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Monday, April 6, 2009

Should business invest in renewables while the rules are shifting?

I wrote earlier on my blog a post Signs of An Inflexion Approaching highlighting changes in carbon accounting rules for businesses on both sides of the Atlantic.

These can be a tough times for businesses that have been first movers. Rules change, and what seemed like the right decision at the time suddenly looks less so going into the future. A carbon neutral position can become invalidated or seemingly regress by either a company or a government entity, such as the recent example of the US House of Representatives
abandoning plans to make their offices carbon neutral.

But that is not how we should be judging. It is the actions of the businesses and governments that stepped into the fray before things were clear that have been the catalysts to crystallize the landscape and help facilitate decisions on rules and frameworks.

The investments of these first mover organizations will not have been wasted. These companies and other organizations will be able to inform policy and rulemaking and will be ahead of their competitors both in adapting quickly, based on knowledge and experience, to the new rules.

And enlightened government will ensure that rule and their timescales for introduction do not penalize first movers. I see this in the timescales for the new EPA rules for Green Power Partners that allow companies to adjust before the rules take effect.

Some businesses will have to sacrifice a little pride and revisit carbon reductions in the light of a new framework - but this is the worst case.

The ground is going to continue shifting for some time before rules become clear. But businesses should not wait. Renewables decisions should of course include scenario planning as would any other business decisions, but they should go ahead where they make commercial sense. And government should recognize the valuable contribution of first movers and the damage it would do to other potential actors if the whole market is paralyzed into inaction until all the rules are clear.

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