Based on the rash of predictions for cleantech in 2010 from investors, consultants and media (see the full list at the end of this post), I’ve pulled together a “trend of trends” list below that attempts to synthesis the broader, over-arching themes. As always, I’m amazed that water isn’t on the top of every list, every year, although there are some positive signs on that front. So here are the 12 things that filtered to the top:

• Energy efficiency will have a big year, with buildings and information and communications technology (ICT) front and center (nice to see the “wow” factor over technologies like solar being tempered by the realization that there are a lot of cheaper ways to meet immediate goals for reducing emissions)
• Private investment will revive (with one prediction for a record-breaking year), but fears persist that the pending end of stimulus dollars will cast a long shadow over the market
• Differentiation – i.e. marketing – will increase in importance as we move from a technology-heavy phase to a commercialization-focused phase (something I’ve called attention to in the past).
• Consolidation and industry shake-out will accelerate, as will increased involvement of major corporates. Many VC-backed firms need an exit (especially in smart grid, solar and biofuels), so expect a few IPOs, but mostly M&A or failure as scale becomes more important and winners and losers emerge. And as the market grows and the issues being addressed become more complex, big multinationals with vested interests will try to play a larger role
• Smarter transportation – especially electrified – continues to gain traction, while next generation liquid fuels (cellulosic in particular) takes baby steps
• It’s more than energy, stupid. Land, water, rare earth metals, etc take more mind share as understanding grows  that the issues we face go beyond energy and carbon
• Importance of carbon measurement and management will increase, but folks seems pretty skeptical that even if climate legislation/treaties get enacted that they will be aggressive enough (some expect sector specific carbon regulation – i.e. aviation and shipping – instead of economy-wide measure  
• Distributed solutions continue to erode the power of centralized systems (in energy generation, building, transportation, etc)
• Some technologies expected to garner attention: Waste to energy, waste biomass, power storage, geothermal, aquaculture, ultracapacitors, desalinization, building materials, large-scale solar
• There is a lot of expectation around advancements and interest in upgrading the electric grid; although there was a warning to expect at least one major failure of a smart grid rollout (not to mention that people have been predicting an intelligent grid for many years)
• Standards gain a higher profile – whether building codes, water or carbon labeling, unified standards for the smart grid, etc, creating a clear marked playing field grows in importance, including communicating the rules to consumers as needed
• International competition to be the cleantech leader intensifies (again this is something I’ve written about in the past, so not really news in my opinion)

If you want to read for yourself, the various predictions I’ve pulled from are here: Energy stocks to watch from Seeking Alpha; Overall industry outlook from the Cleantech Group; Clean energy predictions from Deloitte; Two different VC perspectives, one from Lightspeed Venture Partners  and the other from Rob Day at Black Coral;  5 biggest hurdles from Earth2Tech; IT and corporate green from Greenmonk’s Tom Raftery; Green building trends from Earth2Tech;  Top 10 promises from cleantech companies from Cleantech Group; Smart grid from Earth2Tech.

The American Council on Renewable Energy (ACORE) had this to say about the current state of affairs on bioenergy. Nice to see some realism out there:

"The prospects for a successful green energy revolution  appear problematic with the diffused applications of the American Recovery and Reinvestment Act (ARRA) of 2009, the seemingly faltering relevance of carbon regulation, the lack of policy coordination  on environmental/ renewable energy issues in the Federal Government between departments and agencies with broad natural resource jurisdiction, and the controversy surrounding green  energy uses  of bioenergy sources  such as co-firing by electric utilities and other companies. The significance of these issues will be escalated if the scheduled reduction in Federal grant, tax and loan assistance programs to renewables occur in 2011."

If you want to learn more ACORE on this subject take a look at Sustaining National Stimulus: The Bioenergy Case

Some of the trends, information I found interesting at REFF-West (rather than Tweet all of them, I’ve just listed them here):

 

