Copenhagen Summit: What Business Expects

The global climate change meeting starts on Dec. 7, and prospects for a firm deal are slim. But companies aren't waiting to invest in going green

By Mark Scott

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The small town of Thompson in northern Iowa is a world away from Copenhagen, where global leaders will meet on Dec. 7-18 to hammer out a deal to combat climate change. Yet Thompson, with a population of about 550, is doing its part. Just outside of town, the rotors of 10 wind turbines twist in the breeze on rolling farmland. Built last year by Spain's Iberdrola Renovables (IBR:SM), the second-largest wind energy producer in the U.S., the project now provides green energy for 6,000 homes in and around Thompson.

"The U.S. is our main investment priority," says Angeles Santamaría, markets and forecasts director for Iberdrola Renovables, which already employs 800 across America and plans to spend $6 billion in the U.S. by 2012. "The opportunities around the country are very attractive."

Iberdrola Renovables isn't the only company eyeing eco-friendly investment. From General Electric (GE) and Ford (F) to Chinese solar panel maker SunTech (STP) and French utility EDF (EDF:FP), firms worldwide are clamoring to join the green bandwagon. That comes despite concerns that the Copenhagen summit, which will bring politicians together to negotiate a successor to the Kyoto Protocol, may fail to hammer out a binding deal to tackle climate change.

For companies, the uncertainty isn't resulting in a postponement of investment. Billions of dollars already have been earmarked for green projects from California to Cambodia. And despite political setbacks, analysts expect more cash to be doled out over the next decade.

"Politicians need to catch up because the private sector is leaving them in the dust," says Joe Stanislav, an independent senior adviser at consultancy Deloitte. "Companies and consumers have embraced the green agenda, and it's driving a revolution."

Efficiency and Higher Margins

Amid the worst economic downturn since the 1930s, the push to go green isn't just about saving the planet. Companies, particularly those in energy-intensive industries like steel and cement, are looking to rein in costs, and eco-friendly investments could help them do that. Take Italian energy company Enel (ENEL:MI), which invested $3 billion earlier this decade in smart meters—technology that allows companies and consumers to more closely monitor electricity consumption.

By keeping closer tabs on energy use, Enel now saves $750 million each year through better management of its power plants. And the utility plans to invest billions more to upgrade its infrastructure to so-called smart grids—with more intelligent power routing—which analysts reckon could further reduce the company's energy consumption by nearly 20%.

"We wanted to improve efficiency, create higher margins, and help customers reduce their energy bills," says Livio Gallo, Enel's director of infrastructure and networks.

Eco-investments may help companies trim their costs, but they're also opening up opportunities for sectors not typically associated with green business.

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