In late June 2019, General Electric announced it would close a California gas plant 20 years ahead of schedule. The Inland Empire Energy Center in California, the company said, was “uneconomical to support further” in part because of outdated technology.

But California’s aggressive clean energy goals and commitment to using renewable energy was also a key determinant in GE’s decision to take the plant offline. What’s more, the closure is not just a hiccup in GE’s energy plans, but is just one small piece of the American giant’s substantial stumble on clean energy in recent years.

The company has lost hundreds of billions of dollars of investor money in just two years as its stock has plummeted. And a new report claims the downturn is in large part because the company failed to pay attention to the rise of clean energy.

“You don’t necessarily think of GE as an energy company,” says Kathy Hipple, a financial analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), which produced the report. “But every company on the planet will be impacted by climate risk.”

Founded in the late 1880s by Thomas Edison, General Electric was part of the 12 companies offered on the Dow Jones industrial average at its formation in 1896. While the name GE might convey images of light bulbs and household appliances to most Americans, the massive multinational conglomerate is a key player in several different industries.

GE now owns 10 subsidiaries, including companies handling aviation technology, healthcare, and financial services. Its energy offerings are split into two units: GE Power, a gas-focused division, and GE Renewables, a much smaller company focused primarily on wind technology.
GE’s energy troubles began in 2014, when the company announced it would purchase French gas turbine company Alstom for $13 billion. The timing of the purchase happened to coincide with a seismic shift in climate policy. The acquisition was completed in November 2015, just one month before hundreds of people gathered in Paris to ratify the landmark climate agreement in December of 2015.

“It was kind of like Bayer buying Monsanto just as the bulk of the class-action suits were coming through,” says Ion Yadigaroglu, managing partner at Capricorn Investment Group, a clean-energy investment firm.

GE’s purchase of Alstom also coincided with a global downturn in the price of renewables, lessening demand for the gas turbines right after GE had made its costly pick. Between 2010 and 2016, the cost of solar dropped 69%—putting it “well into the cost range of fossil fuels,” according to the International Renewable Energy Agency—while the cost of onshore wind dropped 20% in the same time period. Since then, costs have only plummeted further. In November, financial advisory firm Lazard reported that building and operating new renewable energy plants had become, in some cases, cheaper than operating older conventional plants.

“You’re in a situation where the market for one of your main products—literally the bottom falls out of it,” says Hipple. She explains that utilities became wary of spending millions on gas turbines that would take years or decades to pay off.

“Utilities and power plants were saying, ‘We don’t need to do things now. We’ll just wait and see,’” she says. “The price of renewables is dropping—why lock in? Why lock in now? Let’s keep an eye on the natural gas prices. Let’s keep an eye on renewables prices. We don’t need to act quickly.”

According to IEEFA’s report, GE lost investors a staggering $193 billion—74% of its market capitalization—between 2016 and 2018. GE Power was a huge driver of this loss as it began to bleed money, going from bringing in $4 billion in profits in 2016 to losing more than $800 million in 2018. The company’s other subsidiaries only experienced slight variations in profits during this time.

Last year, GE was kicked off the Dow Jones Industrial Average after 110 years on the index after its stock plunged. GE was the last remaining original member of the index and a remnant from a time when the U.S. economy was driven by industrial giants rather than Big Tech. “The company was often at the center of American capitalism” over the past century, the New York Times wrote last summer of the change in the Dow, noting the removal as a “fresh blow” to a company “reeling” from challenges to its power businesses. “As recently as the 1990s, GE was at times the most-valuable American company by market value,” the Times reported.

GE’s downfall, of course, can’t be entirely attributed to a lack of foresight on clean energy. The well-publicized leadership struggles within the company—its longtime CEO Jeff Immelt was forced into retirement in 2017, and his successor was removed by the board a year later—as well as myriad legal troubles have significantly eroded investor trust. And GE does have a substantial investment in renewables: Its wind turbine business is the third-largest in the world and has brought in hundreds of millions of dollars in profits over the past two years.

