Yesterday I spent an hour taking in a terrific webinar from the Cleantech Group, conducted by what I’m sure must have been one of its most senior consultants, Sheeraz Haji, who ably walked us through some of the 2012 numbers associated with global cleantech venture investment. As it happens, these figures were down about 33% from 2011, and came in at $6.46 billion. Deal count, i.e., the total number of such transactions, was also down, off 15% from the year before.
I’ve noticed that these numbers really do pop around year to year, and I normally don’t make too big a deal out of each year’s changes. Obviously, they collapsed with everything else in 2008, but then steadily regained ground, only to see last year’s drop-off.
Here’s my personal interpretation: almost 80% of the deals discussed here were in the U.S., the home of the 2012 election year from hell. (The Cleantech Group has numbers from Europe, as well as from China and India, but they admit that they have very little visibility in the Asian geographies.)
The way I recall 2012 here in the U.S., a guy who received nearly half the popular vote in the presidential election ran on the platform that global warming is a hoax, that Solyndra is illustrative of what happens when government is involved in energy policy, and that cleantech is a fad. So, yes, almost half of Americans believe this – and we’re unique in this respect. Try running on that platform anywhere else in the world and see what happens. But, returning to the point, is it any wonder that the constant bombardment of these messages caused a downturn in confidence of cleantech?
Even with all this, cleantech’s overall performance in terms of publicly traded issues for the year wasn’t abysmal, though it was disappointing. The S&P 500 gained a little over 13% in 2012, and the cleantech sector was up approximately half that, about 7%.
But what comes next? Haji’s job is presenting history, not predicting the future, and there wasn’t too much talk about the direction in which 2013 will take us. Having said that, he sees extended losses in the mature areas like wind and solar, balanced out by areas in which he feels particularly bullish:
• Water / waste-water treatment
• Telematics / IT and communications technology that help improve the efficiency of transportation
• Efficiency in fossil fuel exploration and extraction
• Agriculture and food – using IT to improve these processes
These are savvy observations that show real sophistication in looking at this subject. When Haji dismissed his audience after an hour, I’m confident in saying that every single member felt like me: we were, to a person, truly satisfied with the use of the hour we had spent.
But to me, there is a far more potent ingredient in all this: Do we really care about sustainability? If the answer is fundamentally no, as it’s been in the U.S., Haji is right; we’ll continue to show no real trend in cleantech; each year, certain arenas may be up, while others will be down.
But what happens when we decide, for whatever reason – perhaps even stronger evidence about global climate change or another form of ecological destruction, maybe a new set of wars over oil, maybe more healthcare issues related to childhood asthma or lung cancer – that sustainability and environmentalism actually mean something? At that point, the investment in cleantech will look like the ultimate hockey stick.