Cleantech is fun because it touches so much, although technically in the case of wireless there is no touching going on (alas). Wireless is particularly effective when applied to more efficient use of energy, water and other resources. I first took notice of the growing wireless/cleantech ecosystem when I learned that Vulcan Capital (my neighbor in Seattle) had invested in a company called Ember. Other companies in the space, many of which use wireless for various sensing applications that monitor and automate demand of  energy and water use for utilities, buildings and facilities, have attracted investment including SynapSense, Eka Systems, Accuwater and Powercast to name but a few. Of course major players such as Honeywell and Siemens (through spin-off EnOcean) are also heavily involved. A newcomer called On-Ramp Wireless is claiming orders of magnitude greater capacity and range when compared to other systems based on the Zigbee standard (a full list of companies involved with Zigbee can be seen here). Wayne Manges, a leading wireless advocate with the Oak Ridge National Lab, put the whole "green wireless" opportunity into perspective in an interview with Green Mountain Engineering. Mr. Manges noted: "The 'holy grail,' of course, is low-cost ubiquitous sensors. With improvements in process visibility users get better energy efficiency, materials use, quality control, inventory tracking and reduced waste." He predicted that wireless sensing will spark "a tidal wave of change" to industry and culture. Pacific Northwest National Labs is also doing work in this area, focused more on managing HVAC systems wirelessly, something my client Optimum Energy is working on as well. The Department of Energy (DOE) has largely been responsible for creating the industry for wireless in energy management, in part through its guaranteed loan program. One of the keys, according to Manges and others, to really blowing out the wireless cleantech segment is promulgating standards that take away the hesitation of end-users, many of whom are wary of investing without protocols that can talk to each other. ISA 100 intends to do that, and expects its first standard to come out in December 2008. Suffice it to say that cleantech is more than just the sexy, shiny (and high risk) renewable energy gadgetry. It is also the more mundane, but equally if not more impactful, world of wireless controls and automation and their importance in delivering on the promise of the smart grid. Even so, there is also cutting edge work being done to achieve Nikola Tesla's dream of wireless transmission of energy, including experimentation with magnetic resonance by Marin Soljacic at MIT, which might eventually have even bigger ramifications. This will continue to be a fun space to watch.

Hundreds of leaders from business, policy and NGOs in the same room for two days, naturally some interesting things will emerge. Below is a quick sketch of trends and comments from the just wrapped Fortune Brainstorm Green that I thought of particular note:

• The media "needs to get off cars and on to buildings" - Autodesk executive chairman Carol Bartz on the fact that the issue of buildings sucking energy, material and water is still not getting the attention it deserves. The numbers back her up. Conversely, it was noted by others in the green building space like Hycrete and Serious Materials that after a two decade hiatus, venture funding has found its way back to building in the past 2 years.
• A new version of LEED is set for unveil at Greenbuild in Boston and will be a "quantum leap" - head of USGBC Rick Fedrizzi
• Seems to be growing unease, and even skepticism, that cap and trade is going to be as easy at many thought. 2011 was heard repeatedly as a possible timeframe for legislation. Will a nascent business consensus fray into a mess? Are the economics fully understood to push forward aggressively? Is the Hill ready? Anecdotally at least, the answer is still clearly in the balance. One interesting alternative presented was Cap and Dividend.
• Like building, energy efficiency is still struggling to get more than a lot of lip service. Is recession the catalyst for cracking that nut? It was mentioned as a possibility.
• Hybrids and small cars are the fastest growing segment of US automotive market, according to Beth Lowery of GM. "The price of fuel is driving behavior," she said.
• "Living building" that taps into biomimicry is going mainstream. HOK - the giant architecture and design firm is starting to position itself as "bio-inspired", according to Janine Benyus, the founder of the Biomimicry Guild. Benyus' group is also looking to launch Asknature.org - a cool idea that allows anyone to query a database with questions about how nature addresses specific issues.
• Coke's environmental guru Jeff Seabright said look for something soon about consumer-facing information about "water used" in the company's products. It may not be on-package information, but something is coming. This would be welcome, since embedded water in consumer products is still very opaque to the consumer (for example, according to Dow Chemicals' Scott Noesen, it takes 2,000 liters of water to make a McDonald's hamburger if you do the whole-cost analysis.) There is nutritional information, now carbon labeling information has appeared, and water is the logical next step. Let's hope it happens.
• Vinod Khosla was the most provocative in my opinion during a 1:1 with Fortune's Adam Lashinsky. Highlights include:
  • Next generation batteries are not on a rapidly declining cost curve and require a quantum jump with a high probability of failure
  • The "Prius is more greenwash than green"
  • Technology for clean energy will only succeed if it passes the Chindia price test. If it's affordable in China and India then it has a shot.
  • Carbon emissions from all-electric cars are 3x more than that of cars powered by cellulosic ethanol.
• The highest correlation in the movement of solar stocks is the price of oil (not the price of natural gas as would be expected) - David Edwards, analyst at Morgan Stanley
• Both Monsanto CEO Hugh Grant and Khosla cited the same statistics placing biofuel as the fourth leading cause for the spike in global grain prices. The top three - rise in oil prices, drought in Australia and change in eating habits in developing countries like China (to more meat). I found one paper on Khosla's site about Fuel vs. Food, but it didn't appear to include the above list. Anyone know where it comes from?
• When Fortune's Marc Gunther asked a panel of Xerox, GM, SC Johnson and Dupont executives what grade corporate America should get in addressing environmental challenges (10 being the best grade), all of them said "1″, with the exception of GM's Lowery, who gave a "2″ because of innovation happening around new technologies. If you want to actually score a company, you can thanks to the CEO of Stonyfield Farm Gary Hirshberg, who has created an online corporate scorecard at Climatecounts.org

