In the Frank Capra movie classic, "It's a Wonderful Life," the Bailey Brothers Building and Loan is facing a Depression-era bank run. George Bailey leaps over the counter, blocks the door, and says to the panicky investors that they're "thinking of this place all wrong."
Today's investors need to hear the same message: If you're worried that stopping global warming will wreck the economy, you're looking at this all wrong. Solving global warming will be an added cost, yes – but a bargain compared with the economic cost of unchecked climate change. And fixing this problem will create an historic economic opportunity.
Energy is the biggest business in the world, "the mother of all markets," says venture capitalist John Doerr, Google's first funder. The winners of the race to reinvent energy will not only save the planet, but will also make megafortunes. Venture capitalists and companies like Google are already jockeying to fund clean energy start-ups. In 2007, clean tech was the fastest growing category of venture investing in the U.S., growing four times as much as Internet investing, according to PriceWaterhouseCoopers.
Action on global warming is coming soon. Governors, mayors and CEOs are already making bold and binding commitments; the presumptive presidential candidates from both parties are strong supporters of new federal policy initiatives. Meanwhile, under the radar, smart entrepreneurs are inventing new technologies to cash in on the high-tech bonanza to come, offering clean, affordable energy without carbon emissions.
A Silicon Valley firm, Innovalight, has figured out a way to harvest solar energy much more cheaply than present technology allows by dissolving silicon nanocrystals in ink, which will ultimately be printed onto roof panels like we print ink onto paper. Using a platform they developed as postdoctoral students at Berkeley, the founding scientists of a company called Amyris have re-engineered yeast to ferment sugar into pure hydrocarbon fuels. Unlike ethanol, the fuel has the energy density of gasoline (or jet fuel, if that's what they program the yeast to produce) and can be shipped through existing pipelines and pumped into any car now on the road.
A company called GreenFuel is working to make biodiesel from the algae that feed on the carbon dioxide from power plant smokestacks. The fastest-growing plants on earth, algae can double their mass in a few hours and produce orders-of-magnitude more biomass per acre than plants grown in soil. Founder Isaac Berzin is optimistic that, at commercial scale, he will cut capital costs enough to beat oil at $60 per barrel. Burning the algae fuel means the carbon has been used twice before being released, displacing greenhouse gas emissions from burning oil, and adding to the power company's profitability when carbon is regulated.
There's much more. Scientists have traveled to the most extreme environments on earth – from deep-sea vents to Siberian volcanoes – to bio-prospect for "extremophile" micro-organisms that can digest wood and plant wastes to be fermented into fuel. The Makah tribe of Native Americans, for two thousand years fisherman in the roughest Pacific waters, are working to harvest the fierce power of the waves off the Olympic Peninsula. A neurobiologist, Michael Trachtenberg, has devised a filter to clean smokestack gases at coal plants using the same enzyme that removes carbon dioxide from the human bloodstream. A bioengineer, Angela Belcher, is redesigning viruses so that they assemble themselves into the most powerful batteries ever seen.
These bold ideas are nearly ripe, but without a strong economic incentive they won't come to market at a speed and scale sufficient to beat the swift pace of global warming. The big money, the billions of dollars required to take these technologies to the necessary scale, remains on the sidelines, waiting until the U.S. Congress sets a cap on carbon and makes the rules of the game fair and clear.
Under a cap-and-trade regime, Congress will set limits on greenhouse gas pollution, and ratchet down those limits over time. Congress won't dictate to business which technologies to use – the marketplace will determine the ones that work best at the lowest cost. Cap-and-trade is a proven approach. When applied to acid rain pollution in the 1980s, it solved the problem faster and cheaper than anyone thought possible.
Global warming skeptics notwithstanding, fixing global warming won't be a drain on the economy. On the contrary, it will unleash one of the greatest floods of new wealth in history. When Congress finally acts, America's entrepreneurs and inventors will find the capital they need to solve global warming – and a lot of people will make a killing.
Mr. Krupp is president of Environmental Defense Fund and co-author of "Earth: The Sequel – The Race to Reinvent Energy and Stop Global Warming" (W.W. Norton, 2008).