Are clean technologies the investment opportunity of the 21st century? That was the breathless question at the panel I went to on Thursday, the second day of the "Advancing Sustainable Prosperity" conference in Boston. And some of the answers suggest to me that however much the private sector comes around to acting to slow, stop, and even reverse climate disruption (and let's hope that's 100 percent), we can't rely wholly on market forces to transition to a low or no-carbon energy future.
The information the panel shared was dizzying from an investor's perspective: clean technologies have accelerated rapidly over the last four or so years to become a $70 billion market worldwide, according to Kenneth Locklin of Clean Energy Group (a trade group representing power generators and distributors advocating for sustainable energy generation, that has worked closely with CERES on its Investor Network on Climate Risk), and current growth rates this will get close to $100 billion by the end of 2007. This year biofuels are one of the most exciting investment arenas, Locklin said, displaying a graph showing skyrocketing amounts of ethanol production.
Michael Leibreich of New Energy Finance looked at the same data on the clean energy market from a slightly different perspective -- beginning with some humor. "Is it fair in year seven of the century to identify what the investment opportunity of the century will be," he asked, and with tongue firmly in cheek, prognosticated the next 90-odd years worth of "investments of the century":
Moving on to a candid assessment of clean energy market dynamics, Leibriech suggested that right now the sector's action is mimicking the frenzy of the dot-boom of the late 1990s, and that some of the results are likely to be similar. "This is the transformation of the energy industry," he said, but "these kinds of increases can't go on forever." And while there will be investors who win out in the cleantech-boom, the likely bust to follow will create "quite substantial losers."
Leibriech's message, from an investing perspective, essentially seemed to be that investors should diversify their portfolios, and not bank on just one part of the clean energy/clean tech sector. And since this gathering is all about advancing sustainable prosperity in all senses of the s-word, that's fine.
But from what I understand, ethanol -- which the market is currently in love with -- is a pretty shaky biofuel to pin our hopes on this far north (kind of like shipping 30-pound bags of dog food across the country for free was a shaky dot-com business plan). It takes a lot of energy to grow corn, our primary ethanol feedstock, and the Big Ag interests protecting corn subsidies are both entrenched and powerful. Do we want depend on the kinds of market dynamics and insider politics that led to some phenomenally bad business in the late 1990s -- and profound financial and professional losses for many people around the turn of the century -- to get us off dirty energy as fast and painlessly as possible?
The growth in the clean energy and clean tech sectors that I heard about in Boston is significant, and inspiring, and I'm all for doing well by doing good. But until strong and well-considered laws are in place to work in sync with these market forces, the whims of investors are arguably playing a too-powerful role in charting the country's energy future.