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Sustainability: driving innovation and growth in IT, telecoms and cleantech

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This blog by Steve Goldstein of Growth Advisors on Greenbiz.com discusses how companies in a range of industries, including the IT indstry, are using sustainability and innovation as a springboard to growth.

Goldstein makes the point that although in the communications and high-tech industry, "much has been written about how software will play an important role in monitoring environmental performance - an estimated $12 billion market this year with some of the world's and industry's leading companies like IBM, HP and SAP actively competing for it.. sustainability is playing a much larger, even pivotal role in remaking the competitive fundamentals, business models, and direction and growth of the industry itself."

He cites three sectors where an industry-wide growth opportunity is being provided by sustainability.

• High-tech equipment and services - "Cloud computing is fundamentally shifting the way enterprises use communications and high-tech products and services. Enterprises are embracing "the cloud" to reduce capital and operating expenditures. Of course, one of the biggest operating expenditures in a data centre is the cost of energy. The use of virtualisation software (central to the operating effectiveness of servers in data centers) from the leading provider (VMware) saves more power than the amount of electricity used annually for heating, ventilation and air conditioning across all of New England. Further, the energy efficiency of computing and network equipment has improved by 70 percent to 90 percent in recent years. "Cloud" is the competitive game changer and a big growth opportunity that every major player in this industry is working on and sustainability is a fundamental reason for its emergence."

• Telecom services - "For major telcos and other players in the communications business, the focus on sustainability is reviving established services like video conferencing, fleet telematics, and telecommuting that date back a few energy crises. It is also putting communications companies in position to compete for business in the rapidly growing markets for cloud, hosting and vertical solutions like e-health against IT providers. New and potentially very large markets for smart buildings, smart grids, remote monitoring, and electric vehicle charging are also in the sights of many companies in this space. Leading telco services providers are beginning to put sustainability at the centre of their product strategies and are looking to address the competitive and regulatory pressures customers are feeling around the sustainability issue. They are in a unique position to provide a broad and integrated set of solutions to the range of an enterprise's sustainability needs."

• Cleantech
- "Clearly a new and rapidly emerging, yet already large space ($188 billion market value in 2010, according to Clean Edge), more money is going into cleantech than any other communications or high-tech segment. Billions are being invested by venture funds, Internet players like Google and long established tech giants including Intel. Why? Solar, water, wind, power, electric vehicles and other cleantech products are highly dependent on information technology and communications in both their operation and distribution and represent the most significant growth and value creation opportunities in this industry for the foreseeable future."

 

UK roadshow to showcase green technology for overseas markets

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Peterborough will play host on July 5th to a roadshow showcasing solutions in the green IT or 'greentech' technology sectors.

The UK Trade and Investment (UKTI) GreenTech Road Show will bring buyers and decision makers from markets including Australia, Bulgaria, China, Hungary, India, Kuwait, Portugal, Romania, Russia, Turkey and UAE into the UK to look at the UK's capabilities across the spectrum of 'green' technologies.  The delegates have specific interests in green energy production, energy efficiency, green building technology, cleaner production technologies, waste management and water and wastewater treatment.

 

The event will be a regionally focused day dedicated to developing interactions between UK suppliers and the visiting 'buyers' and UK Trade & Investment Officers.

 

The morning will offer briefing sessions aimed at UK companies that are relatively new to exports and will offer advice on export services available from UKTI. Advice will be on hand from UKTI regional contacts and Trade & Investment Officers based in overseas embassies, as well as details of how UKTI is promoting the UK's Low Carbon know-how around the world.

 

The event, to be held at the Bull Hotel, will also feature 'Meet the Buyer' sessions in the afternoon, giving greentech vendors the opportunity to book 1-1 meetings with either the overseas buyers or Trade & Investment Officers. 

 

Places on the GreenTech Road Show are free of charge. For more information, email garry.poole@uktradeinvest.gov.uk

 

 

China: potentially a leader in Cleantech?

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I've written here before on the rise of China as a green power. With this in mind, there's an interesting piece on the Tomorrow Today blog about China going green. By the end of the decade, asserts the blog, China will be the greenest nation in the world.

It is investing in a wide array of technologies, from novel power-transmission lines to advanced vehicle engines and batteries for electric cars. (though there's not much evidence yet, it appears, of a groundbreaking approach to 'Green IT'.) The piece, originally from Newsweek, is worth a read.

Green Business Leadership and the World Climate Summit

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Last time I mentioned the excellent Green awards that took place in London. They were not the only awards taking place recently. Another set were the Gigaton Awards, referred to in this piece by Andrew Winston on the Harvard Business Review blogs. In fat, there's a close link referred to in the piece with Sir Richard Branson's Carbon War Room.

Winston remarks that the point of the Awards is to praise companies that are actually cutting emissions in order to inspire others.

I concur, provided that that inspiration actually works. As Winston points out, given the challenges of climate change and the policy failures of recent years, it was good to celebrate business and the work it's doing.

