Rising oil prices and the imperative of addressing climate change combine to make this a pivotal moment for investing in green technologies, explains Kevin Walsh of GE Energy Financial Services.
If we are going to place blame for the environmental crisis on anyone, said moderator Quentin Hardy of Forbes by way of introduction, it should rest squarely on the shoulders of Thomas Edison. Without Edison's inventions, after all, industrialization could never have undergone the rapid expansion and development of the past hundred years necessary to land us in our current predicament with carbon emissions. (Nor, of course, would the inhabitants of the developed world be able to enjoy the benefits of these self-same innovations.) It is therefore fitting, if ironic, that Edison's General Electric should now take a leadership role in greening the power industry, he said.
Hardy's questions for Kevin Walsh, known by many as "the sugar daddy of renewables," ranged from the soundness of green investment in areas that so far have yielded small returns to whether or not the whole notion of "green" is merely hype.
Responding to Hardy's question about the limited returns on green investments, Walsh insisted that returns must be sound or the innovations will fail in the marketplace. GE applies the same due diligence and rigor to green projects that it applies to any other investments it underwrites. But he pointed to one indication of his belief in the security of this new direction: His team began with six people handling $800 million of investment and has grown to 38 people and $4 billion.
Walsh repeatedly emphasized the need to maintain a global perspective on climate change and green technologies. GE must maintain national competitiveness in the face of enormous growth of renewables in Europe and elsewhere, he said, noting that investment in renewable power sources also provides protection against rising oil prices. The president of OPEC recently declared that the price of oil may well hit $200 a barrel, and while renewable energy is no "silver bullet," it can act as a buffer against the full impact of oil price fluctuation. Naturally, in this light, the greater the percentage of renewables of the total energy budget, the better.
In a discussion about the volatility of the energy investment climate and, specifically, the relationship between the dollar and the price of oil (if the dollar strengthens, the price of oil falls), Walsh responded simply that the volatility of the dollar is exactly why investments in solar and wind technology — which beyond initial outlays for infrastructure are not pegged to the dollar — are the nation's best bet for future energy security.
Proven technologies make the soundest investments, said Walsh, in response to a question about which technologies in particular interest him. And sound investment is his top priority. Tidal, or lunar, energy is interesting, but it's a relatively risky investment. His preferred technologies include not only solar and wind power, but also geothermal, biomass and hydroelectric energy. GE is interested in partnering with other companies, such as Google, that may have higher comfort levels with risk, he said.
Speaking to the question of biofuels, Walsh called for the "electrification of transportation." Ethanol from corn is simply not efficient enough to be sustainable with an energy balance of roughly 1.3:1, compared to a ratio of 8.3:1 in ethanol from sugar cane. Biodiesel, he said, is better, but a biodiesel hybrid might be the best type of transitional technology as the United States heads toward fully electric-, solar- or wind-charged vehicles.
Is green just the flavor of the month? Hardy asked. Walsh responded that the entire international scientific community is on board with the reality of climate change, and left it at that. And to a final question about whether a greening of America's energy budget an electrification of transportation is just "too visionary," Walsh replied emphatically that "it's a risk worth taking."
Global Conference 2013
Former Prime Minister Tony Blair, philanthropist Bill Gates and Strive Masiyiwa of Econet Wireless discuss advancing prosperity in Africa.