• Compared to REFF-West last year, the mood was considerably more positive. Especially important, project finance appears to be recovering (the “community as a whole is looking to migrate back to development projects”) and tax equity is attracting more players than just JP Morgan. Jonathan Yellen of Deutsche Bank said “the projects market… is very strong for what we just went through”. He attributed this in part to the tightening of the bond market, which was pushing institutions more aggressively into funding solar, wind and geothermal projects.
• Some skepticism exists – Dan Reicher of Google said that without more policy support “we’re staring at the biggest cliff” for renewables when stimulus funding runs out in 18 months. Many at the meeting said DOE needs to be replaced by a CEDA (or the Green Bank), with Matt Cheney of Fotowatio less upbeat on the prospects for solar projects, and saying that “banks were not open for business” as claimed and calling for more innovation from the banking community on financing models.
• VCs are also seeing more action – Anup Jacob of Virgin Green Fund said he’s now seeing 6 deals a day, up from 6 a week half a year ago. He lamented, however, that the quality of the deals was too low.
• The forecast for M&A activity in 2010 is to expect “a lot of upside”, according to Jim Metcalfe of UBS Securities. IPO outlook “is improved, but there is still some way to go” to get back to the sweet spot of 2006/2007, according to Kevin Genieser of Morgan Stanley. There are 24 IPOs on file in various markets, but they will be smaller in scale, so likely to get good reception,
• Not new, but good quote from Mike Eckhart of ACORE: “If you’re interested in clean energy, the government is your partner”. Like it or not, in the highly regulated energy space, you better get your government groove on.
• Coal-to-liquid – I was unaware that the US CTL program began in 1944. Give it up already, or in the words of John Geesman, “after 65 years, the audacity of hope should yield to the audacity of nope”.
• Parker Weil of BofA Merrill Lynch said the “markets doesn’t believe that the best companies are getting the government funding”. 250 reviewers in DOE building every day since May reviewing ARRA projects, Matt Rogers of DOE said. But oddly, there is little transparency in how the decisions to fund are made – the credit committee for DOE loan program is confidential. That was troubling to many.
• Renewable energy technology entrepreneurs should not see utilities as competitors who will try to go it alone and scale their own technology, according to Weil, who said the utilities do not have as strong of a capital position as many believe.
• Former US Rep. Vic Fazio thinks the Senate can find 60 votes for climate and energy bill in the January-March 2010 timeframe. On a similar note, Tim Newell, advisor to U.S. Renewables Group, said that the capital markets have already discounted the possibility of climate legislation happening in 2009,
• China – good intelligence from Ryan Wiser of LBNL
  • Good chance it will surpass the US in wind installations for 2009.
  • Solar PV feed-in tariff could come this year, but more probable next year (already feed-ins for biomass and wind).
  • Expecting government to significantly increase their targets for wind and solar generation by end of 2009
• “Biofuels is a 4-letter word in most investment shops right now” – Jacob
• Hottest sectors in next 12 months:
  • PV, CSP – Yellen
  • “Big Wind and Small (i.e. distributed) Solar” – Weil
  • Wind for developers, smart grid for private equity – Jim McDermott
  • Smart grid and solar – Jacob
  • Smart grid (including demand response, meters and data management) – Geneiser

Interesting events mentioned that are worth sharing: US Partnership on Renewable Energy Finance and The Networked Grid

At the launch of the Gigaton Throwdown in DC last week, entrepreneurs and investors adopted a new metric for cleantech businesses other than internal rate of return – something called gigaton scale. The herd mentality that has characterized cleantech over the past three years continues today. In 2007 it was biofuels, in 2008 it was solar, and this year it appears to be smart grid and efficiency (which is ironic because for the longest time investors swore up and down that energy efficiency didn’t fit the VC model). What is so captivating about the Gigaton Throwdown is that it challenges businesses, investors and policymakers alike to focus on the technological pathways that have the potential to abate one gigaton of carbon or GHG equivalent per pathway per year by 2020. And executives with vision appear to be buying in. The CEO of Novozymes, Steen Riisgaard, for example told me during a recent conversation: “Thinking at gigaton scale is helping us identify our ultimate potential. Novozymes has the aim to help our customers achieve a 75 million tons reduction in greenhouse gases by 2015. But we actually believe the potential is much, much higher if you look at the entire industrial biotech space, where we think can reach gigaton scale within 10-20 years." Similarly, Marty Lagod of Firelake Capital referenced one company, EOS Climate, in his investment portfolio that he bet on precisely because it has the potential to reach gigaton scale. Marc Porat, who has founded three cleantech building companies (Serious Materials, CalStar and ZETA Communities) has focused on building materials and building efficiency for the same reason. In his typical candor, he said that a lot of cleantech businesses in Silicon Valley are “vanities, which will not make a difference”. He’s absolutely right. And while businesses and entrepreneurs seem to be getting it, according to Cathy Zoi, the newly confirmed assistant secretary of energy for energy efficiency and renewable energy, policymakers in DC “don’t fully understand the potential scale of clean energy”. If the Gigaton Throwdown is successful it will change that, and bring all parties involved in the clean economy to the common realization that gigaton scale – besides meaning the possibility of climate stabilization within the necessary timeframe – also means gigadollar scale.

