Why Are Green Technologies Worth the Investment

@olkakonecka via Twenty20

When speaking about environment protection, the first thing that comes to my mind is the Green Technology, which is basically the applying environmental science and technology with the goal of conserving the natural environment and the resources. It became evident a few years ago that the future is founded on the effective use of green technology. In this article, I will discuss whether this new shape of technology is worth investing in as well as what are the benefits and risks of this concept.

What Areas of Green Technologies are Worth Investing?

The goal of the investment in Green Technologies is to reduce air pollution and greenhouse effects. All Green Investments (GI) have a goal of reducing pollution, caused by energy generation or use, and we can split these into 3 categories: energy efficiency, carbon sequestration and low-emission energy supply. These core-strategies, united by the same concept, have a different objective but also share the ultimate goal: preserving nature.

Energy efficiency relates to the use of energy with a lower amount of pollution that is released due to energy production or use. Fuel efficient and hybrid cars are one of the examples. One of the areas worth investing in is a hybrid/electric car that does not require gasoline and oil to run. In relation to this, you can also consider investing in energy-saving appliances, waste management insulation and cooling systems as well.

Source: Global Energy Investment, 2020

According to the infographic above, the energy-efficiency investments dropped a bit in the past two years. However, the investments are present on the yearly basis but in a lower amount as people focus on other things.

Carbon sequestration can be related to the previous category as well, however, it is mainly caused by deforestation. For example, Australia has one of the highest rates of deforestation, which peaked at 662 ha/year in 2010 as you can see on the infographic below.

Source: Government RD&D in Energy and Technologies by Country and Religion

The carbon sequestration is more related to the investment into physical labor instead of the concrete physical goods/capital as agriculture depends on the physical labor and storage technology. This type of investment is related to the soil management or changes in crops, which means that the date on GI on this subject is somehow limited.

Low-emission energy supply investments include investing in the change the energy supply — the one that does not produce a lot of pollution that damages the environment. Instead of using fossil fuels, the accent is on the use of less polluting fuels like biofuel for example. In terms of electricity generation, we see the use of wind, solar, nuclear or hydropower for energy production.

The Recent Trends in Green Investment

One of the biggest trends in Green Technologies that you should invest in is renewable energy, which had raised significantly over the past few years. While some regions have a declined investment into renewable energy, the Asian region leads in the world, especially China that add an additional 37GW of renewable electricity! The infographic below shows the rise of the investment in periods from 2004 to 2010. The infographic shows the overall statistics, considering all the forms of renewable energy.

Cited by International Monetary Fund

Hydro and nuclear capacity has been one the best investments, especially in the 1970s and 19080s, but the Chernobyl disaster somehow ruined the trend of nuclear plants and energy. Even though the disaster did make a decline in these investments, the trend became popular again some 30 years after the disaster and it will continue to rise in the upcoming period as well. In the last decade, China had been investing $7 billion yearly on average.

Cited by International Monetary Fund

Hydropower became the second-largest renewable energy source and the main source of renewable electricity and doubled its capacity in 30 years, from 480Gw to 920GW per year. However, the environmental regulations may slow down this from time to time, especially as the majority of countries have already exploited the places for hydropower plants. The infographic below shows you the progress of hydroelectric capacity from 1980 to 2008.

Cited by International Monetary Fund

Profit and Social Approach

A lot of companies, especially those that are in the industries that damage the environment, want to reduce the impact they make on the environment, without sacrificing the profit. I have wondered many times why did some companies make a fuss about implementing green technologies or concepts that would lower the damage. They kill two flies with a single stone — they keep their profit intact but they also make an announcement about changing their work to reduce the environmental damage.

With this approach, the companies make it possible to continue work at the maximum, while the users and customers will buy from them. The companies are constantly trying to find new ways of reducing pollution by offering public projects that people can present to them. If the projects are consistent and efficient, the company will hire the person to work on the project.

@ponsulak via Twenty20

This way, they still continue to make profit, if not even more, as they implement sustainable ways that do not harm their profit. However, the biggest problem is obsolete technology and systems that need to be replaced. It creates a lot of e-waste that needs to be recycled properly. This makes it possible for the companies to form partnerships with independent researchers and companies, which boosts their social approach but also keeps the profit intact.

Building a Reputation for Yourself via Green Technology

Yes, it is natural that you will build a reputation for yourself as soon as you implement the green technology or concept that does not do any harm to your environment. With this in mind, no wonder that some companies made so much profit and took a large part of the market share — everyone looks for the reputation! If you were to buy an electronic device, would you buy it from the unbranded supplier or would you look for the branded name that is known in the world of electronics?

The new concepts and researches in green technology help companies to earn reputation and therefore take a large part of consumers. Additionally, some companies do receive Government subsidies for researching and developing new green technologies and concepts, which also makes the company that receives it more popular. Once the new concept is developed and well-researched, it can be patented and distributed further to all other companies in the industry, which makes your reputation to skyrocket.

Are Green Technologies Helping You to Invest in the Future?

As the goal of green technologies is environment care and preservation, I could say that we are investing in the future. Sooner or later, our traditional fuels, production processes and use of energy will become obsolete and we will replace them with the environmental-friendly concepts that will improve our environmental health. Every investment you make, whether it is carbon dioxide reduction, renewable energy sources or use of nuclear energy, improves the overall future of the planet Earth.

Besides this, green technologies bring additional pros like tax benefits and good ratio of cost — effects. Besides the obviously reduced emissions, reduced waste and reduced energy use, people can enjoy tax benefits when building a new home that utilizes a solar-powered electricity system, for example. Also, in terms of what you pay and what you get for it, you get 100% return on your investment. Therefore, the investment into green technology is the path to the new savings and future.

What are Tax Benefits?

By 2021, the US Government should reduce tax credit to 22% for property construction, which included implementing solar systems and wind energy systems. The homeowners will be able to qualify for the green investment tax credits and the only need to make sure that the equipment that they use (which can be bought or made on its own) must meet certain standards. Since 2015, homeowners who implement solar equipment in their homes are eligible for 30% tax credit.

Also, if you want to convert your property to the green-building, you can get up to $1.80 per square foot of a deduction. However, this is only available for commercial properties as well as with the possession of a certification that confirms that energy bills must reduce by 50%. Therefore, everyone can take the advantage of the tax benefits for making the home green as long as they meet a few conditions.

It is Cost-Effective

@melanie_thedreamer via Twenty20

The costs you pay for the equipment and installation are more than efficient as you save on bills and energy consumption over the years. Being so cost-effective, the green technology concept is one of the most popular investments (both in residential and commercial purposes) in this century. In addition, the ratio of investment and saving is boosted even more with the lower interest rates and subsidies from the Government.

What are the Risks of Investing in Green Technologies?

One of the main risks is the change in macroeconomics as it can influence the changes in commodity prices, interest rates and exchange rates. Also, it includes the political changes that might lead to problems in legal systems in some countries, which also touch base on policy changes that can influence the economic viability. Therefore, the risks are global and do not leave out any sphere of the social aspect, however, the advantages cast a shadow over the potential risks and green technologies are highly profitable and advanced concepts that will run our society one day!

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Roman Reitman

Roman Reitman

Proficient Investor concentrated on ethical investments and green technologies.