Copenhagen pledges on carbon emissions will mean little unless we do some radical thinking about how to finance themWith the world's attention focused on what will be agreed at Copenhagen, the reality is that unless there is a massive rethink about how a transition to a low-carbon economy is to be financed, whatever is agreed will not be achievable.Take solar: the economies of solar mean that putting a panel on one's roof is a huge upfront investment, only at the moment recoupable in about 40 years. No wonder solar, an energy source with limitless potential, has not yet realised its ambitions. Which is why I was really interested to learn about the $200m sale, the other day, of the startup solar company – SunEdison.SunEdison's business model tackled the problem of financing head-on. Instead of selling panels to companies such as Wal-Mart, Walgreens and Staples, it leased the panels to them – under 20-year contracts – and armed with blue chip lease agreements as sureties it was able to secure financing. The company had effectively created corporate green bonds for its clients and in the process cracked the solar financing conundrum, at least for its select group of "tenants".Applying the sales leaseback model, a model more commonly seen in real estate than solar energy is the kind of out-of-the-box thinking that is desperately needed if we are to solve the essential question of how the transition to a low-carbon economy will be funded.From solar to electric cars, from geothermal to reconfiguring the grid, the scale of investment needed in green technologies in order to meet whatever agreements on emissions reductions are finally agreed will be immense. Emissions trading, the saving of rainforests, the development of energy monitoring household devices – though of course part of the answer – will in no way deliver on their own the 80% drop from 1990 carbon emissions levels needed within the next 40 years if we are to avert an Armageddon scenario. And n ...

less than 239 day(s) - Thursday December,03 2009 @ 02:13 PM
More on Guardian.co.uk