Wednesday, January 7, 2009

"Investment in Clean Technology Suffers Steep Quarterly Decline"

"Investment in Clean Technology Suffers Steep Quarterly Decline"


TECHNOLOGY JANUARY 7, 2009, 10:28 A.M. ET Investment in Clean Technology Suffers Steep Quarterly Decline Article, Wall Street Journal.

Venture-capital investment in clean technology fell 35% in the fourth quarter from the prior quarter amid the economic slowdown, the steepest quarterly drop in two years.

In total, $1.7 billion was invested in the sector in the fourth quarter, the smallest amount in six quarters, according to estimates by the Cleantech Group LLC, a market-tracking firm in San Francisco. Clean technology includes technologies such as solar that, in general, makes industry greener.

The swoon in what has been one of the hottest venture-capital sectors was largely driven by the global economic downturn, and is likely to persist at least into the current quarter, say officials of Cleantech, which tracks venture activity world-wide. But they say clean-tech spending is likely to rebound, given indications by the incoming Obama administration that it will invest heavily in green technologies as well as a long-term push by corporations to become more energy efficient.

"The fundamentals are still strong when it comes to clean tech," said Brian Fan, Cleantech's senior director of research. "We know the world has to get off coal and has to replace oil."

For 2008, venture investments in the sector rose 38% to a record $8.4 billion, up from $6.1 billion in 2007, according to Cleantech's estimates. The numbers, which exclude some places like Japan and South America, have shown growth every year since 2001 when reported transactions totaled $506.8 million.

Solar continued to account for the lion's share of investments with 40% of the total, followed by biofuels, transportation and wind. Some of the biggest investment rounds went to thin-film solar companies, which use materials typically cheaper than the silicon solar panels that have dominated the industry.

In 2008, U.S. clean-tech companies raised $5.8 billion in 241 disclosed investment rounds, up 56% from 2007. Those companies accounted for 68% of the global total tracked. Top investors included Khosla Ventures, which participated in 21 disclosed rounds, and Kleiner Perkins Caufield & Byers, which participated in 18. Both Silicon Valley venture-capital firms have been pioneers in clean-tech investing.

Write to Jim Carlton at

Response by Superamerican, emailed to Wall Street Journal, January 7, 2009:

This article has it all wrong. Venture investment in "clean technology" [sic] fell because the price of oil/gasoline fell. If these so-called new technologies can't pay off economically for investments made, no investments will be made. This is a great time for me to promote my idea of a floating federal gasoline tax, where the price of gasoline at the pump remains relatively fixed and high enough to encourage private investment in alternative technologies. The tax would float up or down opposite to the underlying wholesale price of gasoline thus keeping the same retail price for gasoline. This would yield huge sums to the federal government for infrastructure spending while encouraging the private sector to invent new technologies alternative to fossil fuels. If gasoline is, say, $3.00 or $3.50 and relatively fixed it would serve as a base on which to develop business plans for alternative energies. This would be a win-win-win: 1) government would get funds for infrastructure from users; 2) alternatives to oil could be invented and developed by the private sector, where such innovation always comes. At the same time it would keep the federal government out of "investing" in alternative energy which typically would see funding for either technologies which are bureaucratic favorites or large campaign contributors. And the final "win" 3) would be to allow consumers to have a continuing fixed gas price from which to budget their expenses. Add a fourth win: 4) it would allow public transportation companies to reliably budget operating expenses and capital expenses for expansion.

Theodore M. Wight
2201 Third Avenue
Seattle WA 98121
(206) 956-011

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