Investment dollars are increasingly flowing to environmentally conscious companies
BY JIM HARRIS

Venture capitalists (VCs) invested US$843 million in North American cleantech deals in Q2 2006, making it the third largest investment category, according to the Cleantech Venture Network. Q2 was the eighth consecutive quarter that investment in cleantech companies increased—and it was more than double the investment in Q2 2005.
In fact, investment surged ahead of telecommunications and medical investments—attracting 13.4 per cent of all North America venture capital. Cleantech now only ranks behind biotech and software.
Cleantech Venture Network defines this sector as "technologies developed by biological, computational and physical scientists and engineers that enable more valuable use of natural resources and greatly reduce ecological impact, although this may be only one of a technology’s benefits." The group (www.cleantech.com) has tracked more than US$10.2 billion in North American cleantech deals since 1999, involving initiatives such as alternative energy, water purification, air quality, enabling technologies, agriculture and transportation.
The largest segment of cleantech is alternative energy, which attracted US$594 million in the second quarter, triple the venture capital that flowed into energy in Q2 2005.
Cleantech has gone mainstream. Consider:
> Pre-eminent VC firm Kleiner Perkins Caufield & Byers announced in February a US$100 million greentech fund. Partner John Doer said clean technologies "could be the largest economic opportunity of the 21st century."
> Vinod Khosla, co-founder of Sun Microsystems, is funding ethanol start-ups with tens of millions of dollars.
> Swiss Re, the second largest re-insurance firm globally, has stated climate change is the defining challenge for business in the 21st century, and documented the doubling of insurance pay outs due to catastrophic weather events over the last decade.
> And Wal-Mart, the world’s largest retailer, has committed to investing US$500 million per year to improve the energy efficiency of its stores and the fuel efficiency of its vehicles.

Cleantech will be the industrial engine of the 21st century, and it is therefore critical Canada get active in this area. Twenty years ago Denmark began a focus on wind power. Since then, 20,000 jobs—10,000 direct and 10,000 indirect—have been created. This tiny country was the largest exporter of wind turbines, surpassed only recently by Germany and the U.S. The installed base of wind power has been growing 32 per cent a year compounded for the last decade. How many industries can claim that?
In Canada, Quebec premier Jean Charest announced a $1.9 billion wind power initiative in 2004, the largest in the world. That was the good news. The bad news is 70 cents of each dollar is leaving Canada to U.S., German and Danish companies because Canada has an underdeveloped wind industry.
That famous management consultant, Wayne Gretzky, used to say: "I never go where the puck is, I go to where it is going to be." Where’s the puck going to be in 20 years in energy? Is wind power going to be more or less prominent globally?
If Canada had the same percentage of energy supplied by wind power as Denmark, it would create 288,000 person-years of employment. Furthermore, every dollar invested in wind power creates five times more jobs than a dollar invested in nuclear power. And a dollar invested in energy efficiency reduces CO2 emissions seven times more than a dollar spent on nuclear.
Why then has Ontario decided to spend billions on nuclear power, forgetting the $38 billion of "stranded debt" Ontario taxpayers inherited from the last horrific nuclear power decision?

Consider the lowly light bulb. Seventy-five per cent of the power it uses generates heat, not light. In Ontario, if consumers replaced 20 100 watt heat bulbs with 20 compact fluorescents, it would eliminate the need to burn 10,660lbs of coal.
So the venture capitalists are seeing huge opportunities in clean technologies, but so are those responsible for economic development. And even consumers understand the huge economic benefits of simple actions such as swapping heat bulbs for light bulbs.