My Clean Break column this week reports on a new study out of the Richard Ivey School of Business, which takes a look at the state of the bioproducts industry in Canada. The researchers behind the report analyzed Statistics Canada data between 2003 and 2009 and what they found was a disturbing negative trend — the industry is shrinking, not growing, at a time when bioproducts are desperately needed as part of a strategy to reduce our dependence on fossil fuels; also at a time when the United States and other regions are showing a strong commitment to bioproducts and are enjoying the associated growth.

What’s going on? Well, for one the bulk of bioproducts made in Canada are first-generation biofuels, such as corn ethanol, or other forms of bioenergy. We don’t give enough support to biochemistry research and product development, or higher value non-fuel markets such as alternative plastics, which in my view are much more exportable down the road. We are throwing money at corn ethanol and not doing enough to support and help commercialize next-generation biofuels produced from algae or cellulosic conversion technologies.

I’m pasting my column below, though before you read there are some caveats here. The data analyzed doesn’t cover the past two years, so there may be some positive signs not accounted for in this report. Also, Ontario appears to be doing much better than the rest of Canada, though this is not to suggest there’s enough being done in Ontario. Anyway, I think this report is an important wake-up call for Canada. Sure, we’re blessed with forestry and agricultural resources, but are we satisfied just growing and selling commodities? Are we going to continue down the path of selling our raw natural resources to other countries, only to purchase it all back in the form of higher-value products? Once again, Canada lacks a vision and has no real plan to lead the world on bioproduct development, even though it has the capacity to do so. Click below to read the full column: (more…)

HSBC Global Research just put out a report titled “Energy in 2050” and concludes that the world can grow without excessive environmental damage, “but it will need a change in human behaviour and massive collective government foresight” — both of which, unfortunately, we lack at the moment.

Some other interesting comments:

“As things stand, the world simply doesn’t have the luxury of turning its back on nuclear power, despite the recent disaster in Japan”

Oil demand and overall energy demand is expected to double between now and 2050 as developing countries grow and add more cars to the roads.

If we do nothing, “a doubling in the amount of carbon in the atmosphere, more than three and a half times the amount recommended to keep temperatures at a safe level.”

“We have become terribly complacent in the way in which we use energy… The lowest hanging fruit is in the transport sector. Smaller, more efficient cars will get you from A to B, just not as quickly. Similarly, buildings can be powered much more efficiently, with the cost of alterations coming down quickly as technology evolves.”

“The lead times we highlight on the measures in ‘the solution’ are often long. Therefore the squeeze on fossil fuels in the interim could be both persistent and painful as oil prices are so sensitive to minor imbalances between energy demand and supply.”

It’s an interesting read, and while those who follow these issues closely won’t find anything new, it’s good to have another major institution issuing a warning and call for much-needed change in the way the world operates.

Canadian sites are taking pre-orders for a few more days still, but for my U.S. readers Amazon.com has started shipping my new book Mad Like Tesla: Underdog Inventors and Their Relentless Pursuit of Clean Energy. The book tells the stories of some clean energy entrepreneurs/inventors taking huge risks and thinking outside the box to solve some of the world’s most pressing issues. Each one is at a different level of development but all face similar barriers along their journey. The stories set the stage for discussion about a specific type of clean energy, technology or field of discovery (e.g. fusion, solar, waste-heat recovery, biofuels, energy storage, biomimicry, etc.) supported by some historical context and current-day examples.

Why Mad Like Tesla? That’s explained in the introduction, but in a nutshell Serbian-American engineer Nikola Tesla invented many important technologies in his lifetime. yet he faced constant struggle against naysayers and skeptics who couldn’t, at first, grasp the significance of what he was sharing with the world. Many dismissed Tesla as a mad scientist, and yet his inventions shaped the world largely for the better. So, in my view, if someone today is mad like Tesla, that’s not necessarily a bad thing. It’s quite a good thing, actually — we need more of these people, for the changes necessary in our world will not come from the kind of cautious, incremental steps being taken today.

I have a website for the book in the works, but it won’t be ready until end of August.

Thanks for your support!

My latest Clean Break column looks at how venture capitalists — impatient with lengthy returns on their investments and worried about the economic climate — are retreating from the cleantech space to less risky investment opportunities. Picking up the slack are corporate investors such as ABB, GE, and Siemens, who are making large strategic investments or outright purchasing promising cleantech companies as a way to plug holes in their own R&D machines. Is this the way the market is going? When it comes to cleantech, particularly the “hardware” side of the business, it seems that strategic partnerships with large corporations are the way to go, and that VCs that plan to continue investing in the space must increasingly see their role as a matchmaker that hooks up promising new technologies with industry behemoths that have enough clout (the money and the track record) to bring these technologies to market. In other words, venture capitalists have to be a little more patient and take the role of company builders, seeing their final exist as part of a corporate purchase or corporate-backed IPO.

We’ve seen this approach before: biotechnology.

The full column is below:

———————————

The clean technology market is a tough space to be in these days if you’re a startup in North America on the hunt for early-stage venture financing.

Venture capitalists who have already invested in clean energy, smart grid, energy efficiency and electric vehicle technologies are starting to get cold feet.

Impatient with how long it takes to realize a return on these investments, many are taking a pass on new deals and choosing instead to nurture existing portfolio investments.

The uncertain economic climate hasn’t helped, nor will a U.S. debt deal that threatens to cut the federal government’s financial support for clean energy innovation and infrastructure.

Some venture capitalists are walking away altogether.

