Climate Action 2010-2011

Finance and Markets
Figure 1: Global GHG abatement cost curve beyond business-as-usual (v2.1) – 2030.
to comments made publically by GE’s CEO Jeff Immelt
last June, Ecomagination is now one of the company’s
most successful business initiatives, with revenues from
its portfolio of energy efficient and environmentally
beneficial products and services crossing the US$18
billion mark in 2009 alone.
Central to GE’s success has been the strength of its
commitment. Crucially, this goes beyond the sums invested
and is reflected moreover in the fact that Ecomagination is
a core, cross-company strategy. Without doubt this is the
thread that ties together those companies making the best
of the low-carbon opportunities at hand.
At BMW for example, its ‘EfficientDynamics’ initiative
has improved fuel efficiency across all its vehicles
since its introduction in 2002. As a result of early and
comprehensive action, BMW ranks top among major
manufacturers in terms of the speed at which it has
improved the average carbon efficiency of vehicles sold,
according to research from the European Federation for
Transport and Environment. This stands the company
in good stead for cost-effectively meeting stringent
carbon emission regulations now present across its key
automobile markets. Analysis from Liberum Capital,
for example, estimates that BMW will spend less than
half the annual amount to meet the European Specific
Emissions Targets from 2012 when compared to
competitors such as Daimler.
Doing more with less – a blue-chip
focus on energy efficiency
It is perhaps no surprise that in sizing up the lowcarbon
economy, blue-chip companies have focused
predominantly on lower-risk market opportunities related
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to energy efficiency. Associated products and services
typically offer customers relatively short pay-back periods
where fuel savings outweigh capital investment costs,
known as ‘negative abatement cost’ solutions.
Indeed a report from HSBC’s Climate Change Centre
of Excellence recently noted that whereas the dominant
feature of the low-carbon economy to-date has been
a focus on altering the energy mix, energy efficiency
will be the single largest investment opportunity by
2020 as government policies increasingly look towards
improvements in the energy efficiency of buildings,
industry and transport. This, they estimate, is a market
set to grow at a compounded annual growth rate of
12 per cent to 2020, by which time it would reach a
market size of US$1.2 trillion.
As ‘win-win’ investments that reduce both energy costs
and climate impacts, growth opportunities within this
sector don’t rely solely on the appetite to tackle climate
change. Rather, such solutions offer a number of ‘wins’
to related but separate concerns such as energy price
volatility and energy security. ‘Smart-grid’ infrastructures
that optimise the delivery of electricity provide a further
example of this. IT giants such as IBM, Cisco and Oracle
now market solutions to support a mass roll-out of Smart
infrastructures, as are electric transmission and distribution
specialists such as Schneider Electric and ABB.
Moving to the next phase of green
growth
In view of this, the challenge for policy makers must
therefore be to ensure the safe passage of projects
that initially have a positive abatement cost – where
investment costs are outweighed by cost savings.
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