Published on May 25th, 2012 | by Zachary Shahan2
Goldman Sachs Investing $40 Billion More in Clean Energy
Not even a couple weeks ago, Mridul wrote that Goldman Sachs–backed firm ReNew Power Limited was investing Rs 6,000 crore (over $1.1 billion) to build 1 GW (1,000 MW) of wind power projects across India. Apparently, Goldman Sachs has much bigger plans than that, though.
Goldman Sachs Group Inc reportedly plans to put $40 billion towards renewable energy projects over the coming 10 years. Why? well, if you know anything about Goldman Sachs, you know it’s all about the money. Renewable energy is “an area the investment bank called one of the biggest profit opportunities since its economists got excited about emerging markets in 2001,” Reuters reports.
It sees China, Brazil, India, Europe, and many other countries implementing strong renewable energy policies. Combined with dropping renewable energy costs from mass deployment and continued technological advances, renewable energy is a winning bet as far as Goldman Sachs is concerned.
That said, this new announcement actually more or less continues the bank’s current trend. ”In 2011, it helped finance $4.8 billion in clean technology companies globally, and co-invested more than $500 million in that area,” so $4 billion a year is actually a bit of a decrease in annual investments. Still, this is far more than the $1 billion it committed to in 2005. Perhaps if more countries implement strong climate change and cleantech policies, we can look back on this $40 billion (still a considerable amount) as Goldman Sachs testing the waters.
“The bank’s new $40 billion target applies to investments and financings for solar, wind, hydro, biofuels, biomass conversion, energy efficiency, energy storage, green transportation, efficient materials, LED lighting and transmission,” Reuters writes.
Goldman has also pledged to reduce its own net carbon emissions to zero by 2020.
Stuart Bernstein, head of Goldman’s clean technology and renewables investment banking group, compared the opportunity to technology investments in the 1990s or investing 10 years ago in fast-growing countries like Brazil, Russia, India and China, for which Goldman economist Jim O’Neill coined the term “BRIC” in 2001
Enthusiasm for renewables was high in 2006 and 2007 as oil prices soared. But enthusiasm waned after the financial crisis cut energy demand and cash-strapped governments reduced subsidies for alternative energy programs.
The use of hydraulic fracturing technology to access abundant supplies of natural gas in the United States and elsewhere has also undermined alternative sources of energy.
“Obviously we recognize this is not the easiest of times in the clean energy market but nevertheless the underlying thesis as to why cleaner and more sustainable forms of energy need to scale up still holds true,” Park said.
For more, check out: Goldman sets $40 billion clean energy investment plan.
Image: Goldman Sachs building in NYC via Shutterstock