Cleantech has been discussed frequently in recent years and with Bill Gates' announcement to create a billion dollar fund for cleantech, I wanted to unravel the truths and myths behind it and analyze whether we are experiencing the dawn of a new era of clean energy.
To start off - what is cleantech? According to the Clean Technology Trade Alliance it can be described as: A broad base of processes, practices and tools, in any industry that supports a sustainable business approach, including but not limited to: pollution control, resource reduction and management, end of life strategy, waste reduction, energy efficiency, carbon mitigation and profitability. This description taps into various fields of environmental and climate protection which begs the question of how feasible it is and what the actual implementation looks like. Could it potentially have a big positive impact on the planet's energy consumption and make a huge difference in GHG emission figures, or is it just wishful thinking by some bright minds, but who lack the means to put their ideas into practice? An amalgamation of good intentions, and green solutions, but without the necessary funding, that would allow it to have the capacity to operate on a larger scale?
In 2008, cleantech companies were sprouting everywhere and huge amounts of venture capital from companies, most notably companies at Sand Hill Road, were invested in new innovative ideas. But, after a a lot of hype, high hopes and positive prospects, in 2014 CBS aired a piece on their 60 minutes segment that announced "The Cleantech Crash".
What had happened? How did 60 minutes decide that this is the end of cleantech, when the market was still going strong? One major problem was that the segment focused almost exclusively on the Silicon Valley and venture capital that was lost by those companies. According to Joe Romm of www.thinkprogess.org, the cleantech sector was "booming by every key indicator" by the time the 60 minutes video was aired. He argued that just like in any other new industry, there will be winners and losers among those who invest capital, and he further stated that the CBS piece failed to understand and recognize the actual successes of this new industry, while solely focusing on the failures.
So how does the market look today? In April of this year, Rob Day at Techcrunch.com wrote an interesting article, announcing the resurrection of cleantech in his article "Cleantech is dead, long live cleantech". Cleantech was looked at as a beacon in a world where profit making is seldom linked to doing something good for the environment or society. However it got so overhyped, that the absence of the profits the venture industry hoped for, led to great disappointment and investors turning their back to new cleantech projects. And not to forget, this all happened during a time when global markets were hit by the financial crash. But now in 2015, the cleantech market has undergone a transformation which makes the distinction between 'normal' tech start ups and cleantech enterpreneur rather blurred. As Rob Day described it:
"The distinction between cleantech and tech is increasingly fuzzy and meaningless. So… entrepreneurs are indeed still excited about these markets. And mainstream VCs are indeed still investing in cleantech. They’re just not calling it as such, or defining it with the same subcategories. Instead, innovators and investors are defining the companies in terms of what they actually do."
The need for access to clean energy sources becomes increasingly more pressing and the involvement of governments and public funding for R&D becomes essential. This issue is also a key topic during the COP21 meetings in Paris that are taking place right now. While start up tech companies that have cleantech characteristics, such as Nest, which Rob Day mentioned in his Techcrunch article are definitely important, we do however need large scale initiatives and programmes. Initiative that bring together the necessary research for pure cleantech projects and the required large amount of funding to implement it are paramount, if we really want to enable large portions of the world's population to have access to clean energy. This is why Bill Gates' announcement is so important. He has the unique ability to bring together business heads, philanthropists and state leaders to agree on ways to improve energy efficiency and how to enable access to clean technology, while at the same time, being able to stem a large amount of the needed funding needed for R&D by himself.
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The latest news from today is that Bill Gates officially launched his billion dollar initiative that include notable investors such as Facebook’s Mark Zuckerberg, Alibaba CEO Jack Ma, and Virgin Group's Richard Branson just to name a few. Under the name of Breakthrough Energy Coalition this group of illustrious names' goal is to develop new tools to power the world. New research projects could for example be the hypothesised idea of artificial photosynthesis, using sunlight to produce liquid hydrocarbons that could replace fossil fuels. The key idea is to bring cleantech projects out of the labs, where they would most probably be shunned by a complacent energy sector, straight into the markets, backed by the wealthy investors.
This new coalition seems to hit the nail on the head with this statement on their website:
"The existing system of basic research, clean energy investment, regulatory frameworks, and subsidies fails to sufficiently mobilize investment in truly transformative energy solutions for the future. We can’t wait for the system to change through normal cycles."
We do indeed not have the luxury of time, that would allow us to wait until the conditions under the current systems and frameworks allow us to find new ways for clean energy. This coalition's approach seems daring, innovative and promising. Bill Gates announced on his blog that this is "A Big Win for Cheap, Clean Energy" and I think it is save to say that this move is a game changer and it brings a new dynamic into the COP21 conference.
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