In 1976, amid rising scientific concerns about a warming planet, a young energy-policy analyst named Amory Lovins challenged the U.S. government to reimagine the nation’s energy supply and pursue the path of renewable energy and greater energy efficiency. Forty years on, Amory’s vision has become the world’s mission and perhaps the greatest opportunity of our lifetimes.
As a year of seismic geopolitical shifts comes to an end, some things remain unchanged: climate science has been settled. Last year’s Paris Agreement, which seeks to limit the global average temperature increase to well below 2°C and ideally no more than 1.5°C above pre-industrial levels, went into force just weeks ago. Forty-seven countries used the recent U.N. climate summit in Marrakech to announce an ambitious plan to wean themselves off fossil fuels entirely. And many large businesses, Virgin included, have made a commitment to reach net-zero carbon emissions by 2050.
When it comes to new, sustainable ways of powering our planet, I’ve always been optimistic about the prospects. And as an investor who is not averse to risk, banking on the long-term prospects of coal, oil or gas has become a risk that even I wouldn’t be willing to take.
There is no question that the sustainable-energy revolution is under way. And it is moving at a much faster pace than anticipated. For starters, in an increasing number of countries, renewables like wind and solar have become increasingly cost-effective sources of energy. Clean energy is becoming abundant, ubiquitous and cheap. As the International Energy Agency reported, renewables accounted for more than half of electricity generation capacity added globally in 2015. The IEA expects that as early as 2021, renewable energy will grow by as much as 42% globally. If you ask me, that’s a trillion-dollar opportunity. Our greatest risk would be not to seize it.
Does that mean we can lean back and watch the market take care of things? Almost–but not quite. We need to aggressively deploy a lot more renewables–wind, solar, geothermal–in the power sector, in heavy industries like mining, in the built environment and transport. At the same time, we need to increase energy efficiency to get more out of every unit of energy we produce. Finally, if we are to be successful in increasing global energy productivity and reducing net emissions, then countries need to learn from one another and coordinate efforts. The international community must set realistic expectations for the developing world and help developing countries move to renewables, bypassing the smokestack stage entirely.
Some of the biggest challenges are political. What happens if the incoming Trump Administration unilaterally withdraws from the Paris Agreement? As we learned this year, surprises can never be ruled out. But I also know that pragmatism can be an enormous force for good. As China and India are doubling down on their commitment to the clean-energy revolution, smart and sustainable energy policy becomes a matter of global competitiveness. And who wouldn’t like to be on the winning side?
Branson is the founder of Virgin Group