Do You Take Less Return to Save The Planet?

This post is by Jeff Carter from Points and Figures

I was reading today’s Term Sheet from Fortune.  Here is a salient paragraph.

Cleantech is staging a comeback with investors seemingly the most bullish they’ve been on the sector since perhaps the bust from roughly a decade ago.

But a major problem from the cleantech boom of the late 2000s still persists today: The cost of many clean options remains expensive. The price of running an airplane on jet fuel costs about $2.22 per gallon, for instance, while clean biofuel costs a significantly higher $5.35 per gallon, notes Bill Gates in his guest essay for Fortune published Tuesday.

To solve the problem, Gates is proposing an ambitious change not only in the mindset of governments and technologists, but also in investors and financiers. While investors have long been praised for eking out the highest returns possible, Gates is calling for acceptance of lower monetary returns to benefit the climate. He wrote in his article: “For example, lenders will need to be willing to finance innovative ideas—with low-cost capital and other financial concessions—that could make clean solutions cheaper.”

Let’s unpack that a little bit as we think about the states in the US that are without power right now due to a deep freeze.  There are rolling blackouts in many states that have embraced green energy.  As I joked with friends yesterday, Milton Friedman said if the government managed the Sahara Desert, in a few years you’d run out of sand.  Texas has more energy than any other state and the (Read more...)