Making market-based case for renewables

We’ve reached a point where everyone agrees that renewable energy sources are good for the planet. But, can they be good for the bottom line, too?

Maddy Urbish, head of government affairs and market strategy for Ørsted New Jersey, said the global company she represents is determined to make a business case for clean energy alternatives.

“Ørsted historically was a fossil fuel-oriented generating company that made the strategic business decision more than 10 years ago to divest its fossil-fuel interests and focus on a sustainable approach to providing energy,” she said. “That’s part of our business model and that is part of our mission as a company.

“But, what’s really important, and our global CEO (Mads Nipper) talks about this, is making a market-based case for this — that there is a business-oriented solution, that it’s not just about policy goals, which are very important.

“There is a private-sector business case to be made for decarbonizing, and that is the focus that we’ve had.”

Urbish was speaking as a panelist during a recent ROI-NJ thought leadership discussion on Energy Infrastructure in New Jersey.

“We’ve seen success in Europe, and we’re working to do that here in the U.S.,” she said. “And our hope is that, as we have proof of concept, it will indicate to other parts of the marketplace, outside of government, that it is possible.”

Mike Makarski, the external affairs lead for Engineers Labor Employer Cooperative, ELEC 825, said he feels bottom-line success in Europe has been tied to a diverse energy plan.

“The European Union, when they were redoing their clean energy standards, opened it up to include both nuclear and natural gas in order to use European Union dollars to invest in that infrastructure, because they know they need it,” he said.

“So, if Europe is ahead of us, saying, ‘We’ve done a lot of investments in clean energy, but we also need to invest in renewables, nuclear and natural gas simultaneously,’ I think we in the United States should be taking that cue.”

Eric DeGesero, executive director of the Fuel Merchants Association of New Jersey, said history has shown investing in all possible energy solutions is key.

“I would say, from a market-based approach, the shale development of natural gas had more to do with coal going by the wayside as a generating fuel than anything else,” he said.

Makarski pointed to history, too, saying President Barack Obama, in addition to making some of the largest investments in renewable energy, also did helped create the largest production of oil and natural gas in U.S history.

“What happened?” Makarski asked, and then answered. “We reduced our climate emissions for the United States by nearly 15% while growing our GDP nearly 15%.

“Now, obviously, this was pre-global pandemic, pre-issues in Europe, but, to Maddy’s point, there is a market-based case that shows that we can grow our GDP while reducing emissions if we make the smart investments.”

Financing these investments can be challenging — and often calls for government assistance, a fact that leads some to push back on the idea that clean energy initiatives can be market-based.

Urbish pushed back on that.

“It doesn’t matter if we’re talking about clean energy or natural gas or other types of industries, when you’ve got something new, you need to provide incentives to help make the cases investable,” she said. “Since these are new, it’s risky — and risky money is more expensive money.

“Having opportunities, through policy, for governments to incentivize businesses to go down certain paths is really important. It’s why we have film tax credits. It’s why we have all sorts of mechanisms to help make embarking on certain endeavors that have positive economic impacts of positive ancillary impacts, like climate goals. By incentivizing folks to take that leap and make those private investments, you’re seeing an overall benefit to society.”

It’s worked in the energy sector before, Urbish said.

“We certainly had incentives to convert from coal to natural gas, which is a big part of our emissions reduction and made a huge difference, particularly in New Jersey,” she said. “Incentivizing different types of activities like that, help at the outset, as you’re trying to get companies and folks to make what we would call maybe behavior-type changes.”