The Cleantech Upside
Sustainable Opportunties Summit, Denver CO
March 2009




John Balbach
Managing Partner
Cleantech Gro...
“May You Live in Interesting Times”

    Three Global, Systemic, Interlocking Crises:

  • FINANCIAL
     – breakdown of ‘...
New Financial, Operating and Policy
  frameworks required to meet all three
                crises
“Acrisis is a terrible
 thing to waste.”
     --Paul Roemer, Stanford economist
CLIMATE: Carbon Emissions Rising Sharply
  Toxic Waste




  Water Shortages



                                          ...
PPM CO2 in Atmosphere vs % Global Temp

      5%     400 ppm CO2e          95%


                      450 ppm CO2e


    ...
CLIMATE: Temperature Increase & Impacts




                                          Source: Stern Review

            So...
30 gigatons of CO2 mitigation needed by 2030


                            Business as usual                      Smart po...
Business as Usual = Worst Case Outcome




                 Source: IPCC
Climate Change Mitigation Goal




   Stabilize CO2 at/below 450 PPM
Benefits of Mitigation: Raw Economic Effects




            Source: Stern Report
Addressing the Upside:
                       Which sectors matter to meet 450 PPM goal
•Potential reductions by 2030
    ...
Mitigating Climate Change
      Investment required by 2020

 Stern Review (2006) - Suggested committing 1% of GDP ($350-4...
Defined: Cleantech = More with Less
                            CLEANTECH encompasses knowledge-based technology products/...
Cleantech Market Cycle: Category Dynamics

  • Similar to HIGHTECH and BIOTECH as investment theme


  • Early results sho...
Global Cleantech VC Investments 2002-2008




                                 Source: Cleantech Group
Driver #1: Population Growth & Urbanization




18 Megacities in the World Today

At current growth rates, 10
Billion Popu...
Driver #2: Urban Infrastructure
        Upgrade and Expansion Opportunities
World’s Urban Infrastructure Looking at $40 Tr...
Driver #3: Efficiency
     example: energy & 52% resource loss




                                           Source: Lawr...
Geographic Distribution of VC Investments in Cleantech
      2007 – 2008




                                      Source:...
Credit/Debt/IPO Crisis Having Impact




                Source: Cleantech Group
Europe: Cleantech VC




               Source: Cleantech Group
Cleantech VC Investments in China 2000-2008




•   Cleantech represents 10% of total VC by number deals done, and 22% by ...
Sector Breakdown (Global Q109)




               Source: Cleantech Group
Relative Growth

      Top 6 U.S. Venture Capital Industries, Percent Change 2001 to 2007




                            ...
Government Spending - Largest Projects in History
      (Inflation Adjusted)




                 Compiled from numerous s...
Government Spending - Largest Projects in History
      (Inflation Adjusted)




                 Compiled from numerous s...
$3 trillion . . .

   . . .and growing
Highlights - US Stimulus for Cleantech Sector
Direct Spending:

       $16.8 billion for renewable energy and energy effi...
$80 billion+
Global Stimulus Spending . . . Select examples
South Korea plans to invest $38 billion in green projects in the next four ...
Global Stimulus Spending on Cleantech in 2009




                   Sources: Cleantech Group, New Energy Finance, IEA WEO...
National RPS Coming Soon?
 •   2008: 28 states and D.C.




                      RPS       No RPS
Pricing Carbon – ‘Cap and Trade’ or Tax?




           Source: Washington Post, March 2009
Carbon Price & Mitigation Affordability
Address: China Middle Class . . .
                           (. . . similar in India)




                                ...
Scaling Proven Models - California

                                           United States                     Californi...
Potential Size of Markets for Climate Change

                             $500 billion
          Value of low-carbon ener...
Conclusions

• Government investments worldwide starting in 2009 providing 2x
 private sector scale and new floor

• Full ...
Cleantech Group - Global Supporters
Thank You!




                Join the Cleantech Network™
      Access our services. Profit from accelerating the next wa...
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NextGen of Cleantech Investing: Policy and Scaling

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NextGen of Cleantech Investing: Policy and Scaling

