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For the last few months, we have watched global markets in turmoil. It has affected all stocks in renewable energy, but then, it’s affected everyone.
The Cleantech index of Australian renewable energy stocks took a real hammering last month.
It fell from 92.7 to 59.6 over the month of October recording a 35.7 per cent loss. It did even worse than the benchmark ASX200 and the S&P ASX Small Ordinaries Index.
So what impact will the downturn have on global markets?
One way of looking at it is that it would actually leave the renewable energy sector in a much stronger position with more innovation coming through.
"We're in a crisis because of oil prices and climate change, and now we're in a crisis because of the capital markets," Paul Maeder from global venture capital firm Highland Capital told Time. "This is where innovation happens - where the existing power structure hits a crisis point. I'm really happy,"
There is another view that the development of green jobs will actually help boost the economy. More on this from CFO.
Of course, the subprime meltdown and climate change have eerie similarities. Both are examples of market failure, both are examples of where society has assumed it can keep borrowing and use up resources as a way to prosperity. And now we are paying the price.
Comments
I feel the economic crisis only cements the need for business to realise that good environmental policy makes good business sense. With the introduction of the 2010 carbon pollution reduction scheme (formally known as emission trading scheme), most experts agree on one thing. Energy prices will rise. Businesses that operate more efficiently and get their processes for low-energy operations right today, will be well positioned when the inevitable price rises happen in 2010. Expect efficiency and reduction of energy consumption to go straight to the bottom line. I feel when times are tough (like now!) businesses should be looking to cut costs (which means becoming more effecient) and stand out further from the crowd. Businesses all around the world are bearing the fruits of an environmental policy which creates differentiation and exudes an ethical brand to consumers. Businesses today face ever increasing competition and ever-aware consumers who factor environmental issues into their buying decisions.