The Cleantech Law & Business Review has officially launched with the release of its first quarterly issue. The goal of the Review is to accelerate cleantech commercialization by addressing a current deficiency in the sector: the absence of a forum that has the ability to look holistically, and through expert eyes, at the opportunities and challenges of cleantech.  

The journal will be peer reviewed (the first such publication in cleantech) and solicit contributions from business, academic, policy and legal experts to address the most topical and strategic issues facing cleantech commercialization today. 

“We want people to start thinking more laterally, not in silos… because a one dimensional approach is a non-starter,” says managing editor Bill Pentland. “Understanding the problems is something that will determine the success of the solutions, and that requires a systems approach.”   

Existing cleantech publications are doing a good job of reporting on specific solutions. The Review hopes to take all of the pieces and fit them together. The publication will be supported by sponsorship and subscriptions. The inaugural issues was built around the theme of carbon offsets. Other issues this year will focus on water, renewable energy and climate change.

China’s amazing surge as an economic power started with the creation of special economic zones (SEZs) nearly 30 years ago, as did my “it’s complicated” love affair with the country. The zones provided a blueprint for the rest of the country toward accelerated wealth creation. They also marked the beginning of a catastrophic decline in environmental capital. Now the country may be dusting off the SEZ concept and considering the creation of Low Carbon Zones (LCZs). My involvement in the US-China Clean Energy Forum and JUCCCE has put China front of mind, as has my front-row seat in the international race to see who becomes the superpower of cleantech. In the resource-constrained world of the future, the economies that are most efficient (i.e. best at innovating and adopting clean technologies) will win. First proposed in 2007, the idea of Low Carbon Zones was an outcome of interaction between EU and Chinese think tanks, with the support of the UK Foreign Ministry and China’s National Development and Reform Commission (NDRC). The concept, thumbnailed here and here with even greater detail here, states:

LCZs would aim to stimulate transformational regional political leadership, endorsed at the national level, to create an enabling environment for large-scale innovative low carbon private and public investment. Just as SEZs provided China with a laboratory to shape its participation in the global market economy, the LCZs could pioneer approaches to decarbonisation compatible with Chinese institutions and development approaches.  

It appears an initial pilot of the LCZ concept is planned for China’s heavy industrial province of Jilin. I hope the idea flies, as it’s clearly in the global long-term interest. But no doubt questions of IP, tech transfer and ultimately money could create concerns within the industrialized democracies that the West is once again funding China’s development, only to be left holding the bag.  

Another seemingly similar initiative in China has recently emerged from the Climate Group, outlined in a new report, which also focuses on developing low carbon cities. According to the Climate Group, the program aims to recruit, motivate, and engage 20 Chinese cities in a five-year campaign to transform and accelerate the local market for energy efficiency and renewable energy technologies. MOUs have already been signed with the cities of Guiyang and Dezhou.  It’s unclear from the materials I’ve read what the specific funding mechanism for either of these concepts will be, although with the backing of groups like the NDRC at the central government level, it’s certainly within the realm of the possible. As I’ve written about before, China’s scale offers the greatest potential for any country (except for maybe India) to drive down costs of cleantech and make clean solutions truly commercially viable.   

But that doesn’t mean other countries aren’t trying to compete. Less developed ideas seem to be emerging in the US and Europe. Cities like Seattle and Boston have been floating the idea of cleantech innovation hubs. Various states are also vying to attract cleantech investment and economic stimulus money, including Colorado, Pennsylvania, New Mexico and Michigan. In Europe, efforts are also under way to create the region’s first cleantech incubator, which if successful, might be followed by others. And of course, there is the Oz-like effort in MASDAR in Abu Dhabi (“pay no attention to that man behind the curtain”), where the Wizard is oil money.  

It’s great to see a growing understanding that low carbon leadership will mean future political and economic leadership in the world. I just hope that those in the emerging Cleantech Great Game keep in mind the lessons of the original Great Game – that the fight for supremacy over a largely unmapped, strategic territory often leads to unnecessary pain and suffering at the expense of the common good. Let’s hope that the newly announced International Renewable Energy Agency (IRENA) can play a role in fostering the needed collaboration and help us put aside the myopia often caused by financial gain.

