Clean investments are now “the ultimate safe investment,” says venture capitalist Steve Westly
- 16 September 2015
LONDON: “We’re in the middle of a clean energy revolution. Solar, wind, LED lights: all these things are not only good for the planet, they are good economics,” says Steve Westly, Managing Partner at Westly Group and former California State Controller, in our latest exclusive Climate TV interview released ahead of Climate Week NYC.
The venture capitalist and politician draws from his long experience in the renewable sector in California, which is a member of The Climate Group’s States & Regions Alliance: “We are a place the world looks to innovation,” he says.
“And the good news is, that after some false starts, some technologies were maybe not just ready for prime time; we’re clearly coming into the era of renewable energy and energy efficiency.”
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In his political career, Steve Westly also worked at the Department of Energy: “I am proud to have been in the early days of this extraordinary revolution,” he recalls. “But, having said that, the cost of solar back then was almost US$100 a kilowatt. It didn’t make a lot of financial sense.
“I’m glad we started it, but there were very few applications that were making sense. But over time the business community turned down the cost of solar – to the point we’re roughly at a dollar per kilowatt. Solar is at a point where it is cost-competitive with any other fuel source on the planet. And it’s cleaner, and it can be distributed.”
This technological breakthrough has led to a fundamental shift in the markets, the clean tech investment expert explains. “Investments in solar farms and wind farms that just 7-9 years ago were viewed as speculative, are now viewed as the ultimate ‘safe investments’.
“This is what the new market wants, and businesses need to know this isn’t just good for the planet, it’s what customers are demanding.”
ROLE OF BUSINESS
The role of businesses goes well beyond such a market shift, extending all the way up to Paris – where this December the world’s leaders will meet to hammer out a new climate agreement. “Business needs to give governments and policymakers the insurance they need that we can meet new stretch calls for a cleaner environment,” says Steve Westly.
On the other side, governments must support this clean growth stopping “subsidies to the carbon fuel industry: these are mature industries, they are by large quite profitable, but they have huge human costs that generally are not factored into the products,” he says. “Governments may have a role to play in terms of investing in some new, early stage technologies that the private sector may not get to.”
China is today the largest clean technology investor, but is also the biggest polluter in the world. Steve Westly says the country “is in the midst of one of the largest pivots in world’s history to shift toward renewable sources. But for all of their economic progress, China has made the cost of pollution extraordinary. And you know that government leaders worry about that, because huge levels of pollution can lead to social unrest, which no one wants.”
Pollution is not just a problem of a couple of big cities though. “The Harvard Health Project projects that over 83 million people would die, in China alone, of lung related diseases over the next 25 years,” says Steve Westly. “The EPA recently put forward data that shows 25% of the particulate matter off the West Coast comes from Asia.
“This isn’t just a China problem or an India problem, or a Mexico City problem: this is a global problem and all of us need to get past the finger-point and get on with the work of coming up with common sense, global solutions.”
Finally, Steve Westly draws a parallel between his personal history and the divestment movement. “When I was in college, we argued strenuously for the end of the investing of university funds in apartheid in South Africa. Of course, the trustees said we’ve lost our minds. But when Nelson Mandela was finally released from jail, he said ‘I never would have been released had it not been for the international student and labor movement’.
“So, two years ago, the students of UC Berkley reached out to me, and they said ‘We’re really trying to get our pension funds to go beyond coal at the University of California, beyond carbon’. And the students told me ‘University thinks we are crazy, we’re rash, we’re just young people, we don’t understand’, and I said ‘You’re right. Don’t give in. Hang in there. Do a step at the time, see if you can get them to start by not investing in coal’.
“They called last night, and said ‘The University had taken the big step forward, and they will no longer be investing in coal’. So, it requires some risk, it requires a little bit of a thick skin, but that is what change is all about. And I’m just happy to be part of it, and happy to be part of The Climate Group.”
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