The Alstom acquisition was roundly praised by many investors when the purchase was completed in 2015, with the New York Times lauding the deal as helping to “strengthen GE’s footing in emerging markets like China and India, where air pollution from coal power is a menace to public health.” Analysts now say GE paid too much to acquire the company.

Experts agree that GE is, at best, suffering from bad timing, and at worst paying the price for a significant lack of foresight. The Alstom acquisition and the subsequent struggles of the Power division were key to bringing the rest of the company down. News reports on GE’s decline and the company’s grim future widely point to the Alstom acquisition as one of the main drivers of its plunging stock prices. A Fortune profile of Immelt painted the Alstom deal as a key example of the CEO’s often-ill advised tendency toward “paying top dollar to acquire the hot businesses of the moment.”

And in an interview last July with Bloomberg, JP Morgan analyst Stephen Tusa said GE’s power business was “in secular decline,” meaning that it is threatened by long-term market trends. Tusa predicted GE’s power business in the future “could be worse, not better, than today.”

Some investors say GE’s failures could have been prevented—and they’re worried that the company and its investors aren’t learning from its mistakes. Because GE isn’t exclusively invested in fossil fuels, like most oil and gas companies, the company could have become an energy visionary, Yadigaroglu says.

“I think it’s much tougher when you ask [companies like] Exxon to get out of oil and gas,” he says. “In a conglomerate you’re kind of in the ideal place to say, ‘Let’s look ahead of the curve here. Even if the [fossil fuel] business is strong today, it’s not going to be in 5 or 10 years. Let’s start investing elsewhere and maybe even sell that division.’ Clearly, GE did not do that.”

Last October, Yadigaroglu spearheaded an open letter from several asset managers urging GE’s incoming CEO, Larry Culp, to get out of the fossil fuel business and invest more in clean energy. “We thought it might be a good time to say, there’s a blue pill and a red pill. Pick the right one,” he says. “And not just for moral reasons, but because you won’t have a business in 5 or 10 years if you don’t.”

GE declined to comment on this story, but Culp, the company’s current CEO, has made several statements to investors on the company’s confidence in its renewable energy investments, saying at a conference last month that GE Renewable is set up to be GE’s “highest growth business in 2019.”

But both Hipple and Yadigaroglu are skeptical about the company’s commitment to clean energy. Hipple says that even in presentations on the company’s renewables business, GE still noted that gas would be “stable in the long-term” and “positioned to win in the short-term,” a view she calls a “flawed message.” The International Energy Agency’s 2018 World Energy Outlook does show demand for natural gas is “on the rise,” but also predicts renewables’ share of power markets will overtake both gas and coal globally by 2040.

Yadigaroglu is more concerned about the company’s culture, especially when it comes to GE’s presence in countries still evaluating the best ways to meet their energy needs. He decided to write the letter to Culp after attending a GE meeting in 2018 where he says a high-ranking executive at GE Power was dismissive of renewable energy, referring to the company’s fossil fuel investments in developing countries as “real energy.”

The investor letter points to GE’s continued involvement in “outdated coal and gas technologies globally,” including projects in Vietnam, Egypt, and Kenya. Yadigaroglu is particularly concerned about the announcement last month that GE had won a bid to build a coal-fired plant in Kosovo—a project the World Bank publicly announced it would not fund last year because of the rising price of coal and the falling price of renewables.

For the rest of Wall Street, the time has come to wake up on climate. A survey by U.S. consulting firm Deloitte released earlier this month finds that 84% of business leaders in the United States were aware of recent reports that sounded grave alarms on climate change, and more than two-thirds of those leaders had subsequently changed their business strategies in response. Meanwhile, a recent analysis of corporate disclosures shows that more than 200 of the world’s corporate giants expect extreme weather and carbon pricing could cost their companies nearly an extra $1 trillion collectively.

Between press releases announcing renewable energy commitments and pledges to double down on climate action, experts say GE can serve as a cautionary tale for other businesses on what it looks like to miss out on the world’s shifting use of energy.

“If they were making tons of money, you might say, ‘Fine—they’re evil, but they’re realists,’” Yadigaroglu says. “But that’s not even the case, right? It’s not only evil, but it’s just not working. It’s a bad strategy that happens to also be highly, highly destructive.”