The Clean Technology and Sustainable Industries Organization (CTSI) organized a "DC Policy Tour for Clean Technology" this month, taking 50 cleantech industry players (representing cleaner coal, solar, wind, nuclear, hydrogen, demand response, water, biomass and fuel cells, plus investors) on a Congressional walk-about. I spoke with Patti Glaza, executive director and CEO, to get her take on the day and the outcomes. After a total of 45 meetings with elected officials from more than 20 states, Ms. Glaza reported that renewable energy tax credit extensions will happen, but only for one year (longer term extensions will most likely come in the next administration) and that climate change legislation will be considered in June, although again it would be surprising to see anything being signed into law prior to the next administration. She also said that both the House and Senate have requested a significant increase in the Dept. of Energy (DOE) budget from what was in the department's original request, and that more funding should be available than last year. Ms. Glaza added, however, that it was unlikely that the Advance Research Projects Energy (ARPA-E) program that was approved in the America Competes Act last year will get off the ground.  More details from the day can be gleaned from the Q&A below, including tips from Ms. Glaza for how companies, even start-ups, can work with their elected officials to make a bigger difference at the Federal level. 

Q: Any humorous moments from the tour?

A: We learned to never let a tour member tell a Republican official that we should pay for the renewable energy tax extensions with funding for the Iraq war.

Q: Who did you visit and get traction with?

A: The primary focus of the meetings was with members of the Appropriations and Ways & Means Committees as Congress is currently finalizing agency budgets and funding programs slated for this fiscal year. We also targeted the Science & Technology, Small Business, Energy Independence & Global Warming, and Energy & Commerce committees and subcommittees, in addition to several executive-level meetings at the DOE. The highlight was Sen. Byron Dorgan (ND) who leads the Democratic Policy Committee and sits on key committees including Appropriations; Commerce, Science & Transportation, and Committee on Energy & Natural Resources. Sen. Dorgan and his staff took a significant amount of time with our group and showed real interest and knowledge of the challenges the sector faces.    There are a lot of champions on the Hill and we need help in reaching out to all of them. Congressmen that took the time to meet with the tour directly included: Tom Udall, Vito Fossella, Dale Kildee, Phil English, Jay Inslee, and Dorgan. Additional offices showing high-level support included: Cantwell, Clinton, McNerney, Barrow, Capuano, and Candace Miller. 

Q: It seems there is a scarcity of coordinated government relations work being done on the part of the cleantech industry. Is that an accurate read on the situation?

A: My initial assessment is that as an industry or sector, clean technology has not had strong representation in Washington DC. Inslee made the comment that he has been waiting for a group like CTSI and is glad we have started our efforts. That being said, there is strong government relations work being done for specific clean technology segments, solar, wind, and biofuels being examples. The role CTSI is trying to fill is to advocate for policies and programs that address the complexity and interrelated issues of energy, water, and the environment. Renewable energy needs smart grid needs cleaner base load generation needs distributed generation support needs water management/reduction, etc.

It was obvious from our meetings that the Hill is extremely receptive to a sector they see as providing new jobs, energy security/independence, and increasing the US global competitiveness. Regardless of the group organizing, a broad technology platform is essential. Industry has to be seen as working together on solving the bigger issues (growing energy demand, climate change, etc.) and not just advocating for specific industry segments in isolation.    