A newly released report says Washington and Oregon states can assume leadership in five cleantech sectors with the potential to generate up to 63,000 direct jobs by 2025 (up from 11,000 today), and outlines what it says is a plan to be the first US region to achieve 75% of its electricity from carbon-free sources by 2025. By the report's own admission, there is nothing particularly new about the five presumptive areas of strength (PV manufacturing, wind power development, green building design, smart grid and bioenergy), and the 75% figure is somewhat misleading, given that the two states already get 62% of their electricity from clean hydro and renewable sources (The hydro, of course, has nothing to do with anything we've done, but merely the luck of living in a place with lots of mountains and rivers). That said, the report is a very helpful first step for a region that has struggled mightily to get its act together and to find a clear identity and focus amid the clean technology boom in the Bay Area and Boston. It points to a number of signals that point to the potential for future leadership – home to big PV plants from REC and Solar World, home to big wind developments, etc. The report, produced by Climate Solutions and CleanEdge, also proposes a top-level series of 10 actions for the Northwest to achieve its role as a cleantech leader. The top 10 list: 1. put a price on carbon, 2. increase Washington RPS to 25 percent by 2025, 3. implement low carbon fuel standards, 4. pass aggressive green building codes, 5. foster regional cooperation, 6. ensure public funding for clean technology via PERS investments and through targeted clean-tech funds, 7. implement effective tax credits for renewables development, 8. deploy cleantech workforce development programs, 9. establish government procurement policies for cleantech products and services and 10. build out regional smart grids and 21^st century transmission backbone. 

Oh, is that all? Not to mention that how we achieve all of that in 17 years is still unclear. But it is clear from the report that the proof of Northwest leadership is building in drips rather than torrents. It points out several major weaknesses, including some that make the top 10 actions look easy:

• Absence of a leading university technology incubator like MIT or Stanford
• Technology investment climate that pales in comparison to Silicon Valley and Boston
• Small size of public clean-energy support funds compared to other state leaders
• Aging electric utility grid system challenged to carry increasing distributed and variable energy sources such as wind, wave and solar
• Small regional market served by cheap hydro, compared to densely populated markets with high-power prices in other cleantech centers

Another issue that is particularly troubling to me: the lack of synergy between Oregon and Washington. They are working very much in silos, despite the best efforts of Climate Solutions. The one bright spot is the Western Climate Initiative, so that's hopefully something to build on. And the absence so far of any attempt by Oregon and

Washington's Fortune 500 companies to be advocates for the region and to work together to bring their influence to bare.

Nevertheless, the report is rather optimistic in its job creation forecasts, with an acclerated forecast of 63,000. The less aggressive target is 40,000. Nearly two thirds of the growth is expected to come from the PV and bioenergy sectors.

Disclosure: I was one of the 50+ people interviewed for the report and I'm a member of the Climate Solutions Business Leaders for Climate Action group. I've written about many of these obstacles and opportunities here in the past.

I've spent a lot of time in building technology since starting work with concrete innovator Hycrete. This sector screams business opportunity. In part because of what US groups like Healthy Building Network are developing with the Pharos Project and Bill McDonough and his crew are doing with Cradle to Cradle. Other groups are also in the space, such as UK-based The Green Standard. These groups, although taking somewhat different approaches, have one goal in mind — to ensure that building materials are safe for humans and the environment, which often means more energy and water efficient as well. Pharos is essentially a graded scale identifying what range of sustainability and health various products fall within, while C2C is a more transitional approach that gets companies that are manufacturing to buy in to a "back to the soil" design methodology and work to gradually improve their process. The Green Standard is very focused on International Organization for Standardization (ISO) life cycle assessment. Either way, this new type of thinking and the standards that are sure to emerge will force suppliers to the building industry to come up with alternative solutions or go the way of the dodo. Perhaps an even bigger red flag for suppliers – leading architecture and design firms are working independently and with the various emerging standards to come up with their own list of supplies that are deemed bad for human health and the environment. The number of young companies in this space is growing quickly, you might say as quickly as a mushroom (one of the most fun companies is Ecovative Design, who just won the 2008 PICNIC Green Challenge for their mushroom-derived Greensulate product). A resource for other materials that has received some attention is an online database and book called Transmaterial. All of these initiatives will surely further ruffle the feathers of the Vinyl Industry and other powerful lobbies in the building sector. But if the incumbent suppliers buck the trend, they will be missing a huge business opportunity for the creation of new markets for more sustainable supplies. Just think what will be needed to replace PVC? It's not about ideology, it's about business opportunity.

