The clean technology industry has seen a dramatic shift in the past decade, and all signs point to even further change as countries around the world grapple for new ways to deal with increased costs, resource scarcity, and the effects of global warming.
Nicholas Parker is executive chairman and co-founder of Cleantech Group, a company that aims to accelerate the market adoption of clean technology by providing research and advisory services, and organizing events. Parker recently sat down to discuss the future of the clean technology industry in a post-Copenhagen world.
Since 2002, how has the clean technology and clean energy industries changed?
NP: Dramatically. It’s gone from being a cottage industry to a mainstream industry, and the amount of capital that is being employed beyond all recognition from what it was eight to 10 years ago. The corporations have moved from risk management to stakeholder engagement and now they’re looking for the green growth opportunities.
What has prompted that change?
NP: A number of things have prompted it but I think the products and services derived from new technology are increasing cost competitive, with the same or better efficacy of traditional ways of doing things so I think that’s fundamentally driving it. Secondly, I think policy and price signals have begun to kick in to create a market and reshape how people think they need to produce and consume and supply. Then I think, what has also changed is the quality of the people who are involved. You’ve got a much higher quality of entrepreneur and corporate leaders.
From an investor perspective, what we really need is a price on carbon, one way or another, that is long-term, transparent and significant enough that it affects investment decisions. My own feeling is that, I think it’s going to happen anyway. I think just sheer market price signals for commodities like oil and other things will drive change regardless of the outcome.
It seems to have a lot of momentum. Do you think that’s sustainable or do we need governments to sustain that momentum?
You work a lot with investors. For a clean energy company that would be starting up, what are some of the things they could do to access that investment capital that’s out there.
NP: Part of the challenges in the clean tech/clean energy space is that we’re hung up on the technology when we don’t have enough of a go-to-market approach as one might have in other knowledge based industries. Investors are looking at the go-to-market stuff. They don’t want to get hung up on the technology, they want to know why and how there’s a market for it. Secondly, investors invest in people, first and foremost, so the quality of your management team in bringing things to scale is super important. And, third, [investors want to] know there’s a supportive environment around the company. Is the host community a good place to do business? Are there incentives and rewards for this? Is there an available supply of all kinds of the good things one needs? To grow a clean energy company in a region that is not known for being a clean energy hub is difficult.
Where do you see the money going, as far as the clean energy sector?
NP: In a range of ways. First of all, there’s going to be software systems for managing carbon and efficiency. Secondly, the smart grid is a huge area where embedded intelligence will be deployed. And, thirdly, kind of the background story is, IT systems being used to identify new molecules for biomaterials using high throughput screening—it’s the use of (technology) for the research and development of things. So, it’s both front-end and back-end. Specific products areas would be energy management systems and buildings through to smart grid. And, how we hook up all these different assets requires a lot of embedded intelligence. But what gets measured gets managed and our ability to measure these things at ever more refined levels allows us to manage ecological assets at ever more refined levels.
Cleantech Group will be hosting a “Clean Technology Day” at GLOBE 2010, where venture capitalists and entrepreneurs of start-ups who are on the supply side of technology and innovation will meet the demand side, which is major corporations and government.