The threat of recession. Oil at $100 a barrel. Anemic job market growth, with big cutbacks in some sectors. The sub-prime lending crisis and real estate slump. Stock market jitters. So far, the economic outlook for 2008 looks as dreary as the January weather.
Looking for some good news, or at least some excitement? Try the clean energy industry. Beyond the media buzz about polar bears, squiggly compact fluorescent light bulbs, and Al Gore, there is serious money being invested and huge growth potential in this sector.
The recent annual investment survey from New Energy Finance, a London-based clean energy investment research firm, found that despite 2007's global credit woes, new investment in clean energy grew 41 percent last year to blast past the $100 billion mark to $117.2 billion. Venture capital and private equity investments in the industry surged 27 percent. Investing via public markets soared 80 percent to nearly $19 billion, although a big chunk of that was a single deal: Spanish energy giant Iberdrola spinning off its growing renewable power business in a $6.6 billion IPO (the industry's largest to date) in December.
Clean tech, which the Wall Street Journal recently called "Venture Capital's New Green Machine", helped fuel global venture capital's biggest year since 2001 -- $40 billion in total VC investments. Legendary Silicon Valley VC firm Kleiner Perkins Caufield and Byers, which added the aforementioned Mr. Gore to its partner list last year, now puts fully one third of all its investment dollars into what it calls greentech.
Fleshing out the raw numbers are these sector-specific growth indicators and other positive signs for this burgeoning industry as the new year begins:
- In 2007, worldwide production of solar photovoltaic (PV) cells continued its recent trend of doubling of every two years, making it the planet's fastest-growing major energy source. Last year's 50 percent growth pushed global output to 3,800 megawatts.
- The U.S. wind energy industry had its best year ever in 2007, installing an estimated 3,000 new megawatts; the previous best year, 2006, saw about 2,500 megawatts of new capacity coming online. All but 14 states have wind farms running or planned; Virginia officials just approved that state's first wind project on a ridge near the West Virginia border. Texas (surprising some people) is the national leader in wind power with nearly 4,000 megawatts running, followed by California, Iowa, Washington, and Minnesota, according to American Wind Energy Association stats.
-Cellulosic ethanol has long been considered the holy grail of biofuels because it's made from agricultural waste or non-food crops like switchgrass instead of corn. That promise got a great boost from a just-released University of Nebraska study concluding that ethanol from switchgrass produces five times the energy needed to produce it, and cuts greenhouse-gas emissions by 94 percent compared to gasoline. Although cellulosic ethanol is still a few years away from high-volume commercial production, this five-year study confirms what its backers have long claimed is its "net energy-positive" quality. Corn-based ethanol, by contrast, is only slightly net energy-positive or even energy-negative, depending on who you talk to.
That's just a small smattering of recent bullish developments in clean energy. Not all the news is rosy, of course. In recent weeks, two of the industry's highest-profile CEOs, Martin Eberhard of $100,000 all-electric sports car maker Tesla Motors and Marty Tobias of well-funded biodiesel maker Imperium Renewables, were ousted in management shakeups (Imperium also delayed its IPO).
But those things often happen in young, dynamic, growing tech-based industries. The overall trends for the business of clean tech are strongly positive, even with credit woes and an economic recession on the horizon. I like to say that even bad news - in the form of record oil prices and climate-change manifestations, for example - is usually good news for the clean-tech industry. If the January and economic blahs have you down, clean tech is worth your attention - and quite possibly your investment dollars. I look forward to sharing my thoughts about the ups and downs of this exciting industry here in the weeks to come.