The greening of Wall Street

Wall St: Money Never Sleeps, the recent sequel to the original 80's cinema classic that was Wall Street, may leave film goers with a sense of nostalgia for when Hollywood showed greater respect for its audiences. There is, however, quite an interesting subplot running through the film, hidden amid an array of sexier themes.

But first to the plot. Our hero is an attractive and seemingly impossibly wealthy young broker with a dream of financing alternative energy (and earning substantial returns in the process). Eventually he enjoys the opportunity to pitch for significant Chinese investment in the project, competing savagely against a seemingly less worthy solar innovation. Despite his efforts he is defeated by a calculating CEO, whose firm deliberately funds the less worthy technology to protect its oil investments. Don't worry, it all ends well for our hero, and somebody eventually makes money from the 'green bubble'.

This all sounds a bit conspiracy theory-ish until you are, yourself, invested – emotionally at least – in energy policy. Make no mistake, green energy and renewables are no longer the preserve of hemp-wearing vegans mulching fair-trade coffee in their back yard. The first observation to make about the Money never sleeps scenario is that some time in the last decade, green got serious. It also got territorial. Solar, tidal, wind, geothermal, and biofuels all have their advocates and each derides the green credentials or the economic or technological feasibility of its competition. And all are united against the emissions-abating, more immediately deployable giant that is nuclear.

Each green technology is vying for the attention of investors. They need funding for further research, for trials and development of more efficient technology, for speculative 'blue sky' research that may or may not reap benefits in 20 years' time. They need grants and scholarships to attract brilliant young minds to their research area. To a lesser extent, they require infrastructure and pilot plants. All of this needs the type of green that nature can't provide. So the scientists turn to investors in the energy sector – the big energy and resources companies.

Happily, history has shown that the energy giants are amenable to such proposals. For one thing, their PR managers need 'green' photos for their company home pages and as proof of the company's commitment to a clean energy future. But whatever the motivation, in the end this means big companies giving money to good causes, and one can hardly argue with that.

The problem is that this skews corporate charity and 'responsible investment' dollars towards particular types of charity and particular forms of investment. Wind turbines and solar panels are easier to sell to investors than refineries processing beef fat and offal for diesel, for reasons not entirely relating to the relative merits of wind, solar and biofuel. What's more, investors may become more inclined to invest in production and infrastructure than in research and development. In the former case, investors can point to a tangible product, whereas in the latter they have no guarantee of their investment producing anything at all.

These problems are all quite separate from the more obvious and much more sizeable problem addressed by Money Never Sleeps: the issue of conflicts of interest in large energy companies.

When big energy companies do invest in research and development of green energy technologies, how is that research being framed? Are finances directed towards the most promising innovations, or towards innovations promising the least change? How can shareholders quantify the business value of cleaner air, job creation, fuel security, or rural development? And given the limited scope of intellectual copyright, how can investors expect to make returns on their research investment sufficient to compensate them for decline in demand for their oil holdings? That is not to suggest – although Money never sleeps does suggest this – that breakthroughs in green energy are being deliberately stifled. But certainly, it is not beyond the realm of possibility.

Governments should also be wary of directing research spending toward areas that are too specific; blue-sky research across disciplines may yield unlikely solutions to problems not yet encountered. This is the deficit of the private research model. It is also a reality perhaps unwittingly alluded to in the Wall Street sequel – Chinese government investments are currently leading the green energy charge.

Money Never Sleeps is hardly an allegory for the pitfalls of private investment, and a Wall Street broker is an unlikely champion for government investment. But the potential catastrophe of climate change demands that we start paying serious attention to alternative fuels and energy, and that means discussing the economic arrangements that govern their development.

Edwina Byrne works in communications in the not-for-profit and green energy sectors