The numbers tell the story. Venture capital investments in the United States during the second quarter totalled $1.1 billion (U.S.), a plunge of 44 per cent compared to the previous year, according to data released this week from Dow Jones VentureSource.

There were also 12 per cent fewer deals, and of those that received financing about 80 per cent were relatively mature revenue-generating companies.

So much for venture capitalists being venturesome.

Those who continue to invest are increasingly staying clear of capital-intensive, high-risk hardware deals and putting their money in less risky software and service ventures, many of them aimed at energy efficiency and management for homes and businesses.

Clearly, making a new kind of energy storage device, wind-turbine generator or vehicle drive train is more expensive and requires more patient capital than that required to develop a new software program or Web-based service model aimed, for example, at encouraging consumers to conserve kilowatt-hours.

“The venture community hates energy hardware because of the long development cycles and the fact that the technology buyers in this area, including utilities, are very conservative,” Michael Brown, chairman of B.C.-based venture capital firm Chrysalix Energy, explained to me.

These buyers want to see a track record of performance. They want to know the product they’re purchasing will work flawlessly, and they want the companies they purchase from to have 20 years of experience behind them.

This is difficult for most venture capitalists to swallow. They aren’t prepared to wait a decade or more before seeing a return on their investments. They want out within four years, maximum. “So when Silicon Valley (venture capitalists) try to play in clean tech hardware, they get their heads handed to them,” said Brown.

But where venture capitalists are bowing out, big corporations are beginning to step in. At least that’s what New York-based investment bank Peachtree Capital Advisors has observed.

“Corporate investors, perhaps willing to overlook concerns about short-term profitability for long-term potential, were active in making both investments and acquisitions in the first half of 2011,” according to the firm.

Take chemical giant DuPont, which in 2010 generated more than $1 billion in revenue by selling materials and other chemical-based products to the solar industry. Last month, Dupont acquired California-based Innovalight, a start-up specializing in manufacturing silicon inks used to improve the efficiency of solar cells.

The same month, General Electric acquired Israel-based Lightech, a developer of technologies for improving the efficiency and quality of LED lighting, and shale-gas developer Chesapeake Energy made a major investment in Colorado’s Sundrop Fuels, which can make biofuels by vaporizing wood with concentrated sunlight.

Concentrated solar technologies for generating electricity have also attracted the attention of giants. ABB, the world’s biggest power equipment supplier for the grid, acquired Novatec Solar in March.

That acquisition followed a series of similar deals in 2009 and 2010. Siemens acquired strategic interests in Israeli start-up Solel Solar Systems and Italy’s Archimede Solar Energy; Areva purchased Ausra; and Alstom bought into BrightSource Energy. Both Ausra and BrightSource are based in California.

What’s the lesson here? For one, big corporations have a strong interest in these emerging clean technologies because they represent future low-carbon, low-impact product and service offerings that are expected to rise in demand.

Second, venture capitalists will have to change the way they operate if they want to truly tap into the money-making potential of this sector.

Brown said venture capital firms have to stop obsessing about early revenues from the start-ups they invest in. They have to concede that some innovations — the ones with the greatest impacts — will take time to unfold, so the emphasis instead should be on finding strategic corporate partners willing to go along for the ride and support ongoing development.

“There are a lot of big companies out there that are going to care about new innovations but don’t have the wherewithal to do it internally. They will rely on small companies to do the big discoveries for them,” said Brown.

“The end objective is that all or some of those partners buy you out, or they put their signature on a product and help launch an IPO. I actually think that’s the model.”

This will require venture capital firms to be more patient and approach investment deals with a different mindset, Brown added.

“It changes the culture of the investment organization dramatically. You have to stop being an investor and start being a company builder.”

Hi all, I’m delighted to report that the first review of my upcoming book, Mad Like Tesla: Underdog Inventors and Their Relentless Pursuit of Clean Energy, is in and it’s, well, pretty encouraging. Here’s what Library Journal, an important industry trade magazine used as a purchasing guide by library buyer and book wholesalers, had to say:

Hamilton, energy and technology writer for the Toronto Star, examines some of the latest, most far-out green energy innovations and the people behind them. How far-out? Take, for example, a retired engineer’s idea to produce electricity via an artificial tornado, or a plan for a space-based power station that would harvest the sun’s energy, using microwaves to beam it down to earth. Other gizmos and processes seem more amenable to commercial success and social acceptance: Hamilton tells of a secretive company called EEStor that claims to have made a breakthrough in energy storage, and of a team building a low-cost nuclear fusion reactor. He strikes a fine balance between hope and hard realism when considering barriers to energy transition. As the “tornado guy” says, upon considering financial and regulatory obstacles: “Holy crap, that’s a lot to get through.” VERDICT: Mad Like Tesla is easy to get through, even for readers with only a basic knowledge of energy issues. Hamilton makes complex technologies comprehensible, and he clearly enjoys the remarkable human stories behind the science. Many of the risk takers and visionaries portrayed are Canadian (rocker Neil Young makes a cameo appearance!), but this book’s strong appeal should transcend all borders.

Can’t complain with that. The book is scheduled for public release on Sept. 1 and is already available for pre-order on a number of sites, including Amazon.com/Amazon.ca and Indigo.ca. The book won’t break the bank, either. We decided to do paperback release on first run to make the book more accessible to a larger audience. You can likely pick it up for $13 or so. I built a Web site I’m not entirely happy with, so plan to have a newly designed site finished by the end of August. Stay tuned!