$1 Trillion Speaks Louder Than UN Talks

Photograph by Merrick Morton, Columbia Pictures
THE SOCIAL NETWORK, from left: Jesse Eisenberg, Justin Timberlake, 2010. ph: Merrick Morton/©Columbia Pictures/Courtesy Everett Collection

By Nathaniel Bullard

In the Facebook-inspired movie "The Social Network," Justin Timberlake-as- Sean Parker memorably defines a meaningful amount of money: “A million dollars isn’t cool. You know what’s cool? A billion dollars.”

In the energy world, you’d better multiply all seemingly huge numbers by 1,000. A billion dollars isn't cool. You know what's cool? A trillion dollars. Here's why.

Sometime in the two weeks before the UN climate conference in Durban, the world passed $1 trillion mark in clean energy investment since 2004. That’s a trillion dollars in solar and wind power plants, in bioenergy production facilities, in smart meters and smart grids, in assets, public markets, research and development.

Even for the energy world, it’s a big number, and one that grew quickly. The world invested $52 billion in clean energy in 2004, and $243 billion last year. That’s a 29 percent compound growth rate, sufficient for total yearly investment to double in less than three years. It’s capital deployment that has increased every year even with tremendous macroeconomic headwinds and uncertain policies in Europe and the US. Last year’s $243 billion is right about halfway to the yearly investment which Bloomberg New Energy Finance estimates is necessary to slow climate change.

As important is where money is flowing. In 2004, that money was almost entirely European. When it came time for us to identify the trillionth dollar, we found that it went into a basket of projects all over the world: biomass in Brazil, wind in China, solar thermal in Morocco, electric vehicles in the US, even a solar system in Tonga. It is a global game now.

One of the analyst’s tricks of the trade is the ability to make any number seem large or small. Here’s how to make a trillion dollars seem small:  as we’ve just added the seven billionth person to the world last month, we now have deployed $142.86 per person on earth into renewable energy.

That’s 43.6 gallons of Regular Unleaded gasoline at today’s national average prices.

That’s 20.6 steak burritos at your favorite chain.

That’s 1.4 30-day unlimited passes on the New York City subway system.

Can the world afford another trillion dollars in clean energy investment?  It will require some skillful unlocking of capital, and a great deal of coordination.  And even as energy ministers and the punditocracy cannot help but despair just a bit at the intractability of the climate negotiations process, a trillion dollars speaks louder than a UN plenary address.

-0- Dec/07/2011 16:35 GMT
Before it's here, it's on the Bloomberg Terminal. LEARN MORE