What Is Green Tech?
Green tech refers to a type of technology that is considered environmentally friendly based on its production process or its supply chain. Green tech—an abbreviation of "green technology"—can also refer to clean energy production, the use of alternative fuels, and technologies that are less harmful to the environment than fossil fuels.
Although the market for green technology is relatively young, it has garnered a significant amount of investor interest due to increasing awareness about the impacts of climate change and the depletion of natural resources.
- Green tech–or green technology–is an umbrella term that describes the use of technology and science to reduce human impacts on the natural environment.
- Green technology encompasses a wide area of scientific research, including energy, atmospheric science, agriculture, material science, and hydrology.
- Many green technologies aim to reduce emissions of carbon dioxide and other greenhouse gases in order to prevent climate change.
- Solar power is one of the most successful green technologies and is now cheaper to deploy than fossil fuels in many countries.
- Investors can support green technology by buying stocks, mutual funds, or bonds that support environmentally friendly technology.
Understanding Green Tech
Green technology is an umbrella term that describes the use of technology and science to create products and services that are environmentally friendly. Green tech is related to cleantech, which specifically refers to products or services that improve operational performance while also reducing costs, energy consumption, waste, or negative effects on the environment.
The goal of green tech is to protect the environment, repair damage done to the environment in the past, and conserve the Earth's natural resources. Green tech has also become a burgeoning industry that has attracted enormous amounts of investment capital.
The use of green tech can be a stated goal of a business segment or a company. These goals are typically outlined in a company's environmental, sustainability, and governance (ESG) statement, or can even be found in the mission statement of a firm. Increasingly, socially responsible investors are looking to narrow down their prospective investments to only include companies that specifically employ or produce green technologies.
The $1.2 Trillion Infrastructure Investment and Jobs Act, signed into law by President Joe Biden on Nov. 15, 2021, earmarks substantial allocations for green tech. These include the largest investment in clean energy transmission and EV infrastructure in history, electrifying thousands of school and transit buses across the country, and creating a new Authority to build a resilient, clean, electric grid.
History of Green Tech
While green tech has become increasingly popular in the modern age, elements of these business practices have been in use since the Industrial Revolution. Beginning in the early 19th century, scientists began to observe the ecological impacts of coal-burning industrial plants, and manufacturers have sought to reduce their negative environmental externalities by altering production processes to produce less soot or waste byproducts.
In the United States, one of the most important milestones was the Second World War. In order to reduce consumption and waste, more than 400,000 volunteers began collecting metal, paper, rubber, and other materials for the war effort.
Following the war, scientists like Rachel Carson began warning of the consequences of chemical pesticides, while doctors abroad reported mysterious illnesses associated with nuclear radiation. Many point to this era as the genesis of the ecological movement, which sought to preserve ecosystems and resources while raising awareness of the consequences of runaway technology.
Government bodies slowly recognized the importance of protecting environmental resources. Curbside recycling programs became common over the following decades, raising awareness about household waste. The Environmental Protection Agency, established in 1970, set firm requirements on pollution and waste and established mandates for coal scrubbers and other clean technologies.
In the United States, the first major recycling program was launched during World War II. Nearly half a million volunteers pitched in, recycling tens of thousands of tons of waste to help the war effort.
Types of Green Tech
Green technology is a broad category that encompasses several forms of environmental remediation. While climate change and carbon emissions are now considered among the most pressing global issues, there are also many efforts to address local environmental hazards. Some seek to protect specific ecosystems or endangered species. Others seek to conserve scarce natural resources by finding more sustainable alternatives.
In order to provide a viable alternative to fossil fuels, many businesses are seeking to engineer alternative sources of energy that do not generate atmospheric carbon. Solar and wind power are now among the most inexpensive sources of energy, and solar panels are affordable to U.S. homeowners at a consumer scale. Other alternatives, such as geothermal and tidal energy, have yet to be deployed at scale.
