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Report: Climate Change Is Big Business

For cleantech companies, climate change has been a big deal for some time. But it’s officially become a major mainstream business issue, according to a new PricewaterhouseCoopers report, “Capitalizing On a Climate of Change,” that says energy and climate policies are influencing the way all companies report their finances, raise capital, and value merger and acquisition deals.

In other words, climate change is evolving from a scientific and public policy issue to a business concern. “Until recently, the impact of climate change on the deal market was barely on the radar of most businesses,” PricewaterhouseCoopers said in the report released Tuesday. “However, national policy action on greenhouse gas emissions is requiring companies in virtually every industry to think about the impacts on energy and climate policies on their business.”

That’s good news for those developing and selling products to help businesses go green and comply with ever-changing energy and climate regulations. And PricewaterhouseCoopers expects climate change to become increasingly important to investors and to companies’ valuations.

In the report, the firm recommends that companies prepare for higher energy costs and consider their climate-change-related risks, including any greenhouse gas emissions that might end up costing money in the event of a federal carbon cap-and-trade program or other carbon legislation. “Regardless of the ultimate policy design, the fact remains: When greenhouse gases are regulated at the federal level, the cost of carbon will have a measurable impact on business transactions,” the report states. “In this context, companies can no longer sit on the sidelines of the climate-change discussion.”

Companies should also get ready to disclose their climate-change risks to investors, the report suggests. Nearly half of the businesses on Standard & Poor’s 500 index already are reporting greenhouse-gas emissions to their investors in some way, and a number of investors, state officials and environmental groups have petitioned the Securities and Exchange Commission to require public companies to disclose their financial risks from climate change. But companies are far from ready to adequately meet reporting requirements; according to another report from the not-for-profit Investor Responsibility Research Center Institute and research company Trucost, a good 66 percent of companies on the S&P 500 do not publish adequate data on direct greenhouse gas emissions from operations and “could therefore be unprepared for mandatory reporting requirements.”

Climate change is likely to gain more weight in evaluating acquisitions, too, especially in heavy-emitting industries such as power generation, chemicals, industrial products and automobile manufacturing. In fact, it already is playing a role in mergers. PricewaterhouseCoopers pointed to German power company E.ON‘s (s EOAN) purchase of wind developer Airtricity‘s U.S. assets for $1.4 billion in 2007, as well as Porsche‘s (s PSHG) decision to take the majority stake in Volkswagen (s VOW) last year to help it develop more efficient vehicles (and offset its higher-emission vehicles with the more efficient VW line).

Overall, companies that develop “sound” climate-change strategies and reporting capabilities stand to gain the most, the report says. Of course, if the evolution occurs as Pricewaterhouse Coopers predicts, cleantech companies that can help other businesses do this will also benefit.

4 Responses to “Report: Climate Change Is Big Business”

    By: Manfred Zysk, M.E. – June 30, 2009

    Supertankers loaded with 2 million barrel oil capacity are used as storage vessels (100 million barrels) offshore, primarily in Europe and the U.S.A., tanker brokers said. About 70 million barrels are still floating. Ocean oil storage of $8 per barrel/month is now less attractive after oil prices for near-term delivery rose and now dropped to 80 cents. Ocean oil tanker storage generated huge profits when premiums surged for holding oil off the market by Koch, Vitol, Shell, Glencore, British Petroleum, and others. Oil trading profits are hard to track, but analysts say floating oil storage probably helped several firms book billions in collective profits since late 2008. British Petroleum has said crude storage plays helped it gain $500 million in trading profits during the first quarter alone.

    This proves that the USA and the world are at the mercy of the oil companies and they are allowed to pillage and drain the world economy into financial chaos. The world is being doped into submission with false claims and lies of abundant oil and fossil fuel resources with the help of the news media and several governments. Ever larger election campaign contributions by oil companies and corporations ensure that the government is controlled by corporate interests. Honest politicians do not have a chance of being elected, and our U.S. government has become very much against the interests of the average American citizen and national interests, such as by outsourcing jobs, opposing Social Security and not allowing affordable Health Care.

    On June 27, 2009, my Senator Merkley held a town-hall meeting and he proudly announced major energy developments and investments are taking place in wind, solar and even algae formulated with carbon dioxide for quick growth. Three wind turbine manufacturing companies recently declared bankruptcy in Oregon. Most people at the town-hall meeting supported new energy legislation. Several people shouted “drill baby, drill” (for oil). Many people appeared very hostile and uninformed about the fact that the oil companies are sitting on 68,000 acres of oil leases and refuse to drill for oil. These oil leases are claimed as financial assets, but actual oil deposits are not known, or may not even exist.

    The Algae World Summit ended on March 26, 2009 with professionals from all corners of the industry examined the realities and challenges of building a national scale bio-fuels industry for producing nationally 20 to 100 billion gallons (476 million to 2.381 billion barrels) per year. U.S. oil consumption for 2007 amounted to 20.68 billion barrels. Current, unrealistic claims were made of algae producing 15,000 gallons of bio-fuel per acre, while current peak productivity is on the level of 2,000 to 2,500 gallons per acre/year, and evaporative water losses from small-scale production run into millions of gallons per day. In spite of the hype, no solid technological research was presented for immediate useful commercial application. GreenFuel, in Cambridge, Massachusetts promised a large scale commercial algae production plant to be in operation by 2009, but further information about this plant is not available. Now GreenFuel plans to build a commercial 247 acre plant in the next few years.

    A clear majority of people at the town-hall meeting demanded single payer health care plans. A woman demanded that Senators and Congressmen have to read all proposed legislation, because when voting but not knowing what is in the legislation then would amount to fraud. The woman received much applause, and Senator Merkley did not directly respond. No factual data was presented and the town-hall meeting only lasted 1 hour, and over 20 persons had more questions, including questions about our wars and over our 700 military bases worldwide, and how our government can continue to justify such waste during our critical financial times and huge debts. Several angry people were opposed to most government programs and of paying taxes. For more energy information, please see:

    Manfred Zysk, M.E.
    [email protected]