The Internet of Things: Our Greatest Shot at Battling Climate Change

Alternative energy won't reverse the trends of carbon emissions. The biggest change we can make in carbon consumption lies in this technology.

Feb 15, 2014 at 1:15PM

Nellis

You think this is what will prevent climate change? Think again. (Source: U.S. Air Force.)

Machine to machine communication, or the internet of things, is on the precipice of taking the world by storm. At its very core, machine to machine communication is the ability to connect everything, I mean everything, through a vast network of sensors and devices which can communicate with each other. The possibilities of this technological evolution span an immensely wide spectrum; ranging from monitoring your health through your smartphone, to your house knowing where you are to adjust lighting and heating.

 

The way that the internet of things could revolutionize our lives can be hard to conceptualize all at once. So today let’s focus on one place where machine to machine communication could have an immense impact: Energy consumption.  Not only could this technology make turning the lights on easier, but it could be the key to us effectively managing anthropogenic carbon emissions.

 

Regardless of your thoughts and opinions on climate change and the scope of how much carbon emissions affects the global atmosphere, we all can agree on one thing: Emitting less carbon is a good thing, especially if it can be done without impeding economic growth. For years, the battleground for the climate change debate has been on the energy generation side, pitting alternative energy options like wind and solar against fossil fuels. The problem with fixating on this side of the argument, though, is that even under the most ambitious outlooks for alternative energy growth, we will never be able to get carbon emissions below the threshold many think is required to prevent significant temperature changes over the next century. 

Does that mean there's no shot at significantly reducing carbon emissions? No -- we're just focusing on the wrong side of the energy equation, and that is where machine to machine communications comes into play. Let’s look at how the internet of things can mean for carbon emissions, and how investors could make some hefty profits from it. 

Energy consumption's overdue evolution
We humans are a fascinating study in inefficiency. We will sit in traffic on the freeway rather than take the alternative route on "slower" roads. We oversupply the electricity grid because we don't know precisely how much demand is needed at any given moment. It's not that we deliberately try to do things less efficiently; we just don't always have the adequate information to make the most efficient decision.  

When you add all of these little inefficiencies up, it amounts to massive amounts of wasted energy and, in turn, unnecessary carbon emissions. In the U.S. alone, 1.9 billion gallons of fuel is consumed every year from drivers sitting in traffic. That's 186 million tons of unnecessary CO2 emissions each year just in the U.S. 

Now, imagine a world where every automobile was able to communicate with the others, giving instant feedback on traffic conditions and providing alternative routes to avoid traffic jams. This is the fundamental concept of machine-to-machine communications, and it goes way beyond the scope of just automobiles and household conveniences.

One of the added benefits of this technology is the impact it could have on our everyday energy consumption and the ultimate reduction in total carbon emissions. A recent report by the Carbon War Room estimates that the incorporation of machine-to-machine communication in the energy, transportation, built environment (its fancy term for buildings), and agriculture sectors could reduce global greenhouse gas emissions by 9.1 gigatons of CO2 equivalent annually. That's 18.2 trillion pounds, or equivalent to eliminating all of the United States' and India's total greenhouse gas emissions combined, and more than triple the reductions we can expect with an extremely ambitious alternative energy conversion program. 

How is this possible? Increased communication between everything -- engines, appliances, generators, automobiles -- allows for instant feedback for more efficient travel routes, optimized fertilizer and water consumption to reduce deforestation, real-time monitoring of electricity consumption and instant feedback to generators, and fully integrated heating, cooling, and lighting systems that can adjust for human occupancy. 

There are lots of projections and estimates related to carbon emissions and climate change, but the one that has emerged as the standard bearer is the amount of carbon emissions it would take to increase global temperatures by 2 degrees Centigrade. According to the UN's Environment Programme, annual anthropological greenhouse gas emissions would need to decrease by 15% from recent levels to keep us under the carbon atmospheric levels. Based on current emissions and the 9.1 gigaton estimate from Carbon War Room's report, it would be enough to reduce global emissions by 18.6%, well within the range of the UN's projections. 

Nest

A more powerful tool against climate change than alternative energy. (Source: commons.wikimedia.org/YuMaNuMa.)

The Internet of Things is still very much in its infancy, but it's taking off fast. The pending boom in machine-to machine communication helps explain why Google (NASDAQ:GOOGL) shelled out more thah $3.2 billion for smart-thermostat company Nest Labs. Its ability allows customers to better manage heating and cooling in households and instantly provide feedback to utilities in order to better manage energy demand during peak load hours. Sure, estimates put the total number of machine-to-machine capable devices in the billions, but for the Internet of things to be truly effective, everything needs to be connected. Estimates for total connected devices around the globe could reach into the trillions. This could lead to an industry with annual revenues of a whopping $948 billion.

The big players in the technology world, like Google and Intel (NASDAQ:INTL), will undoubtedly be major players in this fast-growing market. Aside from its investment with Nest for smarter home energy use, Google is also getting into the transportation game with its Open Auto Alliance, a group of automakers and technology companies that will establish common practices such that vehicles from different manufacturers can communicate with each other -- the building block for self driving vehicles. With that much money on the line, can you really blame these companies for diving into this market?

What a Fool believes
The Internet of Things trend is approaching ... fast. For investors, it could be an amazing opportunity to get in on the ground floor of a new market with trillion dollar potential, but it is so much more than that. Increased productivity and elimination of wasteful energy consumption through smart devices could be the one and only key to cutting greenhouse gas emission enough to reduce the chances of significant climate change. So go ahead and continue arguing about the use of fossil fuels or alternative energy -- the investors who will really be betting on reducing carbon emissions will be putting their money here. 

The Internet of things is going to explode this year, so we picked this under-the-radar company as our top stock for 2014
The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and this company's position in the Internet of things revolution could make you rich. You can find out which stock it is in our special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this company on the bleeding edge of the Internet of things.

Tyler Crowe has no position in any stocks mentioned. You can follow him at Fool.com under the handle TMFDirtyBird, on Google +, or on Twitter, @TylerCroweFool. 

The Motley Fool recommends and owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers