Cost advantages & disadvantages of going green

Written by gregory hamel
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Cost advantages & disadvantages of going green
Prius (Justin Sullivan/Getty Images News/Getty Images)

Going green can be defined as taking deliberate action to reduce the impact you have on the environment. In many cases, going green involves taking steps to reduce energy consumption and thereby reducing the total environmental effect of the energy you consume. Going green is often a personal decision, but it can also carry significant financial benefits and drawbacks.

Initial Investment

Perhaps the most significant disadvantage of going green is that taking steps to reduce energy consumption often require a large initial capital investment. For instance, if you want to increase the energy efficiency of your home, you might install new windows and insulation, which could cost thousands of dollars up front. In industry or business, upfront costs may be far more expensive; for instance, if a large company were to implement a policy affecting numerous factories, such as more strict pollution standards, it could cost hundreds of thousands if not millions of dollars. The goal of most green investments is to save enough energy or reduce costs in some other way so that the improvement pays for itself over the long term. The problem is that savings gained from green measures are often unpredictable, and other factors such as interest rates can easily alter the payoffs of investments.


The primary cost advantage of going green is that saving energy and other green measures often result in greater efficiency that saves money on operating expenses over time. For instance, a new hybrid vehicle might cost a few thousand dollars more than the same vehicle hybrid technology, but due to greater fuel efficiency, it will cost less to drive the car. If you use the car enough during its lifespan the extra cost for the hybrid technology will pay for itself. Lower operating expenses could give a business a competitive advantage in the long term.

Energy Costs

One of the most important factors that influence the financial aspect of going green is energy costs. Energy costs change over time, which can make the ultimate payoff of going green difficult to project. If current energy costs are considered low, the cost benefit of going green might be low, but if energy costs increase in the future, the benefits will be more dramatic; going green is a way to hedge against increasing energy costs. For instance, a hybrid car might cost about the same as a normal car in the long term based on current gas prices, but if gas prices spike in the future, the hybrid might end up saving you a lot more money than you expect.

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