  1. 1. The Cleantech Upside Sustainable Opportunties Summit, Denver CO March 2009 John Balbach Managing Partner Cleantech Group
  2. 2. “May You Live in Interesting Times” Three Global, Systemic, Interlocking Crises: • FINANCIAL – breakdown of ‘lightly-regulated’ financial markets – 40%+ loss of value • ECOLOGICAL – global consumption patterns far exceeding planetary Carrying Capacity – all resources under stress: energy, minerals, bio/ag, water, air, land etc • CLIMATE – rapidly-forming global consensus to avert catastrophic scenarios
  3. 3. New Financial, Operating and Policy frameworks required to meet all three crises
  4. 4. “Acrisis is a terrible thing to waste.” --Paul Roemer, Stanford economist
  5. 5. CLIMATE: Carbon Emissions Rising Sharply Toxic Waste Water Shortages Topsoil Source: Earth Presentation, Global Education Project
  6. 6. PPM CO2 in Atmosphere vs % Global Temp 5% 400 ppm CO2e 95% 450 ppm CO2e 550 ppm CO2e 650ppm CO2e 750ppm CO2e Eventual temperature change (relative to pre-industrial) 0°C 1°C 2°C 3°C 4°C 5°C Source: IPCC 6
  7. 7. CLIMATE: Temperature Increase & Impacts Source: Stern Review Sources: Stern Report; IPCC
  8. 8. 30 gigatons of CO2 mitigation needed by 2030 Business as usual Smart policy adoption Global emissions (GtCO2e) 65 GtCO2e 750+ppm 450ppm 30+ GtCO2e 2030 Sources: Stern Report; IPCC. Created by ClimateWorks Foundation
  9. 9. Business as Usual = Worst Case Outcome Source: IPCC
  10. 10. Climate Change Mitigation Goal Stabilize CO2 at/below 450 PPM
  11. 11. Benefits of Mitigation: Raw Economic Effects Source: Stern Report
  12. 12. Addressing the Upside: Which sectors matter to meet 450 PPM goal •Potential reductions by 2030 20 17* -4 14 % emissions & redux -6 12 -4 9 -5 -3 4 -4 other Source: Design to Win; ClimateWorks Foundation
  13. 13. Mitigating Climate Change Investment required by 2020 Stern Review (2006) - Suggested committing 1% of GDP ($350-480 billion per annum) to cut carbon emissions. In June 2008 Stern increased the estimate to 2% of GDP to account for faster than expected climate change. -approximately $9 trillion between now and 2020. UNFCCC (2007) - The United Nations Framework Convention on Climate Change said that to mitigate climate change, required investment is $200 billion per annum or 0.3% of global GDP, until 2030. -approximately $2.2 trillion between now and 2020. OECD (2008) – The Organisation for Economic Co-operation and Development estimates that climate change can be mitigated at a cost of 0.5% of estimated global GDP in 2030. -approximately $2 trillion between now and 2020.
  14. 14. Defined: Cleantech = More with Less CLEANTECH encompasses knowledge-based technology products/services which: Ubiquitous • Provide superior performance at lower costs Global • Greatly reduce or eliminate negative ecological impact Applications • Improve the productive and responsible use of natural resources ENERGY: Includes Energy TRANSPORTATION: Includes WATER: Includes filtration, vehicles design, fuels and AIR & ENVIRONMENT: Generation, Storage, purification, water conservation logistics Includes remediation, emission Infrastructure and Efficiency and wastewater treatment control, trading and offsets MATERIALS: Includes MANUFACTURING/INDUSTRIAL AGRICULTURE: Includes land RECYCLING & WASTE: environmental friendly : Includes monitoring/control management, natural pesticides, Includes various recycling nanotech, biotech, chemical appliance and smart production natural fertilizers, irrigation, services and waste treatment materials industries. services.
  15. 15. Cleantech Market Cycle: Category Dynamics • Similar to HIGHTECH and BIOTECH as investment theme • Early results showing investment returns on par with other categories • Significantly larger market potential than IT and Biotech combined; trillion $ markets annually across energy, water, housing, transport, materials, chemistry, agriculture • Rapidly moving from niche to mainstream: Cleantech 2nd largest venture investment category, with ~20% market share worldwide
  16. 16. Global Cleantech VC Investments 2002-2008 Source: Cleantech Group
  17. 17. Driver #1: Population Growth & Urbanization 18 Megacities in the World Today At current growth rates, 10 Billion Population and 400 Megacities by 2050 Source: Earth Presentation, Global Education Project
  18. 18. Driver #2: Urban Infrastructure Upgrade and Expansion Opportunities World’s Urban Infrastructure Looking at $40 Trillion Makeover.
  19. 19. Driver #3: Efficiency example: energy & 52% resource loss Source: Lawrence Livermore National Laboratory
  20. 20. Geographic Distribution of VC Investments in Cleantech 2007 – 2008 Source: Cleantech Group & China Ventures
  21. 21. Credit/Debt/IPO Crisis Having Impact Source: Cleantech Group
  22. 22. Europe: Cleantech VC Source: Cleantech Group
  23. 23. Cleantech VC Investments in China 2000-2008 • Cleantech represents 10% of total VC by number deals done, and 22% by total value • Percentage invested in early stage financing increased from 45% in 2007 to 65% in 2008 • China’s overall global share of cleantech VC investment is approximately 8%
  24. 24. Sector Breakdown (Global Q109) Source: Cleantech Group
  25. 25. Relative Growth Top 6 U.S. Venture Capital Industries, Percent Change 2001 to 2007 Sources: Cleantech Group (cleantech.com), Thomson
  26. 26. Government Spending - Largest Projects in History (Inflation Adjusted) Compiled from numerous sources by Intel Corporation
  27. 27. Government Spending - Largest Projects in History (Inflation Adjusted) Compiled from numerous sources by Intel Corporation
  28. 28. $3 trillion . . . . . .and growing
