Refining the Cleantech Investment Sector

​As the only angel syndicate in the UK specialising in investments that are of benefit to the green economy, Green Angel Syndicate is refining, rather than re-defining, the Cleantech investment sector.  ​

Originating in the early 2000’s, the term was initially treated as referring to renewable energy generation technologies, and cleantech investment tended to be in large-scale renewable energy installations.  Solar and wind dominated.  As time passed, these were seen to perform badly.  The combination of the artificial, commercially distorting effect of Government subsidies on both sides of the Atlantic, and the 2008 financial crisis, as well as the comparatively high price of the energy then generated by wind and solar farms, had a depressing effect on investment returns.
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But there is no doubt that renewable energy is now thriving.  In spite of George Osborne’s sustained attack on renewables in the UK in the early years of the present decade, and his support for the nuclear option; and, more recently, President Trump’s notorious reversal of Obama’s clean power plans; nevertheless, renewables are now growing faster than ever to a larger scale than ever before.  Clean Energy Canada “notes there has been more power brought online from renewables than fossil fuels each year.  In fact, the three world’s largest electricity markets–China, the US and India–accounted for half of global clean energy investment in 2016–roughly $348 billion.” (Cleantech Investing News, 14th December 2017).

The definition of cleantech has long since been expanded to include much more than renewable energy.  Essentially, the term is now used to embrace a large number of diverse technologies whose common characteristic is as much a consequence, a by-product, as a core purpose of the businesses that develop and sell them.  The common characteristic is environmental benefit, most often defined in terms of carbon emissions and pollution.  

The sectors are widely diverse, and range from energy efficiency technologies, including energy management, energy storage, as well as energy distribution and stretch through to energy in other market sectors, such as water treatment, or transport and electric vehicles.  This in turn spins into other sectors which have nothing to do with energy, but have a huge impact on carbon emissions and the environment, such as food production, crop yields, transport systems, data management, even the growing market for satellite data and artificial intelligence, or machine learning, has a place in the Cleantech pantheon.

This exposes the flaw in the term, Cleantech.  It describes a condition of product or service performance.  It does not describe a core business context, more specifically, a market.   It is vague and imprecise, thus capable of different interpretation by different analysts and practitioners.

So Green Angel Syndicate seeks to refine the term.  It notes that the broad market sectors into which cleantech companies are normally selling relate to resource use.  The core resources required by the global economy are energy, food, water and transport.  In fact, many of the problems identified as targets for “Cleantech” technology impact are problems caused by resource misuse, or shortage, in these four sectors.  

We can therefore feel confident in saying that, if we invest in technologies that improve resource use, we will be applying ourselves to the major problem of a growing population with inadequate resources; and the damage created by the past and continuing abusive exploitation of resources.

Economic drivers led the development of the consumerist and consuming developed world.  The efficiencies of plastic production, of coal-fired energy, of petrol-based transport were the pillars of the Industrial Revolution and many of the comforts and sophistications of modern developed economies that have resulted.

The global community can now see that these have damaged the capacity of the world’s resources to provide for the needs of the global population.  Water, food and energy supplies are all compromised, and in places, severely threatened.  Now there is a different driver to the economic imperative that has been dominant for so long.  It is survival.
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Our global population cannot survive in its present form without adapting present practices of resource use.  Technologies which most effectively facilitate this adaptation in resource use will be successful, because we cannot all survive without them.
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Whether we call it cleantech or resource use, it will succeed, and investments in the right companies will bear fruit.  Cleantech Investing News concludes: “Looking ahead, the overall sector is expected to be worth as much as $2.5 trillion by 2020.”