From Risk to Return

Investing in a Clean Energy Economy

This report examines the opportunities for American businesses and investors in a clean energy economy. It presents technology choices and outlines near- and medium-term investment opportunities across nine U.S. census regions. It finds that lowering climate risk by building a clean energy economy is technically and economically achievable using commercial or near-commercial technology.

Executive Summary

Executive Summary

In our 2014 inaugural report, “Risky Business: The Economic Risks of Climate Change in the United States,” we found that the economic risks from unmitigated climate change to American businesses and long-term investors are large and unacceptable. Subsequent scientific data and analysis have reinforced and strengthened that conclusion. As a result, we, the Co-Chairs and Risk Committee of the Risky Business Project, are united in recognizing the need to respond to the risk climate change poses to the American economy.

Now we turn to the obvious next question: how to respond to those risks. Seriously addressing climate change requires reducing greenhouse gas emissions by at least 80 percent by 2050 in the U.S. and across all major economies. We find that this goal is technically and economically achievable using commercial or near-commercial technology. Most important, we find that meeting the goal does not require an energy miracle or unprecedented spending.

The transition to a cleaner energy economy rests on three pillars: moving from fossil fuels to electricity wherever possible, generating electricity with low or zero carbon emissions, and using energy much more efficiently. This means building new sources of zero- and low-carbon energy, including wind, solar, and nuclear; electrifying vehicles, heating systems, and many other products and processes; and investing in making buildings, appliances, and manufacturing more energy efficient.

Meeting these targets requires a large-scale shift away from ongoing spending on fossil fuels and toward up-front capital investments in clean energy technologies. Many of those, such as wind and solar, have little or no fuel cost once built. Given an appropriate policy framework, we expect these investments to be made largely by the private sector and consumers, and to yield significant returns. Because of the large capital investments and the long-term savings in fuel costs, this shift presents significant opportunities for many American investors and businesses. Notably, shifting the U.S. to a low-carbon, clean energy system presents not just long term benefits but also immediate, near-term opportunities, particularly for those actors best positioned to capitalize on these trends.

Our Modeling

Our conclusions are based on a sophisticated energy, economic and infrastructure planning model that compares scenarios through 2050. Each of the four pathways we modeled would achieve an 80 percent reduction in carbon emissions by 2050, and would do one of the following1:

  • Rely heavily on renewable energy;
  • Significantly expand reliance on nuclear power;
  • Include a substantial amount of fossil fuel power plants with carbon capture and storage; or
  • Generate electricity from a relatively even mix of these three zero- and low-carbon resources (the Mixed Resources pathway).

Our Modeling

Each pathway also assumes a different combination of transportation fuels (electricity, biofuels, and fossil fuels).

For each of these pathways, we modeled changes in nationwide and sectoral energy use, electricity use, fuel use, carbon emissions, and investment. We do not endorse any specific pathway.

Figure 1 ES. Average Annual Additional Capital Investments and Fuel Expenditures by Decade

Average Annual Additional Capital Investments and Fuel Expenditures by Decade

Figure ES-1 depicts the annual changes (from reference case levels) in investments and fuel expenditures averaged over three decadal periods for the Mixed Resources pathway.


We modeled four distinct pathways that could achieve economy-wide reductions in CO2 emissions of 80 percent below 1990 levels, and compare results to a “business-as-usual” pathway we call the High-Carbon Reference Case. Three of these pathways each rely significantly on one of the three major types of low- and zero-carbon electricity: renewable energy, nuclear power, and fossil fuel power with carbon capture and storage (CCS). The fourth, labeled the “Mixed Resources” pathway, relies on a balanced blend of these three types of clean electricity. The Co-Chairs and the Risk Committee of the Risky Business Project do not endorse any one specific pathway.

The PATHWAYS Model Outputs

Explore the interactive figure below to see specifically how each of the four different pathways differ in terms of levelised costs and emissions.

Capital Investment Needs

Under our Mixed Resources pathway, we found that the total additional capital investment necessary to cut carbon emissions 80 percent economy-wide by 2050 would be2:

  • $220 billion per year from 2020 to 2030
  • $410 billion per year between 2030 and 2040
  • $360 billion per year between 2040 and 2050

Capital Investment Needs

These capital investments would significantly reduce fuel costs, with the savings growing every decade. The savings would be3:

  • $70 billion per year from 2020 to 2030
  • $370 billion per year from 2030 to 2040
  • $700 billion per year from 2040 to 2050

The largest additional investments would be in power generation ($55 billion per year); advanced biofuels ($45 billion per year); purchases of advanced light duty vehicles ($75 billion per year); and energy efficiency measures ($16 billion per year). Businesses that become leaders in these sectors could see large increases in revenue in the years ahead, while those that lag behind risk being left with stranded assets.

