finance

President Obama proposed a “Clean Energy and Climate Partnership of the Americas” during his time at the Summit of the Americas.  Typical Barack MO: big, broad, ambitious.  The existing Latin America approach in the US Department of Energy is on country-by-country proposals and grants.  This is fine, but  the office of Energy Efficiency and Renewable Energy (EERE) could be providing other, more overarching support to this worthy goal of international RE partnership.  A couple of proposals:

**On the finance front, EERE should consider launching a collaboration with the Interamerican Development Bank to begin ‘greening’ the IDB project finance arm. See this link for good background.   There is some indication that the IDB is just beginning [pdf] to consider this type of change in the biofuels sector.   EERE should advise the IDB in finance concerns re solar, wind, and energy efficiency, too. Such a collaboration would help break the project finance logjam, and would also ensure scale, duration, and breadth of impact, far beyond EERE acting on its own.  (See also the “Green Bank” legislation just introduced in the US.)

Just heard Dr. Dan Kammen for the first time today, and I can see why he’s mentioned as a potential addition to the Obama energy team.  For those who haven’t heard him speak, Kammen is a “Professor in the Energy and Resources Group; professor of Public Policy, Goldman School of Public Policy; professor of Nuclear Engineering; director of the Renewable and Appropriate Energy Laboratory” at UC Berkeley.  Somehow he manages to stay busy.

After giving a brief overview of the carbon situation (basically a modified 7 Wedges slideshow), and making the interesting argument that price signals will not drive this change in the next 20 years, Kammen focused his overview of some key near-term policy and finance approaches that will set us on the path to 80% reduction by 2050.  Specifically: network innovations a la Enphase inverters, Energy Efficiency Finance Districts in almost 20 cities around the country, and the growing number of US/Canada regional cap and trade systems including California AB32, RGGI, and the Midwest Greenhouse Gas Reduction Accord.

I was most excited by Kammen’s reminder to us all that energy efficiency, for four reasons, is a vital short-term investment: 1) It is one of the most underfunded areas for R&D (compared to the flashy wind, solar, and biofuels sectors); 2) it is one of the best areas for immediate job creation, especially in urban areas; 3) it is one of the areas where the barriers to entry are lowest, since it doesn’t require national infrastructure outlays; 4) it is perhaps most open to all sorts of entrepreneurs (esp. IT and Silicon Valley innovators) jumping in, as exemplified by Enphase.

Now we’re listening to a panel that is throwing some luke-warm water on Kammen’s presentation.  I can’t help but think that they are forgetting that there is an army of Gen Y and Millenials who are going to vote on these issues, consume based on corporate performance on these issues, and push for job creation in these areas.  Demographics are on the side of the cleantech economy.

Xconomy reports that PriceWaterhouseCoopers / Thompson Reuters estimate cleantech VC investments totalled $1bn in the third quarter this year.  Cleantech trailed only biotech and software, at $1.35bn and $1.34bn, respectively.

Total VC investments in Q3 were $7.1bn, so cleantech represented 14% of all VC investment in the quarter, compared to ~19% for both biotech and software.  Also according to PWC, cleantech represented only 7.44% of all 2007 investments, and 5.62% of 2006 investments.   Now in the top 3 of all VC sectors in the US, is it alright to say that cleantech has come of age?  What the hell — is it alright to say that the green bubble has begun in earnest?