Q: How can companies make a difference on the national level?

A: I see three immediate ways that organizations can make a difference:

- Companies need to take the time to educate their local representatives on their companies, technologies, and how they are working to solve the larger issues.

- Executives need to participate in Washington DC based meetings to emphasize the important role policy and regulation play in developing the clean technology sector. Nothing grabs attention like a company telling their representative that they expect to start laying off workers in June/July because the renewable tax credits haven't been extended.

- Overall, companies need to recognize that policy isn't just for the big players. Policy and regulations have and will have a significant impact on the rate of development and adoption of clean technologies, and growing technology companies need to be at the table when those policies and regulations are being created. Yes, resources are limited. Yes, policy is complicated and difficult to understand. Thus the role of policy and trade organizations.

Two years ago, I attended a conference where a panel of leading cleantech VCs were asked if they had ever made an energy efficiency investment. The question was met with uncomfortable shifting and dead silence. Michael Kanellos of CNET, noted a similar tendency last year: 

"Despite the savings, people have a tough time getting excited about energy efficiency. At clean-tech conferences, attendees will pack the room to see an ethanol roundtable. But when the agenda turns to smart grids, a lot of people take a coffee break." 

Marc Gunther of Fortune has also told me that of all of his columns on CNNMoney, the one that elicited the least interest was about energy efficiency.  

But last week it struck me more than ever - especially with talk of a recession - that 'Efficiency-Tech', as I'm now calling it, has entered primetime. I was at another conference, where Duke Energy CEO Jim Rogers pronounced that his vision was for the United States to become the "most energy efficient economy in the world" through grid optimization, which he suggested could be the greatest engineering feat of the 21st century. His thesis was that in an ever more resource-strapped world, the economy that best used technology to achieve the greatest amount of efficiency would have a distinct advantage. Mr. Rogers was not alone. Many of the speakers - Dan Reicher of Google, John Podesta of the Center for American Progress, and yes, even leading VCs - invoked the importance of energy efficiency in their remarks. With the US economy poised for a potential downturn and Corporate America starting to tighten its collective belt, the argument can be made that efficiency is also poised — poised to finally take its long overdue place as a legitimate target for significant investment.

It was refreshing to hear Mr. Rogers frame the issue from a perspective of economic competitiveness in the global marketplace. That is a message that resonates with the business community — self-sacrifice, saving the planet, etc have proven repeatedly to fall flat with consumers. Precisely for that reason, another speaker at last week's conference, CEO of PNM Resources Jeff Sterba, said that there is a need for technology to produce devices that deal with the issue of energy savings, rather than asking the consumer to - "prices to devices, not prices to people" as he put it so well. Tom Konrad of AltEnergyStocks.com had a thoughtful analysis on why energy efficiency is such a hard sell last fall, surmising that people only buy energy efficiency if they are made to feel that they are part of a "conspicuous" movement. The issue is how to make energy efficiency cool. EnerNOC and Comverge have certainly helped the business case, with successful IPOs for the two demand-response companies last year. Mr. Rogers had one other insight that stayed with me, which he said was gaining currency - namely that efficiency should be viewed as a form of production of energy. If this happens, the economics will shift in favor of efficiency even more.  

"The mindset that has stymied energy efficiency efforts for a generation has been altered", says Kevin Klustner in his upcoming book "Energy Efficiency: The Future is Now". Klustner, also the CEO of Verdiem, is doing his part through addressing PC power waste, a huge issue. And he's not alone. An energy efficiency survey of business executives done by Johnson Controls in mid-2007, revealed that 50% planned to use capital and operating budgets to increase investment in energy efficiency over the next 12 months. A recession was not in the cards at the time of the survey, so I'm sure that the inclination is now even that much stronger. Ironically, Efficiency-Tech is finally getting what it deserves - more power behind it.

Software as a service (SaaS) has already been declared by Forbes as a recession-averse part of the tech sector, citing the fact that it weathered an earlier downturn in 2000-2002. Cleantech barely existed as a category in 2002, so we don't have historical performance to go on. Would consumers and businesses continue to spend on green? Would investment remain hot? Would many of the positive environmental gains made in the past several years stall or even reverse?

Those are some of the questions posed informally to companies that I work with. The conclusion? Cleantech, like nearly every other sector, would take a hit, particularly the companies still in need of funding, but it would also find distinct opportunities - in particular efficiency plays (some are already calling 2008 the year of energy efficiency given that energy costs are at record-breaking highs and that the most significant energy-efficiency legislation in three decades was recently enacted.

