The mainstream business press, always eager to say “We told you so” and “history will repeat itself,” appears quite eager to announce the demise of cleantech and all the associated buzz it carries. The bubble is bursting, they say. The return to cheap oil will kill the green movement, they declare. They point to some weakling companies in the cleantech sector that are struggling, or to the dramatic drop in sector stock prices, and say cleantech’s days are numbered. A front-page business story today in Canada’s Globe and Mail features the headline: “Has the sun set on cleantech?” Apparently financial investors are giving up on cleantech and, like the dot-com bubble, it’s all about to burst.
Such pronouncements are getting rather tired.
For one, the dot-com folks brought on their own collapse. No revenues. No profits. No real market need. Crazy valuations. Irrational acquisitions. Inflated pay. Too much partying, networking, and elevator pitches and not enough work that mattered. And the dot-com collapse wasn’t spurred by a larger economic decline. In fact, one could argue it was the bleeding edge of a decline that followed. The current situation is completely different. Cleantech companies and stocks that are struggling are caught up in a much larger decline sparked by a crisis on Wall Street. Some cleantech companies are fairing better than others, same as any other industry. One could argue the oil and gas sector has taken an even larger hit. To look at cleantech in isolation and start talking about a bust is, well, is a huge stretch.
Emerging Energy Research just made the following statement today about solar: “Unfazed by the financial crisis, utility-scale and large commercial PV development activities in the US are exploding. And with the October 2008 passage of an 8-year Investment Tax Credit, opportunities are expected to multiply in the years ahead.”
That doesn’t sound like a full-scale bust to me. On the issue of declining oil prices and history repeating itself, let’s remember that oil — in the grand scheme of things — still isn’t cheap at $55 a barrel compared to what industry expected just two years ago. And more and more people are saying prices will be skyrocketing back up in 2009 and beyond as demand begins to creep up again and supply constraints become apparent again. The International Energy Agency says after 2010 the situation could become quite critical and we’re going to need massive investments in clean technologies to help cope with higher oil prices. It’s also expecting an average of $100-plus oil from 2010 onward.
The death of the green movement? Not a chance. Back in the 1980s and 1990s when oil prices were ridiculously low we didn’t have governments talking seriously about carbon taxes and cap-and-trade systems. We didn’t have groups representing more than $1 trillion in institutional investments demanding that publicly traded companies reduce their carbon footprint. We didn’t have a call for green-collar jobs as a way to stimulate the North American economy, or a U.S. president that made it a cornerstone of his platform. We didn’t have China to deal with, or Chinese leaders who understand that their current path to economic growth is not sustainable. We didn’t have mature solar, wind and other green technologies becoming cost-competitive with increasingly costly conventional options. We didn’t have an appreciation within larger corporations that being green isn’t about being a treehugger, it’s about reducing costs associated with inefficiencies, increasing profits and revenues, and staying competitive. We didn’t have an understanding, let alone a mainstream appreciation of the seriousness and certainty of global warming. We also didn’t have billions of dollars in venture capital being poured into cleantech startups, or an SUV-addicted domestic auto sector on the verge of bankruptcy, or blue chip companies like Wal-Mart and General Electric embracing the greentech agenda and providing a counter-balance to the powerful fossil fuel and nuclear lobby.
That fossil fuel and nuclear lobby, by the way, sees the current economic crisis as an opportunity to poke holes in cleantech as a trend that will go away like the hoola-hoop. It’s no coincidence that a number of conservative U.S. think tanks have released reports over the past couple of weeks arguing against renewable-energy and other green technologies and highlighting the incentives and subsidies behind them, of course conveniently ignoring the problems and subsidies that underpin our existing energy infrastructure. They tried this when earlier this year the world was in a tizzy about a global food crisis, and of course ethanol was to blame. A couple of months later this speculator-driven crisis disappeared after we saw grain prices, along with oil prices, plummet. People are still starving around the world, but now that we can’t blame ethanol, it’s like it doesn’t matter. Very sad.
So, let’s get over this discussion of cleantech as a bubble and appreciate that the trends underlying this sector will not go away just because of an economic downturn. Increasingly, the view is that cleantech will be one of the things that gets us out of this economic downturn.