"This is hard work and many of the executives representing their companies are in fairly thankless positions.  All that said, it's clear that these Awards were just a beginning. We're not at gigaton scale by any stretch. The winners have made cuts on the millions of tons at most. Gigatons have to happen at the industry and value-chain level, and that is the work that the CWR is doing."

 

 

Scotland bids to attract Cleantech sector

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The economic potential offered by the Cleantech sector, not least in the jobs opportunity, is creating a number of national suitors, one of which is Scotland.

 

The Scottish Government published its Low Carbon Economy Strategy on 15 November, setting out the major opportunities for Scotland in the development of low carbon goods and services. The Strategy also sets out strategic opportunities and immediate actions for central and local government to support business in the transition towards a low carbon economy.

Scotland's low carbon market was worth around £8.5 billion in 2007-08 (within a GDP of around £100 billion), and is forecast to rise to around £12 billion by 2015-16. It is estimated around 60,000 new green jobs could be created in Scotland by 2020.

 

Launching the Strategy, Cabinet Secretary for Finance and Sustainable Growth John Swinney said that that moving to a low carbon economy was "Scotland's biggest opportunity this century" to create new jobs and grow the economy while tackling climate change.

 

Actions in the Strategy include:

·                       Co-ordinated support for businesses and academia in the Environmental and Clean Technologies sector, to maximise opportunities in a market potentially worth £12 billion to Scotland's economy

·                       Channelling innovation support to low carbon technologies where there is greatest chance of commercial success - the Scottish Government will reprioritise £15 million of innovation funding from the Lowlands and Uplands European Structural Funds Programme, which, along with match-funding from the private sector and other public sector funders, could create £60 million of support for low carbon activity

·                       Supporting the planning, design and construction of new infrastructure and the retrofit of existing facilities to support low carbon activity, such as renewable energy and electric vehicle infrastructure

·                       Supporting skills development through the Low Carbon Skills Fund and working with partners and employers to predict and respond to future skills demands

·                       Holding an annual Scottish Low Carbon Investment Conference, with next year's focus being investment for resource and energy efficiency

 

The Strategy makes clear that there are low carbon business opportunities not just in energy but across the economy, including: green tourism, green financial products, sustainable transport, building technologies, sustainable health, local sourcing of food and drink, and sustainable business practices.

 

With in mind the future economic opportunities to be created by what is essentially the birth of a new industry driven by a need to get to grips with climate change, it's no surprise that every country is upping the ante and wanting its slice of the Cleantech action. The UK Government believes the value of the global low-carbon goods and environmental services market will reach £4 trillion by the end of this Parliament. It is growing at 4% per year, faster than world GDP. It believes its share of that market is £112 billion. In the UK, it suggests, nearly a million people will be employed in the low-carbon sector by the end of the decade.

 

Getting there, however, is likely to take some time, and the reality is that there is unlikely to be a Fast Track route to Cleantech-created prosperity. That's not to say it won't happen - but it'll probably take longer than many governments would wish - or hope.

 

Putting the onus on green technologies to deliver green jobs

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I heard David Cameron speaking this morning to the CBI, saying that he wants to tap into green technologies. He also mentioned finding  £1bn for carbon capture and storage and £200m for low carbon technology and announced £60m to help with infrastructure for offshore wind infrastructure. The goal, it appears, is to create 70,000 jobs, which is fine and may be part of the much-discussed plan for the private sector to  create the jobs to cover for those being lost in the public sector.

 

"We need thousands of offshore turbines in the next decade and beyond, each one as tall as the Gherkin," he said.

"And manufacturing these needs large factories which have to be on the coast.

"Yet neither the factories nor these large port sites currently exist and that, understandably, is putting off private investors.

"So we're stepping in. To help secure private sector investment in this technology, we are providing up to £60 million to meet the needs of offshore wind infrastructure at our ports."

 

The Crown Estate would also work with ports and manufacturers to "realise the potential" of its sites.


I like the intention but it still all sounds pretty aspirational and 'conference-speak', and I'm just not sure yet that it's going to be quite so easy to link the theory behind the potential of 'green technologies' with the practical creation of tens of thousands of jobs. It'll be interesting to see what progress has actually been made on this in a year's time.


Nick Clegg, however, is talking up the potential.  

The carbon sector starts to see more encouraging investment and M&A developments

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With finance still in mind, I was interested in this piece on the Cleantech Blog about carbon investment which suggests that the carbon sector has done well in merger and acquisitions (M&A) this year. You can read the post by Neal Dikeman here

Neal has also produced some cleantech investment 'rules' which say:

  1. Energy is slow and big - Energy technology R&D and commercialization time frames are longer and costs higher
  2. Technology is "cheap", the scale up is where all the risk is
  3. There is no disruptive technology in energy, only disruptive policies and resource shocks that make certain technologies look disruptive after the fact - aka, "it's the policies (and subsidies), stupid"
  4. At scale, there is no capital efficient investing in energy
  5. Commodity prices and policy tend to be more important variables than technology and management
  6. Energy is at heart a resource play, the price you pay matters more than what you do with the resource

You can read the whole story behind the rules here

 

 

 

London gets a warning on Green financing

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Nowhere's too far from having to think about financing, and investment in low-carbon energy and cleantech is no exception. That's why a piece the Financial Times ran yesterday by Fiona Harvey, all about green funding, makes for interesting reading. I've reproduced it below.

