Climate change is the most pressing issue facing the world today. Indeed, it’s telling that US President Barack Obama, speaking at COP21 just days after the heinous Paris terror attacks, said “that for all the challenges we face, the growing threat of climate change could define the contours of this century more dramatically than any other.”
Given the climate change challenge at hand, it’s hardly surprising that a group of international bodies, including the OECD and the International Energy Agency, came together at COP21 to state that a “transformation of the world’s entire economic system is essential to achieving our common climate change, development, economic, and energy security goals.”
As the world has become more connected via the internet, entire industries have stumbled, reinvented themselves, and risen up with a renewed focus on allowing early adopters and customers to play a bigger role. These user-driven companies have already successfully taken on the hotel and taxi industries, and, with the help of crowdfunding, they can lead the sort of economic transformation that the OECD is calling for in the energy industry.
Renewable energy crowdfunding is a small but rapidly growing sector of the overall $34bn+ global crowdfunding industry. It leverages the power of social media to bring together backers and investors looking for not just a healthy financial return, but also for an opportunity to create a more sustainable future for our planet.
Crowdfunding fits well within the current global rethinking of energy investment. The fossil fuel divestment movement, for example, has brought to the fore the question of how much individuals (through their pension plans, for example), as well as large funds, are invested in dirty fossil fuel sources, and whether there is an opportunity to move at least a part of their money into cleaner investments.
Yieldcos are just one potential alternative investment opportunities that has emerged out of this desire to both invest economically and responsibly. While the jury is still out on how much such investments can yield their investors, it’s clear that, worldwide, appetite is growing for these opportunities. India, for example, is considering introducing these investment opportunities to its citizens; Chinese consumers are also looking at yieldcos as a way to diversify away from the volatile stock market.
Community-owned solar and wind farms, meanwhile, offer a way for investors to crowdfund renewable energy initiatives in their backyards. Such initiatives are already proving that they’re able to provide a significant chunk of countries’ energy needs: Germany, for example, already gets half of its renewable energy supply from community-owned farms. Crowdfunding platforms in developed nations are looking at how to best integrate crowdfunding with community-owned solar and wind farms.
Such initiatives resonate with the younger generations, and it’s imperative that COP21 can rally support from the millennials, who are more likely than older generations to invest money looking at the ‘triple bottom line’ rather than purely at profit. That’s why initiatives like the “Young and Future Generations Day” at COP21 are important for both raising awareness of alternative investment opportunities in renewables.
Crowdfunding can thrive in today’s world, but it needs governments to set up incentives for renewable energy, promote awareness-raising initiatives, and ensure that those who wish to invest in renewables are able to do so. If officials across the world are able to create such an environment, the economic system transformation that the OECD and others are encouraging at COP21 can be a crowd-led revolution.
Image: Flickr Creative Commons: ‘I Fell Tower‘ by Son of Groucho