Cornelius Vanderbilt saw the revolution from wind to steam engines and built an empire in shipping and railroads. Henry Ford ushered in the basis for decades of industry as he took the automobile from the purview of the wealthy to a staple of the average American by increasing production efficiency thereby reducing costs for consumers and creating an entire industry much as Bill Gates did for the personal computer. Andrew William Mellon went from banking to construction, energy and transportation (lumber, oil, steel, shipbuilding, and construction).

Indeed many of these changes in industry and transportation have followed the evolution from individual power (feet or paddles), to animal power (horses and horses and buggies) to steam (initially powered in the U.S. by wood and then coal) and finally to internal combustion and electricity. It is important to note that in addition to increasing speed and efficiency, many of these changes were furthered by the desire for more environmentally friendly alternatives; streetcars and buses in New York were seen as a solution to the manure that was lining the city streets. The progression for shipping (in the cases of our military submarines) has progressed on to nuclear power.

Electricity is generated by a combination of means, including hydroelectric, wind, solar, nuclear, and coal-fired power plants. In Germany, government subsidies and programs have helped support the expansion of solar and other efforts. The recent decision to eliminate nuclear from that nation's portfolio is an interesting experiment in progress. In the U.S., the vast majority of our power is generated by coal-fired plants. These plants are a lot cleaner than in decades past, and mining techniques have improved, but this remains an environmentally intensive way to power our myriad of electronic devices.

If fortunes are to be made by the bold who seize the innovation high ground (and those who invest in those individuals and technologies) the need to address climate change (whether the fears are real, exaggerated or unfounded), energy independence, and meet the needs of a population that has reached seven billion worldwide combine to demand action to build a sustainable world economy.

For those who ask what the role of government is in all this, I turn again to Branson: "Governments can encourage the change in direction and help to create the right framework and conditions," he offers, "but it will be the entrepreneurs who will seize this opportunity, make the fortunes of tomorrow and ensure there is a future for our children."

So where are the opportunities? If we look at the traditional sectors, energy, construction and transportation one of the biggest things that leaps out to me is the idea of substituting and replacing raw materials using one thing that humans seem to be able to produce in abundance -- waste.

For example, the Environmental Protection Agency (EPA) estimates that more than 50 percent of global methane emissions are related to human-related activities such as fossil fuel production, animal husbandry, food production, biomass burning, and waste management. These activities release significant quantities of methane to the atmosphere. Tapping these sources is a win-win because it prevents greenhouse gas emissions and can provide fuel for power plants to generate electricity.

Synthetic gypsum has been used to make wallboard in the United States for more than 20 years. Electric power plants that burn coal are required to have scrubbers that trap emissions. The result is a very pure synthetic gypsum that is being used to create wallboard. Since 2000, enough gypsum to finish the interior of more than 7 million American homes has come from this waste product.

The future belongs to the innovators and the clever and the bold.

Next time: How to carry the torch for sustainable business without burning down the village in the process.