 

London risks losing its pivotal position as a centre of green finance and missing out on a growing market worth many billions of pounds a year, according to Greg Barker, energy and climate change minister.

"The vital role of capital markets in tackling climate change has been overlooked for far too long," said Mr Barker, who is holding a meeting of City financiers, government officials and policymakers from overseas on Tuesday to discuss ways of using private-sector capital to tackle climate change.

Last year, global investment in low-carbon energy topped $160bn (£104bn), and by 2020 the amount invested in helping developing economies alone to cut their emissions and adapt to the effects of climate change is projected to reach $100bn a year, according to the international accord signed in Copenhagen last December.

Mr Barker said these fledgling markets presented an obvious opportunity for City institutions.

London already has a strong position in green finance - being a leading centre of carbon trading, with a large number of investors focused on "clean technology".

However, Mr Barker pointed out that many of the UK's experts in green finance were in "boutique" or small-scale institutions, and that if Britain wanted to expand in this area, mainstream financial institutions, including banks, pension funds and other big investors, would have to be encouraged to take part.

"The market is in such infancy that London could easily be overtaken by New York or one of the Asian capitals," he said. "We want to make sure that we plant the Union Jack firmly in the middle of this agenda."

He pledged government help in the form of forging links with the developing economies likely to provide much of the green-finance growth in the next decade, and in ensuring that the market was well-regulated and not dogged by fraud.

Mr Barker said many developing economies were "sceptical" of the involvement of the private sector in green finance, and would require persuasion before they were willing to provide the framework needed for big institutions to invest.

Copyright The Financial Times Limited 2010.

 

 

Norton Rose Publishes Survey on Cleantech and Private Equity

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A new survey by Norton Rose and Cleantech Investor discusses how investment interest from the private equity and venture capital community in the Cleantech sector has increased dramatically over the last few years.

Growing political and commercial awareness of the need for investment in Cleantech, particularly to combat ever increasing environmental challenges, has continued to drive this activity. This has led to a steady rise in the number of dedicated Cleantech funds and to an increase in investment mandates from funds with a more generalist approach, viewing cleantech investment opportunities as part of a diversified portfolio.

The survey canvasses opinion from the private equity and Cleantech communities and has been undertaken to support an enhanced understanding of the challenges facing investment in this sector, to pinpoint some current trends that appear to be developing and to stimulate further discussion.

The survey's findings are that:

 

• energy efficiency is expected to be the Cleantech sector that attracts the most

investment interest in the immediate short term

 

• wind will continue to be the main sub-sector in Cleantech energy generation, though solar has recently attracted more investment than any other sub-sector

 

• Cleantech generated electricity cannot immediately satisfy the world's ever increasing energy needs; it is felt that it will take some considerable time to displace fossil fuel based technology; in reality the expectation is that it will require a mixture of different technologies to satisfy consumer demand

 

• the USA was identified as being the most likely beneficiary of private equity driven Cleantech investment

 

• Europe is perceived as offering the greatest incentives for Cleantech investment

 

• political and regulatory support by governments, and the financial incentives they provide for Cleantech innovation, are seen as crucial factors in the continuing growth of the Cleantech sector

 

• banks are still cautious about lending to the sector, despite proposals to support the green economy, and debt remains tightly controlled

 

The survey canvasses opinion from the private equity and Cleantech communities and has been undertaken to support an enhanced understanding of the challenges facing investment in this sector, to pinpoint some current trends that appear to be developing and to stimulate further discussion.

Ian Moore, a corporate finance partner at Norton Rose LLP, commented:

"Our respondents had very strong views about the need for an international treaty to provide sufficient regulatory and financial support to the Cleantech sector. While a number of individual countries have policies in place to support Cleantech, there is a demand for much greater policy certainty and for a binding global legislative framework to assist the sector to develop and grow, and to give greater confidence to investors.

"While there are some significant investment and regulatory challenges for Cleantech organisations, the sector is certainly not in crisis. Cleantech should not be mistakenly compared to the dot com bubble. There is an undeniable need for Cleantech as energy demands rise and traditional options falter. The weight of concerns about energy supply and climate change, mixed with faster technological innovation and growing global consumer demands for cleaner solutions, means that Cleantech developments are here to stay.

"A secure international legislative framework is needed especially given the long and costly research and development processes of many Cleantech technologies. We expect to see a steady transition towards a predominance of Cleantech energy rather than an abrupt change. There will need to be a portfolio of old and new technologies working alongside each other for some time yet."  

You can view the complete survey here

 

 

 

 

 

 

 

 

 

 

 

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