Positive energy

We've all changed our lightbulbs, so now what? The first Guardian/Library House CleanTech 100 surveys the companies taking us into the future. Alok Jha reports

Alok Jha, science correspondent
The Guardian,
Thursday September 18 2008

Stories about climate change are generally depressing: melting ice sheets, more intense hurricanes and species vanishing as humans steadily push up the amount of carbon dioxide in the atmosphere. But out of the impending gloom has come the promise of technology to slow or even reverse some of the decline.
In its simplest form, clean (or green) technology is anything that helps consumers or industries to use basic materials such as energy, water and waste more efficiently and, while using it, lessen their environmental footprint. Unlike IT, biotech or telecommunications, there is no agreed definition of "cleantech" but it is a hot area, thanks to heightened awareness of climate change and the rising cost of fossil fuels.
And it is poised for a boom: according to the analysts Library House, venture capital investment in European cleantech companies went from £407m in 2006 to £805m last year. Ben Goldsmith of WHEB Ventures, an investment firm specialising in environmental businesses, says that globally the figures are even more impressive: "around $850m in 2004 against $6bn in 2007".
Clean technology represents more of a theme than a specific sector, says Patrick Sheehan, a partner at the Environmental Technologies Fund. He says that waves of investment in the arena have come and gone for more than 20 years, and identifies the most recent as starting with investors in the US, mainly those used to dealing with technological startups in Silicon Valley, around 2004.
Changing views
At the time, there was a debate among environmentalists on how to pitch the problem of climate change to the public. "There was a shift from the negative – we've got to stop climate change happening and it'll be a disaster and we've got to stop flying on holiday – to the positive – we can build a whole new industry around efficiency and a low-carbon economy," says Goldsmith.In Europe, governments were sympathetic to the green cause.
"Europe has a pretty rich heritage of environmental awareness and concern from Scandinavia downwards, and that's enabled legislators to begin to do something about it," says Sheehan. Mechanisms such as the EU's emissions trading scheme, which allows companies to trade permits to emit carbon dioxide as part of their work, have helped improve the economic viability of (generally more expensive) clean technologies.
Also key were the globetrotting efforts of Al Gore and the highly regarded economic analysis of the impacts of a warming world by Nicholas Stern in 2006. "In the space of the last two years, climate change has moved from the periphery to the mainstream and oil prices have become a major concern. Energy security has become a major issue and you've got, from Europe, a whole raft of legislation around these subjects," says Sheehan. Enter the investment funds. "There are those that see cleantech just as renewable energy," says Goldsmith.
"If you look at some of the large US west coast venture funds, who perhaps have their expertise in semiconductors and IT technologies, they can more easily move their focus to things like solar PV and the high-tech renewable energy stuff."
Linking the chain
Library House, in collaboration with the Carbon Trust, proposes the idea that cleantech can be divided into four parts along the energy chain: the discovery and development of new energy sources; generation of clean power; the infrastructure needed to store and distribute energy; and, finally, more efficient use of energy by consumers.
Much of the first part of the spectrum relates to biofuels. In most cases, this refers to biodiesel or bioethanol currently made from food crops such as corn, sugarcane and rapeseed – collectively known as first-generation biofuels. "Next-generation biofuels will be able to use a wider range of organic material or biomass including current waste material," says Richard White, a senior analyst at Library House.
"This will lead to a much greater yield of fuel per square metre of crop, and potentially the ability to grow biofuels where food crops would not grow, alleviating many of the criticisms associated with current biofuel."
The next part of the energy chain, developing cleaner energy sources, is probably the most familiar to those outside the cleantech world. This includes extraction of energy from renewable sources such as the wind, sun and sea. The British government has committed to source 15% of its primary energy from renewable sources by 2020; that's around 40% of the country's electricity.
The tide is high
Wind turbines are a relatively mature technology, with several gigawatts of farms in planning stages around the UK. In addition, the country has high hopes for tidal power – experts estimate there could be up to 15GW of reliable power waiting to be harvested, and the Carbon Trust estimates that the global opportunities in the field could be up to £600bn. "For the UK, the group of wet renewables – offshore wind, tidal stream and wave – are where the UK can have a global leadership role," said Doug Parr, chief scientist at Greenpeace UK.
Solar power is one of the most established clean technology industries, but efficiency and manufacturing costs need to improve. Current solar panels rely on relatively expensive silicon chips but cutting-edge research includes work on ways to concentrate light, applying thin films of light absorbers to flexible surfaces and using nanotechnology to manipulate materials so that they can better harness the energy from the sun.
Energy storage is also key when increasing amounts of power are generated from intermittent sources. "When energy is produced and not required, it can be stored and released in periods of high demand or when the sun is not shining," said White.
Further along the chain, better distribution and management of energy – the "smart grid" ­­– will lead to more efficiency. "The smart grid allows energy generators (power stations, solar farms) and consuming loads (your kettle, TV, etc) to interact with each other in real time, in both directions, with the aid of modern communications technology," says White.
At end of the energy chain are developments based on more efficient use of power. These range from better insulation for buildings, through more efficient electronics in appliances, to improved monitoring of energy, using smart meters. "Some of the companies in this field may be semiconductor companies at heart, but their developments have the potential for huge energy savings, giving them cleantech credentials," said White.
"Common devices such as televisions, lighting, fridges and computers all contribute significantly to energy use, and there is significant room for innovation to curb consumption in these areas." Greener transport (electric cars, fuel cells and other hybrids) also falls into this final bracket.
Broad spectrum
Besides the spectrum outlined by Library House, Goldsmith adds the efficient use of other resources such as technologies to handle the re-use of waste, water efficiency, pipelines and agricultural water use. "Cleantech is learning to live within the resources of the planet," he says.
But it will not all be plain sailing for the new climate-saving industries. Big projects can be hamstrung by local problems – such as wind farms in the UK held up for up to a decade by planning and grid connection hassles. And carbon-intensive markets also lack pull for new, green technologies.
"We can't generalise from IT, mobiles and so on, where they were offering new functionality in an essentially unregulated area, and translate that over to energy where there are incumbents who have been performing these functions as cheaply as they can in a market driven by cost," said Parr. "It's going to need some political drive and will to re-arrange the deckchairs so that new technologies are in with a shout."
Sheehan reckons it will take only a few years for clean technology to make up the largest chunk of the investors' money. "We're at the early stages of some profound changes and there will be some new technologies that will surprise people... I've been in venture capital since 1985 and where we are now in cleantech reminds me of where we were in the IT sector in the early 1990s: at the start of a very long growth period."