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As an EcoGeek, I spend a lot more time thinking about science and technology than savings and loans. But there's no doubt, a strong economy would help the cleantech revolution get a foothold...and a weak economy will hurt it.
So I've been spending the last few days combing through all of my favorite investment resources, trying to figure out exactly what this "worst crash since the great depression" really means. How will it affect this burgeoning revolution...and what does that mean for the planet.
It seems that the news is mixed. Many have speculated that cleantech investments are one of the best places to be right now. And I have indeed seen that in my own portfolio. While there have been losses across the board, my cleantech and energy investments have lost the least. It seems that investors see clean energy as one place that will continue to grow despite an economic downturn.
This has, of course, been helped by the Senates approval (finally) of an energy bill that includes tax incentives for clean technologies (mostly solar and carbon sequestration.)
But there's bad news too. Two articles I read today have got me believing that there simply will not be enough money to go around for the sector to grow as fast as it should. CNET's Greentech blog is saying that talk of a clean technology bubble is, in fact, a red herring distracting us from the true problem of not enough capital to get companies to full scale.
The problem, they say, isn't getting the startups funded initially. In fact, VC investment has never been stronger. The problem is bridging the gap from startup to full commercialization. That requires strong investment in the form of IPOs or acquisitions. And in this climate, investors aren't looking to invest, and even the biggest corporations are having trouble getting loans for big purchases.
My go-to guy for cleantech stock news, Tom Konrad, is also worried. He deals exclusively in stocks, with no venture investments, so his concerns are more more based around current companies than startups. And his prognosis is grim: Sell everything that is going to need a new money. In short, Tom doesn't think that the investment will be easy to procure, so he's unloading stocks in young companies that are going to need capital.
Instead, he suggests buying up established companies with fingers in lots of cleantech pies already. Companies like Johnson Controls, Philips and even good ol' GE who have government contracts or large stakes in wind energy, energy efficiency, or power distribution.
To see all of Tom's top ten, check out his AltEnergyStocks blog.
All of this seems pretty wise to me...and not entirely encouraging. While it's undeniable that cleantech offers the most obvious path toward continued economic growth, there's just no way to get people spending in a significant economic downturn.
The ultra-rich will keep their venture investments going, but they will likely be disappointed when it comes to IPOs or acquisitions in the next couple of years, and the value of little alternative energy companies who's stock prices are based on projected growth, not current revenue, will probably flounder for a few years.
I'm calling this some pretty bad news, especially since we can't afford a delay on a lot of this stuff...as investors yes...but as inhabitants of the planet earth as well. If the government isn't able to take a leadership stance on carbon markets and subsidies because of the current turmoil...that would be a true disaster.
If they do, then I can see clean technology leading us out of this mess a lot sooner than most people are predicting. If they don't, then we're going to have to wait far too long for the rise of clean technology...and it's possible that stronger foreign markets will beat us to that particular punch, possibly making American markets (and a lot of our companies) surprisingly obsolete.
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written by Morgan Sachs, September 27, 2008
Sorry don't know what else to say. It wasn't real money though. Just money someone invented lent to us and then cheated it back off us.
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written by August Flanagan, September 27, 2008
http://thegreentechnocrat.com/
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written by Tom Konrad, September 27, 2008
I agree that the current climate is not the best for cleantech, but overall, I think it's a good thing. Our first priority in tackling climate change should be energy efficiency, and this is something that tight financial times encourage. True, many exciting new technologies will be delayed or abandoned for lack of funding, but we already have the technology we need to decarbonize the economy.
What we need is political will; getting rid of carbon is a lot cheaper than securing our oil supplies in Iraq, and the only way to get political will is a good crisis.
This financial meltdown has been inevitable ever since 2001, when the dot-com meltdown did not run it's full course due to the Fed pumping money into the system, replacing the dot-com bubble with the housing bubble.
This crisis is likely to be a bad one, but there will still be enough money to tackle climate change. Tackling climate change is cheap... (compared to all our other problems) Finding the will to do so--- requires a crisis.
On stocks, it's back to the basics- energy efficiency rather than solar backpacks. It's less exciting, but it will do more good for the environment at less cost.
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written by dOgBOi, September 28, 2008
While green solutions often provide a decent ROI, the initial cost is often too great. During a downturn in the economy, it makes much less sense to invest in a large project.
Newer companies just starting out have a similar issue. With less available investment capital, they'll be looking to spread their costs over the long term, which means huge upfront "greening" costs will be out.
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written by Clinch, September 28, 2008
But I suppose that wouldn't be any help for startup companies, as they don't have any increasing profits to put the concerns of weary investors to rest.
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Just like how the rise in car-fuel has made people think about their spending, and has been a factor in some people buying more efficient (i.e. greener) cars, driving less, and/or using public transport/cycling instead.
Increase costs (of everything) may cause people to be more aware of the long term savings on more efficient products and such.