The debate about global warming -- or as it's better known
now, climate change -- has consumed everything from political
theater, to corporate board rooms, to the dinner table around
America. There's no debate -- in the scientific community at
least -- about whether there's climate change going on, but
there's a spirited debate about what's caused it, the extent to
which humans are the problem, and what to do about it now.
No matter what your belief is on what is causing climate
change or who is responsible there's really only one thing within
our control that will fix it. The good news is that the solution
is becoming more of a reality every day from the automobiles on
the streets of the U.S. to the power plants in China. And as
investors we can profit from the companies making a positive
impact on the environment.
There's one big driver of a solar boom in California. It's
cheaper than electricity from the grid. Image source:
The only way we'll ever impact climate change
Let's face it, people around the world love to drive and we're
addicted to energy consuming devices like air conditioners, TVs,
and smartphones. We're not going to change the world by telling
people to use less energy. Even using energy more efficiently is
proving to be a tough sell for most people (see the incandescent
light bulb debate). It's also disingenuous to put the
environmental onus on the developing world where electricity is
scarce to begin with and the middle class is just starting to
enjoy the benefits of modern technology.
But what we can do from the developed world to the developing
world is get the energy we consume from cleaner sources. I'm not
talking about "clean coal" or natural gas; I'm talking about wind
and solar energy, which produce no carbon dioxide. They're truly
renewable energy sources so you might be asking: Why aren't we
building wind and solar plants as fast as we can if they're the
Why wind and solar has been held back in the
Wind and solar electricity generators have been around for
decades but they still only produce a fraction of the energy the
world consumes every year. The reason is that they've been too
expensive to compete with coal or natural gas. You may want
cleaner energy but when faced with the option of dirty energy or
clean energy for double the price you may reconsider just how
important clean energy is to you.
The good news is that wind and solar have both experienced
massive cost reductions in the past decade and they're not only
competitive with fossil fuels today, in many locations they're
actually the cheapest energy option.
In a recent article
I highlighted a study by the investment bank
that showed how solar energy is now cheaper than building a new
coal plant and competitive with a new natural gas plant in the
U.S . Wind energy is actually cheaper than natural gas and coal
in most scenarios.
Data source: Lazard. Chart by the author.
This is key because the cost trajectory for wind and solar is
declining rapidly while fossil fuel energy production costs are
flat at best.
As utilities around the country begin contemplating replacing
aging coal plants with new electricity generation it's now
renewable energy that's the lowest cost option. Even consumers
can get in on the action by installing solar panels on their
But this is also key for developing countries, who have
growing energy needs around the world. As they're building out
new capacity they're finding that it's lower cost and lower risk
to build wind and solar farms rather than building a new coal or
natural gas plant. Countries like China, India, South Africa, and
Chile are experiencing some of the fastest renewable energy
growth in the world.
It's this cost shift that will have an impact on climate
change more than any policy or environmental debate. If renewable
energy isn't cost effective it's not going to be installed,
that's just a fact of life in energy right now.
First Solar has built some of the biggest solar plants in
the world, like this one in Canada. Image source: First
How you can make money off companies impacting climate
If renewable energy is now cost competitive and having a positive
impact on CO2 emissions, there has to be a way to make money of
it. And there is.
Wind suppliers are generally large conglomerates where wind is
just a small percentage of their portfolio. Companies like
dominate this market along with a few manufacturers in China.
That makes wind a tough investment today, but solar is another
are three of the largest solar power plant builders in the world.
Just this week SunEdison announced that it had won a bid to build
5 gigawatts of solar plants in India -- enough to power 820,000
U.S. households -- as part of a 25 gigawatt expansion of solar in
First Solar and SunPower are both solar panel makers who have
huge pipelines of utility scale solar projects. They're the two
profitable companies in this group and if you're just getting
your start in solar they're two companies to keep an eye on.
The last one I'll mention is
, which has taken the residential solar industry by storm and is
now building its first solar panel manufacturing facility. Elon
Musk, the company's chairman, thinks that before long SolarCity
will be building 10 gigawatts or more in panel manufacturing to
keep up with demand.
The economics of wind and solar will drive the future
climate change debate
There won't be significant progress made in fighting man-made
climate change without transitioning from fossil fuels to clean
sources of energy. But that transition will never happen if
renewable energy isn't economically viable.
The good news is that today it is economically viable to build
wind and solar power plants instead of natural gas or coal
plants. Momentum is just beginning to build in wind and solar and
before long it will be a paradigm shift in energy that few people
saw coming. It's time to get in now and enjoy the ride.
Another new technology you won't want to miss
A major technological shift is happening in the automotive
industry. Most people are skeptical about its impact. Warren
Buffett isn't one of them. He recently called it a "real
threat" to one of his favorite businesses. An executive at Ford
called the technology "fantastic." The beauty for investors is
that there is an
easy way to ride
to access our exclusive report on this stock.
How You Can Fight Climate Change and Make Money
originally appeared on Fool.com.
manages an account that owns shares of GE and SunPower.
Travis Hoium is personally long shares and options of SunPower.
The Motley Fool recommends SolarCity. The Motley Fool owns shares
of General Electric Company and SolarCity. Try any of our Foolish
free for 30 days
. We Fools may not all hold the same opinions, but we all believe
considering a diverse range of insights
makes us better investors. The Motley Fool has a
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights
reserved. The Motley Fool has a