As we track green trends it’s interesting to see how things play out. In July we made a case for an alternative energy driven boom, and the Wall Street Journal recently reported some interesting facts about the clean technology industry. Perhaps the most interesting statistic is the following:
While the overall volume of venture-capital deals sank last year, investments in clean-technology companies totaled $8.4 billion, up nearly 40% from 2007, according to Cleantech Group. In the third quarter alone, venture capitalists poured $2.6 billion into clean technology, a quarterly record. In the fourth quarter, they invested $1.7 billion.
So, while most of the economy has been tanking, all of the smart money has been moving into alternative energy investments and in 2008 it grew at a wild pace. Not only has venture capital been moving into this industry, but it is widely expected that the Obama administration will also be directing capital and incentives to help spur on this industry, which would further fuel the growth.
Alternative energy “has been the brightest sector in venture capital over the last year,” says Brian Fan, research director at Cleantech Group, an industry trade organization in San Francisco. “Everyone is thinking it’s going to be a big priority of the incoming administration.”
Just the anticipation of a new administration has been enough to spur interest among companies. Green Panel Inc., a solar technology and installation company in Brighton Mich., is planning to add four employees to the 14-person, two-year-old firm over the next few weeks to handle new business that has come in since the election. Even though no new energy regulations are in place yet, big companies are starting to take a look at alternative-energy options, says Adam Harris, Green Panel’s chief executive. He says one industrial firm held off on an order of solar panels until after the election. And he has heard from other firms whose executives want to have systems in place ahead of any regulations for big companies.
Of course this could be a really a great thing, since it will mean more energy efficiency and more energy independence. But, there was another interesting article recently published in Harper’s magazine authored by Eric Janszen of itulip.com (Who has correctly predicted the last two bubbles and recessions). His article talks about the evolution of a bubble, and specifically what needs to be in place for one to occur. The whole article is worth reading, but here is an interesting quote as it relates to a clean technology boom (and bust):
The bubble machine often starts with a new invention or discovery. The Mosaic graphical Web browser, released in 1993, began to transform the Internet into a set of linked pages. Suddenly websites were easy to create and even easier to consume. Industry lobbyists stepped in, pushing for deregulation and special tax incentives. By 1995, the Internet had been thrown open to the profiteers; four years later a sales-tax moratorium was issued, opening the floodgates for e-commerce. Such legislation does not cause a bubble, but no bubble has ever occurred in its absence.
I think that last sentence says it all. Special legislation to create incentives does not cause a bubble, but a bubble has never occurred in its absence.
We don’t have a bubble yet, but it sure does look like one is in the making.
If you enjoyed this post consider subscribing to our feed, following us on twitter, and also signing up for our Weekly Green Tips email newsletter.
Related posts:
- The Case For an Alternative Energy Driven Boom Most booms happen on the back of technological change. Think...
- Google’s Renewable Energy Initiative http://www.flickr.com/photos/sillyjilly/2433676721/ Whatever your feelings about giant Google, and we do...
- President Obama and His New Energy Plan President Obama's White House website is now up and...
- Protest for Climate Change On March 2, 2009 - thousands of people protested...
- Bill Clinton Says Energy Is #1 Priority I had the good fortune to attend a speech by...
