Outlay on green tech set to grow

By David Gelles in San Francisco
Published: January 7 2010 02:52
Investment in green technology largely defied the recession last year as governments, companies and venture capitalists poured money into one of the few areas that seems poised for strong growth.
More than $5.6bn was invested in clean technology through 557 deals across North America, Europe, China and India, according to a report by the Cleantech Group and Deloitte. That is down from 2008’s record crop of investments but about level with 2007, the second-strongest year to date for the sector.
The preliminary total is expected to increase by 5-10 per cent once investors fully announce their activity, which would make 2009 a record year for numbers of cleantech deals, and about equal with 2007 for the total amount invested.
“Record levels of activity from investors, governments and corporations in 2009 demonstrated that the market for clean technologies continues to strengthen regardless of any non-binding global climate-change agreement,” said Nicholas Parker, chairman of the Cleantech Group.
“In parallel to trying to reach carbon agreements, governments spent the year earmarking hundreds of billions of dollars for clean technology in pursuit of economic growth,” he added.
“And in the private sector about a quarter of all global venture investment capital was invested in cleantech in 2009, more than software, biotech or any other category.”
North America’s share of clean technology investments was down from 72 per cent in 2008 to 62 per cent in 2009, a four-year low, while the share for Europe and Israel was up from 22 per cent in 2008 to 29 per cent, a five-year high.
“Cleantech is becoming an increasingly global phenomena,” said Dallas Kachan, managing director of Cleantech Group.
This was highlighted by the distribution of initial public offerings in the cleantech sector. Of the $4.7bn raised through 32 cleantech IPOs, 72 per cent was raised in Asia, while its average over the three years before that was less than 10 per cent.
At the same time investors began focusing on different types of deals. Investment in solar projects was down 64 per cent, while investment in efficiency projects was up 39 per cent.
Mr Kachan said 2010 should be another strong year for cleantech investments, with more IPOs and a further shifting of priorities: “Energy efficiency will in fact eclipse solar”.
Copyright The Financial Times Limited 2010.