The energy and environmental problems that drive clean technology aren't going away any time soon, says a new report, Redefining Cleantech, which recommends the clean tech sector as a good long-term bet for institutional investors.
"There is a growing market for these technologies because the climate is still changing," Vancouver clean-tech researcher and report co-author Dallas Kachan told Business in Vancouver.
"We're still running out of the building blocks of what we need for our modern society, and countries are getting increasingly worried about their energy sovereignty. These issues aren't going away."
Although the global market for clean technology is massive – $300 billion annually – the North American sector has suffered since 2008 from a deep drop in venture capital investment.
General economics aside, the retreat by venture capitalists was driven largely by disillusionment with a sector that was overhyped, and by some spectacular failures – notably the bankruptcy of solar cell maker Solyndra, which wiped out investor equity and left American taxpayers on the hook for $385 million.
Kachan co-authored Redefining Cleantech with Danielle Fugere, president of As You Sow, a non-profit organization that promotes social and environmental responsibility through shareholder activism.
It draw parallels between clean-tech and two other sectors that underwent a period of investor over-indulgence – biotechnology and Internet companies of the 1990s. It describes clean-tech as a sector that is still in an investor "trough of disillusionment" but which poses a good long-term investment vehicle, especially for institutional investors.
"It's an exciting time to be investing in clean-tech – the opportunities and the potential for growth are tremendous, especially in contrast with increasingly risky fossil-based resources," Fugere said.
"Clean-tech investment is ideal for endowments, pension funds, and other institutional investors seeking to achieve solid risk-adjusted returns and, most importantly, act in their constituents' best long term interests, both financially and environmentally."
Clean technology is not so much an industry as a "zip code" for investors, Kachan said. It is defined as innovations that address impacts on soil, water and air, or reduce reliance on fossil fuels. Some clean technologies, like wind and solar power, are now established and enjoying widespread market penetration.
Redefining Cleantech identifies areas of clean technology that yet to gain widespread market penetration, but which have huge investment potential, like energy storage for intermittent energy, like wind and solar power.