Nice to see Seattle and Portland starting to attract and create some quality cleantech, clean energy events. It starts next week with Oregon's Green Advantage: Opportunities for Entrepreneurs, which will showcase local companies such as PV Powered, Plas2Fuel, Greenlite Motors, Powermand, Shorepower and UV Cleaning (as well as some leading NW multinationals and investors). In addition, there is ACORE's Renewable Energy Finance Forum (REFF) – West, scheduled for Seattle in October, which promises to be a highlight of the year and already has a solid lineup of speakers. Also, because of the work being done in the region around algal biodiesel by such firms at Bionavitas and Bioalgene, the 2008 Algal Biomass Summit will also be taking place in Seattle in October. Stay tuned as well for the kick-off of the Pacific Northwest chapter of the Renewable Energy Business Network (REBN) in September (you can click on Chapters to find the PNW link and sign up for updates).

Here's an op-ed that I penned with Dan Rosen that appeared in the Tacoma News Tribune. If you haven't joined Business Leaders for Climate Solutions, you should. 

For a long time, "green" in Washington state has stood for Granny Smith and pine trees. With the Legislature's passage last session of the Climate Action and Green Jobs bill, the state took a big step in creating a future based on the new green – a vibrant economy based on clean technology (cleantech), the green consumer and green exports.

Gov. Chris Gregoire deserves congratulations for requesting and championing the bill. But we all still have more work to do. The window for establishing leadership in the cleantech economy is fast closing. The opportunity to have a strong voice in shaping federal climate policy is closing fast, too. According to the Cleantech Network, while the total amount of venture capital invested in clean technology grew explosively in the last year, the Northwest accounted for just four percent of the total. The Northwest's share was $261 million out of a national total of $6.4 billion, barely placing it in the top 10 regions. And that's not just Washington state, but Oregon and British Columbia as well.

 

Discount the investment in the local biodiesel company Imperium Renewables in 2007, and Washington easily trails the Vancouver, B.C., cleantech cluster and is arguably far behind Oregon, where business leadership has articulated a much clearer vision for establishing an industrial base around the theme of sustainability. California and the Northeast have taken significant leads, and places like Austin, Texas, and Chicago are mobilizing civic leadership around this sector.

As members of Business Leaders for Climate Solutions, we are proud to have supported the Climate Actions and Green Jobs bill. We were joined by 32 other state business leaders, representing cleantech entrepreneurs, investors, energy consultants, service providers or simply business people passionate about sustainability.

But if the Evergreen State is going to emerge from the ongoing cleantech boom with a significant piece of the green that is being created, the broader business community must rapidly and definitively elevate its game.This is not a niche issue; the challenge of using energy more efficiently and developing sustainable products and services affects every sector of the economy and will provide both opportunities for leadership and tremendous risks for the laggards. A recent survey found 61 percent of business executives around the world expect climate change solutions to boost company profits. That's why the major corporations that provide Washington's economic backbone and their executive leadership need to bring their vitally important participation to the table: It's of great economic interest to all of us.

Washington state arguably has several characteristics that will help us as we strive for a piece of the green economy. Our assets include: unrivaled branding as a center of "green" ideas; a consumer base that is highly sophisticated and demands truly sustainable products and services; and strong trade and economic ties with China and the Far East, which is fast emerging as a leading consumer of cleantech products and services. We applaud Sen. Maria Cantwell's efforts to make Seattle the center for the dialogue with

China about these issues.We also have a vibrant green building-and-design industry, which is one of the key pillars of the green economy. And we have the potential to become a power in providing integrated design solutions that will be needed to reduce energy usage worldwide, including "green software" and smart-grid applications.

Along with these strengths, we need to find sustainable and verifiable ways to leverage our vast forestry and agricultural resources as sources of renewable fuels and carbon sinks as regional and international markets take root.

But key pieces are missing. Specifically, for Washington to compete and lead in the cleantech economy, the business community must demand and achieve three things:

  • Legislation next year that commits Olympia to put a price on carbon through a regional cap-and-trade system, along with complementary policies that promote clean energy, sustainable development, transportation and land use, energy efficiency and training for the green-collar workforce;

  • Pressure on the federal government for strong climate policy that achieves reductions in global warming pollution that is science-based and beneficial to the economy;

 • And we need a business community that is focused on and organized around the vision of making the region an international leader in the coming cleantech transformation.

 We have a chance to truly be Evergreen. Now let's seize it.