  29. 29. Highlights - US Stimulus for Cleantech Sector Direct Spending:  $16.8 billion for renewable energy and energy efficiency  $4.5 billion towards a smart grid  $4.5 billion to improve energy efficiency of federal buildings  $2.5 billion for research and development, and demonstration projects  $2 billion for advanced battery grants  $5 billion to weatherize homes  $8 billion for high speed rail projects  $19 billion for water infrastructure and clean up Bond and Loan Programs:  $1.6 billion of new clean energy renewable bonds to wind, biomass, geothermal, hydropower, landfill gas, and marine renewables  $6 billion for renewable energy power generation and transmission projects (up to $500 million allotted for the development of leading edge biofuels that have been demonstrated and have commercial promise to substantially reduce GHGs) Tax Incentives:  30% investment tax credit aimed at jumpstarting the domestic renewable energy industry and designed to make the US a more attractive place to manufacture solar, wind, and other clean technologies  Renewable energy production tax credits are extended for energy produced from wind, geothermal, hydropower and landfill gas  Tax credits for purchases of energy-efficient furnaces, windows and doors, or insulation  Tax credit for families that purchase plug-in hybrid vehicles
  30. 30. $80 billion+
  31. 31. Global Stimulus Spending . . . Select examples South Korea plans to invest $38 billion in green projects in the next four years to create almost a million new jobs. Sectors include recycling waste, increasing energy efficiency, forest conservation and developing renewable energy resources. China has enacted a plan for RMB 4 trillion ($585 billion) in government spending in 2009 to stimulate the economy. The government already spent RMB 120 billion in the fourth quarter of 2008, with about 10 percent of the money going to energy saving and ecological projects. This year RMB 350 million, or nearly 9 percent, is planned for ecological projects, many of which are connected to water conditions. France has unveiled a €26 billion stimulus package, including €4 billion to improve rail infrastructure, postal service and energy services. Germany's Bundestag lower house of parliament today has backed a second stimulus package that injects €50 billion over two years into the economy. This follows a €31 billion package passed in November. Among other measures, the new stimulus contains €1.5 billion to boost demand for cars, including a €2,500 bonus to consumers to trade in inefficient vehicles. The country is also developing a new tax plan for car emissions. Australia has approved a $42 billion (USD $26.5 billion) stimulus package, including money to insulate the ceilings of 2.7 million homes and build infrastructure. The measures are expected to reduce greenhouse gas emissions by 2020 an amount equal to taking more than 1 million cars off the road. Spain approved a €4 billion stimulus to carmakers, including €800 million to refocus production on energy efficient vehicles. In all, Spain has launched over €74 billion in economic and financial stimulus measures. Italy's government has approved €2 billion ($2.56 billion) in stimulus spending, including incentives to buy new cars and home appliances, in addition to about €80 billion announced in October. Japan's stimulus spending includes $145 million in the first quarter of this year to encourage home solar power. Canadian plans to establish a Clean Energy Fund to support R&D projects in fields such as carbon capture and storage. The government's budget also included a $1 billion green infrastructure fund for transmission lines to connect renewable energy project. The UK announced a 25.6 billion-pound ($38.8 billion) package over two years which includes funds to encourage people to insulate their homes.
  32. 32. Global Stimulus Spending on Cleantech in 2009 Sources: Cleantech Group, New Energy Finance, IEA WEO 2008 and HSBC
  33. 33. National RPS Coming Soon? • 2008: 28 states and D.C. RPS No RPS
  34. 34. Pricing Carbon – ‘Cap and Trade’ or Tax? Source: Washington Post, March 2009
  35. 35. Carbon Price & Mitigation Affordability
  36. 36. Address: China Middle Class . . . (. . . similar in India) Washing machines Millions of tons of CO2 Televisions Air conditioners Lamps Refrigerators 2005 2010 2020 Source: China Sustainable Energy Program
  37. 37. Scaling Proven Models - California United States California Per capita electricity sales (KwH) Source: California Energy Commission & ClimateWorks Foundation
  38. 38. Potential Size of Markets for Climate Change $500 billion Value of low-carbon energy markets by 2050 (Stern) $100 billion Demand for projects generating GHG emissions credits by 2030 (UN) $18.6 to $23.1 billion Estimated solar industry revenues by 2010 (Solar Buzz) $15 billion Global fuel cell and distributed hydrogen market by 2015* $84 billion Cumulative net savings from energy efficient products in US by 2012* *Source: The Climate Group, In the Black 2007
  39. 39. Conclusions • Government investments worldwide starting in 2009 providing 2x private sector scale and new floor • Full Private Sector alignment with 8+ years of learnings • Capital, Entrepreneurial Resources focused and scaling quickly • Policy Frameworks required becoming clearer and on fast track globally • Total annual investments nearing low-end of Climate Change mitigation estimates • More Needed; Price on Carbon should stimulate ‘tipping point’
  40. 40. Cleantech Group - Global Supporters
  41. 41. Thank You! Join the Cleantech Network™ Access our services. Profit from accelerating the next wave of innovation. www.cleantech.com john@cleantech.com

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