According to the 44-country ranking, measured by cleantech sales as a percentage of GDP, the Top 3 countries are Denmark, Brazil and Germany. China ranked sixth. The U.S. ranked 19th, just one position behind the United Kingdom. On the bottom half of the list are Australia, ranked 28th, and Canada, ranked 31st. Keith Stewart at WWF said the results come as a warning to Canada. “This report shows that Canada is far behind countries like the U.S. and China in investing in green technologies, in real and relative terms,” he said. “You can be sure the Chinese economy will not sit still while we sit on our hands.”

Stewart said it doesn’t help that come the end of January 2010 a Canadian federal incentive program designed to promote renewable energy development will run out of budgeted funds. While there is talk of re-charging the fund next year there is still likely to be a major funding gap, creating the kind of bust-boom cycle that once held back the U.S. wind and solar markets. Have we not learned from past mistakes?

The Ontario government has created the $250-million, five-year fund to help ventures based in the province navigate through the dreaded “Valley of Death” that far too often sucks the life out of companies poised for great things but incapable financially of delivering. It’s essentially a co-investment fund, based on a model out of Scotland, whereby the government will match, dollar for dollar, any funding of Ontario-based companies that comes from qualified venture capitalists and angel investors. Nifty.

The government doesn’t decide who gets the money. It relies on the judgement of the private-sector investor that has agreed to participate in the program. If it’s good enough for the private guys, it’s good enough for the public guys: that’s the philosophy, as long as the company has a substantial presence in Ontario. And, like the private investors, the government gets the same terms — i.e. the same stake in the company. So it’s not a handout, it’s a true investment with the same risk-reward profile and an expectation of a return.

The beauty of this approach is that it injects more capital into the local pool, allows the private sector to share some of the risk, and “unlocks” capital that might otherwise not flow into Ontario. I only wish the fund was totally devoted to Ontario-based cleantech companies.

Click here to read more in my Toronto Star article. Now, all we need is for the province and municipalities to move beyond demonstration and start buying local cleantech products and services as part of strategic procurement program.

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.

Obviously, it doesn’ t help that oil has fallen back to the $80-a-barrel range. And obviously, some projects will be squeezed more than others given the “flight to quality” we expect to see. Already we’re seeing some hesitation from U.S. politicians about placing a value on carbon or advancing cap-and-trade schemes. The same discussions are taking place in Europe, and much more passionately. Nobody yet is talking about completely abandoning such things, but there is talk of delays — and this is a concern (see this post in the WSJ’s Environmental Capital).

This is also on the minds of big industry. To repeat the words of GM vice-chairman Bob Lutz, who last week described a scenario in which the automaker’s Volt electric car could hit a brick wall:

“Let us say that over the next 18 months the world goes into a major recession, car sales and fuel use drop dramatically, the steel companies produce less steel and therefore less energy, China finds its main export markets drying up, so they are into a contraction … And at the same time Canadian tar sands come onstream, and coal-to-liquids come onstream. All of a sudden there is a reduction in primary demand in petroleum plus all these additional new supply sources. Oil drops to $25 a barrel and we’re looking at gas pump prices at $1.25 a gallon. I personally don’t think that’s going to happen, but that would be a dramatic event for the Volt because everybody would say, ‘Ha!, why should I bother?”

Only a week later exactly what Lutz described began to happen. Now, we still have $80 oil and gasoline at $3 a gallon, but that has happened in just a month! What Lutz describes was an 18-month horizon. And GM is hurting real bad. Let’s hope we’ve reached bottom, or close to bottom, and that the Volt emerges from the carnage mostly unscathed.

I should emphasize that green or clean technology isn’t just about fighting climate change and saving polar bears. It’s about energy security, becoming more competitive, and creating the economy (and jobs) of the future. In this sense, one could argue the need now is even greater to move in that direction. As California governor Arnold Schwarznegger said at the Solar Power International conference in San Diego on Monday night, “We must not give in to those that say that environmental goals should take a back seat until our economy comes back. It’s backwards thinking and just plain wrong.”

I couldn’t agree more. Problem is, backward thinking has a track record of ruling the day when people start to panic. People become selfish, inward looking, and more nebulous concepts like “climate change” get pushed to the margins. Personally, I don’t think we’ll see a repeat of the 1970s, when the eventual collapse in oil prices led (in North America, at least) to an all-out abandonment of conservation and renewable energy. The reason is because we saw what commitment to such programs did in Japan, parts of Europe and Scandinavia. We know, in retrospect, that it paid off in the long run for these countries to stick with the program, and resist the flight to consumption and excess.

Let’s hope we learn our lesson this time around. I’m convinced, on the whole, that we have.

Today I’ll just post a link to my Clean Break column, which argues that green-minded Canadians heading to the polls tomorrow would be best to vote for the federal Liberals if they hope to see any action on climate change and development of a cleaner, more energy-efficient economy. Now is the time to begin taxing pollution and using that money to tackle poverty, stimulate the economy, and ultimately help Canadian households and businesses operate more efficiently, while at the same time accelerating green innovation that could serve us at home and others abroad.

From the perspective of a green-technology advocate, one could just as easily support the Green Party and, to a lesser extent, NDP on this issue, but the Liberals are the most likely to defeat the federal Conservatives, which have proven in their two years of power that they don’t take green job creation or climate change seriously. This is an important federal election, coming at a time when even the U.S. is likely to vote in a new president — i.e. Obama — who has declared energy and green-economy building as his top priority.

One could argue it might help, because big-budget nuclear and clean coal projects will have more difficulty raising the money — i.e. debt financing — to push these megaprojects forward. In such a situation, renewables, conservation and combined heat and power projects could be viewed as the least risky and therefore most worth pursuing. On the other hand, the credit crunch could hit big wind and solar projects with equal impact, and force governments to make a greater commitment to backstopping nuclear and other conventional projects with taxpayers’ dollars.

And what do venture capitalists think about all this? Does the crunch affect how they allocation money, or their ability to raise it? Does it make life more difficult for cleantech startups in need of financing?

If you have any insights or opinions to share, I welcome it…

An independent expert panel of U.S. and Canadian venture capitalists chooses the winners, which get to present their business cases on a U.S. three-city VC road show (Boston, New York and Silicon Valley) next January and February. Winners will be announced October 7 at the Ottawa Venture and Technology Summit.

Cleantech entry applications were originally due Aug. 29, but the deadline has been extended to Sept. 11. Last year’s winners include solar companies Menova Engineering and Mondial Energy. Click here for this year’s cleantech jury.

“This program is an excellent opportunity to help companies get in front of qualified investors from Canada and the U.S.,” said an OCRI official. “Winning companies have access to financing opportunities, new markets, and potential strategic partners through investment forums and road shows, coaching clinics that refine their corporate pitches, and ongoing support for business development.”