Recently, Bank of America and Citigroup were both labeled the "greenest" banks at the same time another group called them the "filthiest." The first name was for investing in clean energy and reducing emissions from operations, while the latter was for providing financial support to carbon-intensive energy such as coal.

In a similar vein, a survey of boom industries shows that one of the top areas for growth in the economy is renewables. And oil and gas. And unconventional energy production such shale drilling.

What can we take away from this jumble of signals? The energy sector is growing on all sides, with nearly US$40 trillion in infrastructure being developed to meet global energy demand, which is on track to rise 40 percent by 2030. As a result, energy -- which is already directly responsible for more than 60 percent of carbon emissions -- is getting more and less carbon-intense.

On the one hand, renewable and hyper-efficient energy production is rising fast, with wind, solar, and biofuels growing from nascent technologies just a few years ago to mature and commercially viable today. On the other hand, the rise of developing economies and more power-hungry industries is driving a quest to uncover the cheapest energy wherever it is found, leading us into an era of "extreme energy," defined by the widening pursuit of unconventional fossil fuels -- those resources that are more difficult to extract and which come with greater environmental consequences.

Over the past year, BSR has been exploring what these trends mean for companies that are trying to address their greenhouse gas (GHG) emissions and become leaders in sustainable energy solutions with our Future of Fuels initiative. It is clear that if current trends hold, the beneficial climate impacts of renewables, which are growing rapidly on a very small base, will be more than offset by the much larger, faster growth in conventional and unconventional fossil fuels. This has important implications for companies that are trying to manage and communicate their climate impacts, as this article will highlight.

Before we turn to these implications, however, it is important to point out another lesson in our Future of Fuels work that will be the subject of articles later this year: There is much more to the energy story than carbon, including a complex set of additional sustainability issues such as human rights, ecosystems health, economic development, and national security impacts. This complexity is unfolding dramatically with shale gas development, which is unlocking a huge amount of natural gas supplies in the United States that may replace more carbon-intense coal. At the same time, however, there is concern that the high-volume, hydraulic fracturing techniques used to produce the gas may threaten water supplies with chemical pollution and even lead to earthquakes.

Our Future of Fuels work will create a comprehensive framework to help companies manage the total sustainability impacts of fuels, but for today our focus is on carbon.

The Rise of Lower-Carbon Energy

You probably know about the first story: Renewable energy is scaling up in a big way. In percentage terms, it is the fastest-growing energy sector. Generating capacity for solar and wind has been expanding in the double and even triple digits annually, and today, both technologies are commercially viable in Germany, Spain, and the U.S. states of North and South Dakota and California. Solar prices also have dropped dramatically; at a solar power auction in California just last month, developers sold projects to utilities at lower rates than were available from the existing power grid. As for wind, it is reasonable to expect that it could power 20 percent or more of the entire U.S. electricity grid by 2030.

Lower-carbon transportation fuels are also being deployed rapidly. In Brazil, the most advanced biofuels market in the world, virtually all new cars can run on any mix of gasoline and ethanol. In the United States, which already produces enough ethanol for 10 percent of its fuel, the electric vehicle industry is tripling in size annually.

Next page: The Rise of Higher-Carbon Energy