We have a worldwide challenge to solve climate change. We need the equivalent of 100,000 companies to sell $100 million worth of climate change solutions by 2020. The result: a new $10 trillion economy. We have named this the “100-100 New Economy Plan.” The question: “Is this 100-100 New Economy Plan possible?”
There is reason to believe it is. For starters, we already have a head start.
The International Energy Agency (IEA) reported that we are already on track to reach more than $4 trillion invested into climate change solutions by 2020. That means that the equivalent of forty thousand $100 million revenue businesses and divisions of large corporations are already locked in. Most of these companies are selling renewable electricity solutions like wind and solar. But with proven technologies not yet deployed in areas such as cogeneration, local food, small hydro, energy efficiency, vehicle conversions to natural gas, water pressure capture, industrial efficiency, livestock intensification, energy access, and many more, it looks like we have a huge upside to actually scale up many solutions around the world.
According to the IEA and McKinsey, deploying $10 trillion of solutions by 2020 is possible with existing proven technology. The IEA’s analysis shows that, to stave off the worst impacts of climate change to stay below a 2 degree Celsius increase in global temperatures, we need a $10 trillion clean economy.
Ten trillion dollars is about 1/70th of global GDP through 2020. The World Economic Forum reports that we have already earmarked $5-7 trillion per year into these types of projects. It means that, to reach $10 trillion, less than 30% of this $5-7 trillion would have to be shifted to meet this goal. To reach these levels of investments, we have to use existing technologies–banks simply will not accept brand new stuff. They want lower risk investment with steady, predictable returns over time. But here are 5 even more important reasons this shift will happen at scale:
- We are behind on infrastructure investment. Given the choice, clean technologies have lower lifecycle costs and often lower upfront costs than polluting technologies. Citibank confirmed that $5.7 trillion of clean electricity could be deployed without increasing electricity rates.
- Climate change is upon us and the deployment of clean technologies at scale will stave off the worst impacts of climate change–deploying cost-effective solutions at scale is better than inaction.
- Since 2000, electricity costs are up 50%, oil is up 500%, and other commodities have also risen sharply–the business-as-usual case is simply too expensive.
- Healthcare costs keep going up and the National Academy of Sciences blames $120 billion of that cost on burning coal and oil. The cost of health impacts from burning coal and oil can no longer be a necessary evil to maintain our lifestyle.
- In the United States, 50% of all fresh water used is to cool thermoelectric power plants and frack wells for oil and gas drilling–this cannot continue if we are to maintain irrigation and drought resistance.
So with a world that has a GDP of about $71 trillion per year and a need for $10 trillion of investments by 2020 in climate change solutions, where and how will this wealth creation happen?
Given the United States’ $4 trillion head start already, it would need to deploy less than the full 22% of its share of the global GDP to make this happen. Fast growing regions like Asia are building the bulk of their roads, power plants, and buildings for the first time, so they would need comparatively more than their share of the global GDP
There are already 20,000 companies in the solar industry supply chain alone with average revenues of $5 million per year. Add the companies in the other cleantech sectors, and you already have more than 100,000 businesses deploying climate change solutions. Now what we need to do is focus on these 5 things:
- Find the tools to help current businesses and underperforming corporate divisions grow their businesses at the rates necessary to stave off the worst impacts of climate change.
- Find new entrepreneurs and existing businesses to refocus their resources to this sector.
- Develop, not just identify, over $10 trillion in projects across the world so that we can convince the money that the projects exist.
- Educate government officials, mutli-lateral banks, and others in a position of influence about what the solutions are, and how they can help unlock their economic power simply by helping people to see that deployment is possible at scale.
- Identify the criteria required by the $10 trillion in mainstream capital to put their money to work between now and 2020.
The bottom line is that we have to make the 100-100 New Economy Plan our focus and our work. It can create a new economy and have the side effect staving off the worst impacts of climate change to stay below a 2 degree Celsius increase in global temperatures. That’s a pretty good side effect.