Nearly a third of U.S. greenhouse gas emissions are released by transportation activities, according to the Environmental Protection Agency. Many manufacturers are exploring ways to reduce automotive emissions, either by designing more fuel-efficient engines or shifting to electrical power.
However, electric vehicles require a host of innovations in other spheres, such as high-capacity rechargeable batteries and charging infrastructure. In addition, the benefits of electric vehicles are limited by the fact that many power grids still rely on fossil fuels.
Farming and livestock have a substantial environmental footprint, from the high costs of land and water usage to the ecological consequences of pesticides, fertilizers, and animal waste. As a result, there are many opportunities for green technology in the area of agriculture. For example, organic farming techniques can reduce the damage due to soil exhaustion, innovations in cattle feed can reduce methane emissions, and meat substitutes can reduce the consumption of livestock.
Recycling seeks to conserve scarce resources by reusing materials or finding sustainable substitutes. While plastic, glass, paper, and metal waste are the most familiar forms of recycling, more sophisticated operations can be used to recover expensive raw materials from e-waste or automobile parts.
Carbon capture refers to a group of experimental technologies that seek to remove and sequester greenhouse gases, either at the point of combustion or from the atmosphere. This technology has been heavily promoted by the fossil fuel industry, although it has yet to deliver on those expectations. The largest carbon capture facility can absorb 4,000 tons of carbon dioxide per year, a minuscule amount compared to annual emissions.
The amount of new energy capacity that comes from wind and solar power.
Adoption of Green Tech
While green tech is a broad and hard-to-define category, some types of green technology have experienced wide adoption. Several countries have launched initiatives to eliminate single-use plastics, a goal that would require sizeable investments in alternatives, such as paper substitutes, bioplastics, or recycling technologies. Singapore, for example, has pledged to reach 70% recycling by 2030.
Renewable energy is another frontier for green tech adoption, with fossil fuels recognized as a significant driver for climate change. According to the Energy Information Administration, solar and wind power together accounted for 70% of the new energy capacity added in 2021. Worldwide, global investment in all renewable energy sources exceeded $300 billion in 2020.
While green technologies have the shared goal of preserving biodiversity and conserving the earth's resources, there are few ways to do so without affecting the environment in other ways. In some cases, reducing environmental costs in one area means causing adverse impacts in another.
For example, the batteries in electric vehicles rely on lithium, an element that is often strip-mined from South American rain forests. Hydroelectric dams have low carbon emissions, but high impacts on the salmon and other species that rely on those waterways. Green energy devices such as solar panels and wind turbines require a host of rare minerals, that can only be extracted by diesel-powered mining machinery.
This does not necessarily mean that green technology is a lost cause, but it does require careful accounting to ensure that the benefits outweigh the costs.
What Is the Cheapest Form of Green Energy?
The cheapest form of alternative energy is solar power, according to the International Energy Agency. In its 2020 World Outlook Report, the Agency found that photovoltaic solar energy is "consistently cheaper than new coal- or gas-fired power plants in most countries, and solar projects now offer some of the lowest-cost electricity ever seen."
How Do You Invest in Green Technology?
The easiest way to invest in green tech is to buy stock in companies that are making major bets on environmentally-friendly technologies. Investors can attempt to identify individual stocks, or simply invest in a mutual fund, index fund, or another instrument that seeks to reflect the broader market for environmental investments. The advantage to the latter approach is that the investor will gain diversified exposure to the green tech industry, rather than the fortunes of a single company.
Is Nuclear Power Green?
Nuclear power is a deeply controversial subject, and many scientists have disputed its benefits. Although nuclear power derived from fission can provide reliable, inexpensive electricity without greenhouse gases, it also produces highly radioactive waste that must be stored for thousands of years. Some activists have argued that nuclear power can never be safely generated, and a number of high-profile accidents—notably at Chernobyl and Fukushima—have highlighted these concerns. However, it should also be noted that the combined death toll from nuclear accidents is far lower than the annual fatalities from fossil fuel pollution.