GREEN INNOVATION AND INDUSTRIAL POLICIES
“Pinstripe greens”: Private ﬁnanciers making millions from clean-tech ventures
Although global venture capital investment in green energy declined with the 2008/09 recession and shares in clean-tech businesses have recently underperformed the wider market by a large margin, a world of U.S. solar titans, German wind moguls, Brazilian biofuel magnates, and Chinese battery tycoons has emerged over the past decade. One often hears that green energy could be the biggest economic opportunity of the 21st century. In 2010 the global clean energy sector (wind farms, solar parks, and related technologies) attracted a record $243 billion in new investment, nearly 5 times the volumes of 6 years earlier. Between 2000 and 2010 the global market for solar and wind power rose from $6.5 billion to $132 billion, the number of hybrid electric car models jumped from 2 to 30, and the number of certifi ed green buildings grew from 3 to 8,138. Examples of private green financing include the following: • Khosla Ventures is a venture capital firm founded by Vinod Khosla in 2004. Its clean-tech portfolio spans utility-scale and distributed generation,
funds by anchoring new funds, fi nancing new fund development, supporting pioneer investments, and supporting improved carbon payments. Even more important will be helping with the structure, management, and exit routes for venture capital investments—for example, by providing equity contributions to increase potential returns or reduce potential risks, which would play a helpful demonstration role if there is enough deal flow. 8 But experience suggests that the government role should be restricted to that of fi nancial backer, and not manager, with funds administered professionally, free of bureaucratic burdens, and independent of political interference (Lerner 2009). But capital market–based, arms-length forms of finance that structure and price each transaction on its merits require deep financial markets, which most developing countries still lack. Moreover, a number of other
electrical and mechanical efficiency, batteries, building materials, plastics and chemicals, agriculture, cellulosic alcohol, and advanced hydrocarbons. The portfolio also includes investments in a low-emission engine (with Bill Gates) and twobladed wind turbines (with Goldman Sachs). • Bloomberg New Energy Finance is a provider of analysis, data, and news about clean-tech, including renewable energy, energy-smart technologies, carbon, carbon capture and storage, renewable energy certificates, nuclear, power markets, and water. The company, founded by Michael Liebreich in 2004, has generated more than $1 billion in profits in 2011. • Suntech is a Chinese company founded in 2001 by Dr. Zhengrong Shi and floated on the New York Stock Exchange in 2005. It is the world’s largest producer of solar panels, with solar modules installed in more than 80 countries (and a low-carbon museum in Wuxi, west of Shanghai, opened by Al Gore). Source: Dutz and Sharma 2012.
factors—such as government R&D expenditures, the extent of patenting by entrepreneurial firms, and national environmental deployment policies designed with the longterm perspective of creating a market for environmental technologies—appear to be more important in affecting the amount of private financing of frontier innovation in the clean-tech sector.9 Provide global support for bottom-ofpyramid and neglected technologies. It is not advisable for countries with weak technological capabilities and no comparative advantage in creating frontier technologies to dedicate significant public resources to this objective. But given the global nature of benefits from many green innovations, stable, long-term global public spending on R&D should be increased and channeled into programs that facilitate the development and adoption of technologies applicable to developing countries.
Published on May 23, 2012
Published on May 23, 2012
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