Detroit Free Press: Op-Ed
There is an important business trend investors like myself are seeing: the world’s largest companies and best-known brands are increasingly adopting renewable energy.
As these companies make decisions about where and how to deploy renewable energy they’re looking to states with strong energy policies as their first stop for their investments. Michigan should build on Gov. Rick Snyder’s recent energy study by implementing strong renewable energy and energy efficiency standards that will attract these investments.
In a speech last month Snyder highlighted how much renewable energy potential exists in the state and called for the creation of goals for 2025. Legislators should heed his call.
In Michigan, General Motors, Ford, and IKEA have installed on-site solar power generation. These companies are not alone. Half of the companies in the Fortune 100 – and two-thirds of companies in the Global 100 – have a renewable energy goal, a greenhouse gas reduction goal, or both. These companies’ strategies often involve building renewable energy projects in states with strong policies, like renewable energy standards.
For technology companies such as Facebook and Yahoo, renewable energy access is not only influencing where they build projects, but also where they site whole facilities. Facebook, for example, made the news when it chose to site its new data center in Iowa. A part of its decision was the state’s wind power industry, which will provide 100% of the new facility’s electricity needs.
Michigan cannot afford to lose out on opportunities to create jobs and attract new business investment. At least in one case, it already has. According to a 2010 letter to the Michigan Economic Development Corporation, American Express chose not to build a new data center in Michigan, citing as one of their reasons the fact that the electricity here is too reliant on fossil fuels.
Michigan passed its renewable energy standard in 2008, requiring state utilities to procure at least 10% of their electric supply from renewable sources by 2015. Though Michigan is on track to meet that objective, it can and should do better. Of the 37 states with renewable energy standards or goals, Michigan is tied for last in terms of aggressive standards. Neighbors–such as Minnesota and Illinois—have standards of 25% by 2025. And Michigan’s state Energy Office and Public Service Commission has found that achieving30% of its electric supply from renewable energy by 2035 can be accomplished without reliability or affordability concerns.
Despite numerous reports showing the competitiveness of renewable energy, some people still argue that renewable energy costs too much. They’re not up to date with the facts. The cost of building and operating a new coal power plant in Michigan is more than double the cost of new wind power facilities. This gap will likely widen in the future.
The choice for Michigan is clear. Increasing the state’s renewable energy standard to meet the potential identified this past year will ensure the state is competitive in the years ahead, and will signal to businesses and investors alike that Michigan is serious about being a leader in clean-energy solutions that propel economic growth.
Steven Heim is a Managing Director at Boston Common Asset Management, an investment management company.*
The information in this document should not be considered a recommendation to buy or sell any security. Past performance does not guarantee future results. All investments involve risk, including the risk of losing principal.*