While outrage is an extreme sport in Washington these days, there certainly was no shortage of emotional energy both for and against the New Green Deal. For those who don’t know, this is a proposed piece of legislation designed to move the country quickly towards a fully green future with social justice for all.

Since I am an investment guy, you won’t get any politics from me here.  However, there are indeed serious problems with the proposal, not the least of which is the timeline for its implementation. While it does not make sense to me to overhaul the entire economy in one fell swoop and pay extreme amounts of money to do it, anyone worried about how to invest under this plan has one very important point to consider.

While I doubt all or even some of the proposal will ever become law, investors in securities, companies, and policies still need to heed the clarion call of the green movement.

No matter what your personal view on climate change may be or which scientists you follow, the trend in the business world is towards reducing carbon in the atmosphere. It should not matter if humans are causing global warming or not. The fact that millions of people believe it is all you need to know.

Before you get too angry with my characterization, I am not denying (or confirming) climate change. I am all about making money if you are an investor or business owner. Or, if you are a politician, you are all about getting re-elected. Yeah, I’m brutal on that but that’s what it is. And if you want to get re-elected, you must take the pulse of your constituency. I would say that most people and businesses would like a green future, as long as it does not impact their way of life.

That’s the key. How does going green impact regular Joe? Don’t forget, regular Joe, and Jane, are more likely focused on keeping food on the table and roofs over their heads. A pickup truck is the lifeblood of many working people. So, tripling their electric rates in the name of climate change isn’t going to fly. But an electric car that gets me to work and the mall in comfort for a reasonable cost is a good idea. So is free electric power from the sun, as long as I know there is a backup plan for cloudy days and I don’t have to take a second job to pay for it.

The point I want to make here is that we just cannot shock the nation with an abrupt overhaul of things. What we can do, however, is move in that direction with sensible, incremental changes, that actually do improve the carbon picture while we wait for technology to catch up to Green New Deal demands.

Sensible targets

Carbon dioxide production comes from several sources. By far, the biggest sources of emissions into the atmosphere are industry and transportation. The other sectors are agriculture, residential buildings, and commercial buildings and interestingly, the agricultural sector, which is where the famous cow farts are, is the lowest emitter of emissions of all these groups (source – EPA).

Retrofitting all existing buildings with electricity for heating, air-conditioning and hot water making is an easy target but the payoff in terms of carbon is only fair. The real problem is the cost and effort demanded of building owners.

Don’t forget, the electricity for all of these systems has to come from somewhere. Right now, centralized power generation. i.e. utilities, still have to burn fuels to produce it. You might think that a centralized source for electricity makes sense as being more efficient with economies of scale but you would be wrong. In the U.S. today, 65% of the power generated by all utilities is lost during transmission and delivery to end users (source: Lawrence Livermore National Laboratory).

Can we say that again? Before even considering how efficient the end user may be, two-thirds of the energy consumed by power plants is wasted. This makes a bigger case for local power generation from natural gas heaters and, of course, renewables.

Ratcheting up clean energy goals within power generation might be a smarter interim step. Perhaps a coal-fired plant is converted to gas-fired. In a few years, it is tweaked to use renewable sources with net-zero carbon and eventually become actually zero carbon.

Net-zero carbon refers to fuels that do produce carbon when burned but would have naturally created carbon or other greenhouse gasses if left alone. This includes the methane emitted from landfills. Harnessing it as a fuel does not reduce carbon but it does not add to it, either.

Retrofitting industry would be a better target in terms of emissions but it could potentially drive the industrial mix into an artificial, and inefficient, direction. Remember, this would impact the free market, which is by far the best allocator of resources. Now we’re also playing with people’s jobs.

How can we incrementally move the industry towards greener pastures? Well, we can start by shifting to cleaner fuels, including natural gas. Fully renewable fuels, such as biofuel (renewable natural gas RNG) are not quite ready so it does not make sense to legislate their use. I am sure that if a business owner can swap RNG for regular natural gas at little to no cost, they would do it just for the public relations angle.

There is one more problem with hanging everything on the electric grid – capacity. Right now, the grid is stressed in summer when all the electric powered air conditioners are in use. What would happen when heating in winter is added? Peak power consumption would shift from summer to winter and the sum of both would skyrocket.

One big ice storm could knock out all power to a region because the majority of power lines are still above ground. How would people cope? The same way they do in hurricane zones with personal, gasoline burning generators.

It’s one point of failure. What if we still could have our heating system in place with another fuel? What if we could power air conditioners in the south with another fuel? It certainly would buy more time for technology to give us better solutions.

And this brings us to the big one, transportation. While we joke that the Green New Deal proposed rail traffic across oceans, it did not. But right now, transportation uses very little electricity at all.

Electric cars are getting better. Have you felt how good a Tesla accelerates? It's really good. And electric airplane technology is making inroads. That’s a lot of carbon potentially saved right there.

What if we could push that into trucks? I’m not talking about autonomous trucks but rather efficient electricity-powered, driver-operated vehicles that still have enough power to haul their loads. The problem I see is that trucks are both local and long-distance delivery vehicles and electric may not have the range needed.

What if instead of killing existing transportation, there was a plan to provide frequent electric power stations on the most popular routes? That could take a big chunk of carbon away but still allow regular trucks in areas where it does not make sense to create new electric infrastructure.

I’m going to end it there as I do not have the specific answers to all of these questions. What I do know, however, is that each of these can be small, manageable steps on the long journey that is a carbon-free world. We’ll probably never get to 100% carbon free but some is better than none. And the less we disrupt the economy doing it, the farther along the path we can get.

The Green New Deal, even without the social components (job payments, universal healthcare), is indeed an impossible idea. However, some of its intentions are in line with what is good for business and should not be dismissed out of hand.

The trend towards a greener future is in place and it makes sense to operate with the trend, not against it.