The diagram speaks for itself...more than 50% of all energy consumed in the world (and the CO2 resulting) is due to the consumption of energy in buildings, far surpassing the automobile (at 9%) as a primary cause of global warming. And experts believe that total CO2 could be cut by 1/3 through building efficiency retrofits. In a certain way there is no real energy shortage, just an abundance of leaky and inefficient buildings. The good news for investors (and for the planet) is that the necessary revamping of the building industry represents a huge and quick-to-market business opportunity.
A watt saved is a watt earned
Great progress has been made in developing new and innovative energy technologies, but a sobering fact remains. Even if we place all our new energy technologies online to their maximum capacity, we would still fall short of global energy demand. As currently projected by a 2007 McKinsey Report, we will need approximately 32 terawatts of annual energy production within the next 30 years. Currently we produce about 14 terawatts per year. I recently saw a fantastic lecture at West Coast Green by Kevin Surace, CEO of Serious Materials, who provided the following breakdown:
* If we immediately commission 45 nuclear plants and added 45 nuclear plants per year we would add 2 terawatts.
* If we planted 2/3 of all available plantable land with energy crops we could add 2 terawatts.
* If we converted the equivalent of 20,000 square miles of desert with solar panels we could add 2 terawatts.
* If we implement all currently planned wind energy for the next 30 years we would add 1 terawatt.
* If we build 1 coal plant per week for the next 30 years we could add 5 terawatts.
So at best, we can only reach about 12 terawatts! This falls far short of the 18 terawatts we need to add at our current rate of growth.
Now, if you look at the fact that 50% of that energy demand is coming from buildings and you were able to improve the efficiency of buildings by 75% (which according to the panel at the Green Building Symposium we have the capability to do right now), we would save a full 12 terawatts, the equivalent of all the new solar, wind, nuclear, biofuel and coal combined!
It's not surprising that some of the biggest players in the investment community have been jumping into green building. A recent report by Ernst & Young puts energy efficiency at 20% of total cleantech investments in the 2nd quarter of the year. Cleantech grew 83% since last year, and of the $962 million raised in the 2nd quarter, more than $192 million went into the sector.