The investment needs of a transition to a clean energy economy are manageable, especially when compared to the costs that would be imposed by unmitigated climate change and continued fossil fuel dependence. They are also comparable to other recent investments, such as in unconventional oil and gas production, and in computers and software. Those investments have transformed the American economy, yielding huge returns to those businesses that led in the development of new technologies and products.

Regional and Sectoral Impacts

Investment needs and business opportunities will vary considerably by region. For example, in our Mixed Resources pathway, new nuclear plants would likely be built in the mid-Atlantic and southern regions, while wind power would grow fastest in the windy central region, investments in solar power would be greatest in the sunny western and southern regions, and revenue from biomass feedstocks would be greatest in the Midwest.

Regional and Sectoral Impacts

Overall, the increased investment would boost manufacturing and construction across the U.S. Roughly 460,000 additional construction jobs could be created by 2030, with the number rising to 800,000 by 2050. At the same time, reductions in fossil fuel use would further constrain coal, oil, and natural gas exploration and production. The number of coal mining and oil- and gas-related jobs could decline by more than 130,000 by 2030 and 270,000 by 2050, disproportionately affecting the specific geographic regions that currently depend heavily on these industries.

We know innovation will continue as American businesses develop and deploy new technologies. Many economic sectors and communities will also respond to the challenges and opportunities presented by the transition to a clean energy economy in new and surprising ways. We can project how the costs of current technologies are likely to decline as they are developed and deployed, but we can’t predict which new technologies will emerge in the next 35 years—though we’re confident new innovations will be made. The costs of creating a clean energy economy are thus likely to be lower—and the benefits greater—than we project.

View regional impact map.

Critical Role of Policy

The private sector alone cannot solve the climate change problem. We know from our collective business and investment experience that the private sector will take action at the necessary speed and scale only if it is given a clear and consistent policy and regulatory framework. That framework must send a clear, consistent, and long-term market signal on the necessity of climate action, provide incentives for innovation and deployment of clean energy systems, and help society adapt to climate impacts that are inevitable due to past and current emissions.

Critical Role of Policy

We are united in believing that the real costs of carbon emissions must be incorporated into economic decision-making in both the public and private sector, for instance, through putting a price on carbon. Government investment must also be coordinated and streamlined—and must not subsidize or exacerbate climate-related risks and economic activities that contribute to climate change (e.g., tax incentives for fossil fuel extraction or subsidized flood insurance in high-risk areas). Policies should also help those Americans hurt by the clean energy transition, as well as those who are most vulnerable to climate impacts.

America has a responsibility to lead by example. Ultimately, however, U.S. actions must be integrated into a larger global commitment to shift toward a cleaner energy economy. U.S. policies also must ensure that the competitiveness of U.S. business is not harmed. This may require border adjustments and other mechanisms to prevent other countries from seizing unfair advantages.

With the right policy framework, we are confident that America can reduce the economic risks from climate change while seizing new market opportunities. But businesses must also start now to factor climate risks into their investment decisions. Whenever capital assets reach the end of their productive lives, they should be replaced with energy efficient and low-carbon alternatives wherever possible and prudent. All businesses, especially those making regular long-term, place-based infrastructure and supply chain investments, should also conduct detailed analyses of climate risks they face, build internal capacity, develop concrete action plans to address these risks, and disclose their risks and actions.

The transition to a clean energy economy is already underway, but must be accelerated to avoid unacceptable risks from climate change. In the past, transformative investments in such areas as highways, rural electricity, and telecommunications have unleashed the power of innovation and American business. Investing in clean energy can ensure American economic security and competitiveness for decades to come. But to substantially reduce the growing risks of climate change, and to take maximum advantage of the opportunities in a clean energy economy, we must act now.