If we think back to the dot-com shakeout, while the losses were staggering for many, the collapse separated the wheat from the chaff. Current blue-chips like Amazon, Ebay and Expedia all proved that they were more than just clever ideas and marketing gimmicks and used a tough business environment to propel themselves. If a recession hits, it is likely to have a similar outcome for cleantech, a market ripe for a shakeout.  Who will be the winners and the losers? Here are some comments to consider:

From David Rosenberg, CEO of Hycrete, whose product makes concrete waterproof in an environmentally-friendly, cost-saving way:

"The answer is yes and no. All of construction is effected by a recession and we are already starting to see some projects getting delayed and cancelled and financing getting tighter. On the positive side, a slow down often allows greater time to investigate and improve construction practices – like green.  On the negative side, where budgets are slimmer and profits are less, greater upfront costs associated with green construction get harder to justify – of course this is not a Hycrete problem as we are better, faster, and less expensive.".

From Matt Heinz, senior director of marketing at Verdiem, a developer of power management software for PC networks: 

"The polar ice caps don't care too much about recessions. Less flippantly, I think in the not-too-distant future, sustainability will be a fundamental, 'table stakes' part of doing business for global enterprises. Reducing the impact companies have on the world around them will soon become non-negotiable, and a requirement for doing business with customers (commercial and consumer) that expect them to act responsibly.

"Today, that isn't the case - at least not yet. While several businesses have blazed a trail with significant corporate responsibility and sustainability initiatives, not enough of those efforts have paid off - either in increased sales or decreased operational costs. Unless such initiatives demonstrate a consistent ability to provide value to the organization, they'll be close to the chopping block in leaner times.

"That said, technologies are emerging that allow companies to 'go green' and save green at the same time. And if this kind of savings is both real and verifiable, it's the kind of thing that will get prioritized higher in lean times."

From CEO Michael Ford of Choose Renewables, a source for consumer information and products on renewable energy content and commerce: 

"It's tough to make a broad projection regarding cleantech because there are so many facets. In general I think the entire space will perform better than most other segments - but I doubt it's entirely recession proof.  I think energy efficiency / fuel efficiency will actually see a significant bump from recessionary times. And maybe even the biofuels movement, though I personally think the overall philosophy around ethanol in particular is questionable. However, I think some of the more expensive pure play renewables (solar, small scale wind, fuels cells, hydrogen, etc...) will suffer a bit - but still grow. I think big wind is going to keep going no matter what - unless Congress continues to screw up with the PTC."

Michael Meehan, CEO of Carbonetworks, software platform that helps companies create effective carbon emissions strategies: 

"Cleantech as a whole will definitely feel the crunch, but it's a two-sided coin - how clients' requirements will likely change, and what will happen to vendors as a result.

"The market is still immature and spans a lot of industries. 'Niche-fication' (as Will put it in his blog) is only starting to occur. Especially in technology markets, niches can provide some insurance against recessive markets because the need for the service/technology is clearly defined and the incumbents are often well established. Cleantech is still a bit nebulous and a recession will have a direct effect on many areas of the cleantech spectrum: funding sources for startups, increased cost of outsourced services (e.g., int'l support, sales), and decreased demand for point products. That's one side of the coin: increased competition, consolidation, and likely a more protectionist industry as the US/CAN dollar weakens against the Euro, inhibiting growth in an emerging market.

"The other side of the coin (the clients) will hasten this process as their expectations and requirements change out of necessity. Faced with increased demands on potentially shrinking budgets, companies will be forced to place more stringent diligence on technology investments, and cleantech is no exception. But there's a somewhat unique opportunity for cleantech in this: the key here for vendors is to increase the focus on cost savings, process efficiencies, or uncovering opportunities that will help lower operational costs for these companies. That's where the defining line will be for successful cleantech vendors and those that simply react to the market as it tightens up. Unlike other supply/demand markets such as manufacturing or distribution, cleantech has an edge because it can become strategic by helping companies be more competitive through improving their bottom line. This of course is our strategy at Carbonetworks, but it is also true of Verdiem, GreatPoint Energy, IT virtualization technologies, and other innovators who help companies do more with less and diversify. That's the other side of the coin: rather than fighting over decreasing market share, successful cleantech companies will instead seek to increase the clients' competitive position through cost reductions and diversification. Recession may be the impetus for this cleantech market shift, but it will be the clients under pressure that will drive it to consolidation. Whether that's good or bad depends on where you sit, but cleantech is definitely not immune to market recession."