From investors to regulators, and architects to educators, each of us has a role to play in combating climate change
Every morning, I like to read the “What’s News” section on the front page of the Wall Street Journal to get the day’s main takeaways, and then at night I’ll read through the full stories.
I’m quite interested in economics, technology and finance. After all, money is humanity’s universal language, and its power to influence change is unquestionable. Which is why I’m feeling increasingly optimistic for what’s becoming a growing trend: investments related to climate change mitigation.
Many central banks — the most powerful financial institutions in the world — are writing climate change policy directly into their mandates. Climate-related risks like rising sea levels, increasing wildfires and bigger storms, can interrupt the supply chain, leading to shortages and inflation. As a result, regulators are reaching beyond their traditional focus because now, climate change can directly impact inflation.
What makes this especially interesting to me is the interplay of regulations with markets, driving change through increasing accessibility of technological solutions. For example, take how a combination of batteries and renewable energy is disrupting the natural gas industry. Although less than 1% of America’s electricity market is currently made up of battery storage (compared to 38% of electricity coming from natural gas), batteries charged with wind and solar energy are becoming more and more affordable alleviating the time of day limitations of these energy sources. With prices coming down this combination becomes economically competitive with natural gas. Enabled by federal and private sector research and development over the past decades, this transition was led by states with clean energy policies and expanded by corporate climate commitments to the point where these solutions stand on their own in the market. As the Wall Street Journal notes, “even in Texas, a state with a fiercely competitive power market and no emissions mandates, scarcely any gas plants are under construction, while solar farms and batteries are growing fast.”
This “natural” market growth in clean energy is exciting to see, but is just the beginning of what is needed. The United Nations Intergovernmental Panel on Climate Change is now confidently saying that if we don’t make investments in renewables, batteries and modernizing the electric grid, then the financial impact will be extraordinary — reaching tens of trillions of dollars in the decades ahead.