A Product of the Risky Business Project:


  • Michael R. Bloomberg, founder, Bloomberg Philanthropies; founder, Bloomberg L.P.; 108th Mayor of the City of New York
  • Henry M. Paulson, Jr., Chairman of the Paulson Institute; former U.S. Secretary of the Treasury
  • Thomas F. Steyer, Business Leader and Philanthropist


Risk Committee Members:

  • Henry Cisneros, Principal, Siebert Cisneros Shank; former US Secretary of Housing and Urban Development (HUD); former Mayor of San Antonio, TX
  • Anne M. Mulcahy, Chairman, Board of Trustees, Save the Children; Former Chairman and CEO, Xerox Corporation
  • James W. Owens, Former Chairman and CEO, Caterpillar Inc.
  • Gregory Page, Executive Chairman, Cargill, Inc. and former Cargill Chief Executive Officer
  • Robert E. Rubin, Co-Chairman, Council on Foreign Relations; former U.S. Secretary of the Treasury
  • Donna E. Shalala, President and CEO of the Clinton Foundation
  • George P. Shultz, Thomas W. and Susan B. Ford Distinguished Fellow at the Hoover Institution; former U.S. Secretary of State; former U.S. Secretary of the Treasury; former U.S. Secretary of Labor; former Director, Office of Management and Budget; former President, Bechtel Group
  • Alfred Sommer, Dean Emeritus, Bloomberg School of Public Health; University Distinguished Service Professor, Johns Hopkins University
  • Rob Walton, Retired Chairman of the Board of Directors of Walmart Stores, Inc.

Research: Risky Business Project Co-Chairs Michael R. Bloomberg, Henry Paulson, and Tom Steyer tasked the World Resources Institute, a global research organization, with an independent assessment of the economic opportunities in a transition to a clean energy economy in the United States. The research team was led by WRI Senior Fellow Karl Hausker. WRI partnered with Evolved Energy Research in modeling pathways to a clean energy economy, working with Ben Haley, Ryan Jones, and Gabe Kwok as principal analysts alongside Jim Williams, Director of the Deep Decarbonization Pathways Project. The team’s complete assessment, along with technical appendices, is available on the Risky Business website,

Authors: Tim Duane, Jonathan Koomey, Kathy Belyeu, and Karl Hausker

Editors: John Carey, Tan Copsey, Kate Gordon, and Dan Lashof

In addition, Elaine Beebe provided editorial assistance; Joanna Feng provided research assistance; and Candice Allouch, Megan Kaiko, and Marcela Miceli provided project coordination.

The research team’s work was reviewed by an independent Risky Business Expert Review Panel composed of leading climate scientists and economists. A full list of the expert review panel is available below.

Report Design & Layout: Richard James Herring, Aires Almeida: HabitatSeven Inc.,

Funding: This report would not have been possible without the financial support of Bloomberg Philanthropies, the Paulson Institute, and TomKat Foundation.

This report is a product of the Risky Business Project, produced in collaboration with WRI.

Suggested Citation: Risky Business Project, From Risk to Return: Investing in a Clean Energy Economy, 2016.

Expert Review Panel

Expert review of the report is provided by: Dallas Burtraw, Senior Fellow, Resources for the Future; Stephen Doig, Managing Director, Rocky Mountain Institute (RMI); Peter Fox-Penner, Director, Institute for Sustainable Energy, Boston University; Jeffery Greenblatt, Staff Scientist, Lawrence Berkley National Laboratory (LBNL); Etan Gumerman, Senior Policy Associate, Nicholas Institute, Duke UniversityHal Harvey, Chief Executive Officer, Energy Innovation; Doug Holtz-Eakin, President, American Action Forum;  Larry Linden, Founder and Trustee of the Linden Trust for Conservation. Additional expert review provided by WRI staff: Helen Mountford, Kevin Kennedy, Alex Perera, Laura Malaguzzi Valeri, Noah Kaufman, Juan Carlos Altamira, and Michael Westphal.

“We can reduce climate risks with existing clean technologies. We don’t need an energy miracle.”

Henry M. Paulson — Risky Business Co-Chair, Former U.S. Secretary of the Treasury, and Chairman of The Paulson Institute

View footnotes

  1. Our modeling was limited to carbon emissions (CO2) which represent 81 percent of total U.S. GHG emissions. We did not model pathways that would achieve the needed reductions in the other greenhouse gases (methane, nitrous oxide, and fluorinated gases).
  2. Results presented here are decadal averages for the Mixed Resources pathway that incorporates a variety of low-carbon energy sources, one of four pathways analyzed. All modeling results are expressed in 2014 dollars unless otherwise noted.
  3. Fuel savings are based on a U.S. government “business-as-usual” projection of fossil fuel prices in which: oil prices are $79/bbl in 2020, escalating an average of 3.4% per year out to 2050; natural gas prices are $5/Mbtu in 2020, escalating at an average of 2.7% per year out to 2050; and coal prices are $1.9/Mbtu in 2020, escalating at an average of 1.4% per year out to 2050. The analysis also explores a scenario in which a global shift to clean energy results in lower fossil fuel prices as demand decreases.