The Daily of the University of Washington

A green economy


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For the past seven years, travelers crossing Pennsylvania along the turnpike have encountered an interesting scene. Six white towers with blades make up one of the first commercial wind farms in the United States. These wind turbines are part of the growing green economy that encompasses everything from organic products to renewable energy.

While traditionally formed as a niche market for the environmentally and socially conscious, the green economy has found an audience in some of the most unlikely places. Wal-Mart has become the largest buyer of organic cotton products. In the past eight years, Johnson & Johnson has reduced its greenhouse gas emissions by 7 percent. GE’s Ecomagination program has invested more than $700 million in cleaner and more energy-efficient technologies. Microsoft has eliminated 1.5 million pounds of plastic in their operations.

The growth of the green economy has even spurred niche market companies. Whole Foods started out as a small natural food store in Austin, Texas nearly 30 years ago. Today, it is a national chain with over 180 locations.

These changes have not only helped the public perception of these companies, but also increased their profits. The success of these businesses undercuts one of the arguments against greater environmental stewardship — that environmental protection comes at the cost of economic growth.

A recent study by the consulting firm McKinsey suggests that half of the necessary greenhouse gas reductions to prevent climate change can be achieved with a net profit. This has been demonstrated by the many companies that have profited from becoming greener.

One person who believes in the future of green power is T. Boone Pickens, head of the BP Capital hedge fund. This traditional Texas oilman just announced that he is spending $10 billion to build the world’s largest wind farm. The change from oil to wind is not an altruistic endeavor, however. He expects to get around a 25 percent return on his investment.

The green movement has even caught the attention of investors. During the past decade, more than 25 mutual funds have been formed to cater to this new type of investor. They range from investing directly in renewable energy companies to supporting companies that are the best in their field, such as GE.

All of these indicate that the green economy is becoming mainstream. Renewable energy and organic products are now fair game for serious investors looking for greater returns. Companies are reducing their carbon footprint not out of environmental altruism, but in order to increase their profits.

This can be unsettling for those who believe that environmental protection and profits are mutually exclusive. However, this transition will correct one of the last roadblocks to improving the environment. Numerous companies have become allies rather then adversaries, and are pushing for a better environment.

There are still many challenges. Although the price for oil has skyrocketed, numerous green energy sources are still too expensive to be competitive. More than 600 utilities offer a “green power” option to their consumers so they can receive electricity from renewable sources such as hydro, wind and solar power. However, most of them have a price premium that costs consumers an additional 2 cents per kilowatt-hour.

Renewable energy only accounts for about 7 percent of United States energy consumption. While disappointing, there is still much room left for growth and opportunity. The green economy is booming and is likely here to stay for a long time.

Let’s hope it grows.


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