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The Clean, Green Revolution's Begun

An interview with Green Business Letter Founding Editor, Joel Makower

By Bill Moore

"Businesses have been thinking green for quite sometime, a good ten, fifteen and in some cases twenty years and more" stated Joel Makower, the co-founder of Clean Edge, an Oakland, California publishing and consulting firm dedicated to helping clients identify "green technology" opportunities. "Companies have been actively trying to understand and deal with the environmental impacts of their operations."

Makower, who also served as the Green Business Letter's founding editor, was responding to a question posed by EVWorld's editor, "Did Makower agree with an LA Times' editorial writer who recently asserted, "Just As Business Starts Thinking Green, the White House Doesn't?" LA Times' John Balzar wrote that recent decisions from the Bush White House are sending US businesses the wrong signals, that instead of encouraging innovation in "green technology", its seemingly pro-business policy decisions may have the oppose effect, reducing US competitiveness in a whole series of emerging industries and technologies.

The Next Internet?

It is those exciting new technologies in clean energy, transportation, materials and water purification that Makower and his partner, Ron Pernick see as the "next Internet" in terms of business and investment opportunities.

To draw attention to this emerging trend, Clean Edge has just published a new report entitled Clean Tech: Profits and Potential on who is investing in what green technologies and why. It's in the PDF format available for free download from the company's web site.

"In the last few years we've seenĊ  a lot of emphasis on new, greener technologies. And (it is) not just simply capping the smoke stacks and drain pipes and reducing the pollution and redesigning things, but actually getting new technologies, new materials, new processes and in some cases, new business models that deal with a much more, dramatic, discontinuous approach to these things."

"So, yes, just as in some ways things are starting to reach a critical mass, the White House is definitely the wrong place to look for support," Makower replied. "I think that George Bush is misguided in this arena. He may believe that he is trying to help through some of his policies by not being onerous in regulations or what he may see as punitive kinds of government approaches to this. But the fact is, he is actually undercutting a lot of momentum that is going on, and in some cases doing things that will shift a lot of competitive advantage to companies overseas. The irony is he is ultimately making decisions that I believe will be bad for (US) businesses."

Follow the Angels and IPOs

Irrespective of recent White House policy shifts on environmental issues, the smart money is betting on "green technologies" Makower and Pernick assert. Last year, angel investors, venture capital firms, investment banks and others sank more than $2 billion dollars green technology start-ups and IPOs. This represents a significant jump over previous years. But Makower points out that this does NOT include the monies invested by established businesses in the clean tech revolution. He told EV World that long established, well-recognized corporations are investing similar sums of money into "greening" their own operations.

"For example, (there is) the $300 million that Cargill and Dow Chemical invested to form Cargill/Dow, the first large firm dedicated to making bio-based products. It doesn't include the half billion dollars the BP Amoco itself has put into hydrogen-based, solar-based and other renewable-based fuels." He added that additional hundreds of millions and even billions of dollars are being invested in "clean, green technologies" by multi-national financial organizations like the World Bank, the Inter-American Development Bank and the Asian Development Bank. In addition, governments are also putting up comparable sums of money for green technology R&D.

"It is quite a large investment pool that is out there and it is beginning to rise," he stated.

Green Means Money

While there is little doubt that many firms have been compelled by government edicts and regulations to clean up their acts, Makower believes that there are also sound financial reasons for firms adopting and adapting "green technology."

"Some companies have been doing these things because they have to, but a growing number of companies have recognized a very simple truth. From a business perspective waste and pollution represents something you bought, but couldn't sell and had to pay to get rid of. It's lost profit," Makower pointed out.

"Forward-thinking companies have recognized that their environmental initiatives and their adopting clean technologies brings them a wide range of business values. Things like, obviously, increased sales but also decreased costs of goods, increased quality, faster time to market, increased ability to attract and retain trading partners or employees or customers. . . any number of other ways that businesses can benefit. And that doesn't even begin to include the intangible kinds of things like goodwill and corporate social responsibility points."

Makower admits that neither he nor his partner has a firm grasp of the total monies invested globally in green technologies. He said that the data simply doesn't exist. "There is not even global ballpark number that I would offer at this point." Despite this or perhaps because of this, he sees the clean technologies industry as just starting to mature in the last 12 months or so.

Tremendous Business Opportunity

"This really is a unique time. The clean tech revolution is really just now hitting. It couldn't have happened even a year or two ago. There are reasons that this confluence of forces is beginning to make this happen now. Some of it has to do with the energy crisis, the energy uncertainty taking place in California and soon to come to a neighborhood near you.," Makower teased.

"A lot of technological advances that range from microprocessor-based technologies to tremendous advances in things like fuel cells, photovoltaics, other energy technologies, the kinds of things in transportation that (EVWorld) has been writing about so well for years. Growing concerns on environmental issues, climate change, obviously but many others including deforestation, which makes us look at land use in general and alternatives to cutting down trees. And most exciting of all, and this is where we're focusing, the tremendous business opportunity."

"We view clean technology very much like the Internet of seven or eight years ago," Makower stated. "There was a lot going on. It hadn't really aggregated very much into a huge business movement, but people who were looking at this saw there was something there. The money was starting to head in that direction. Companies were starting to look at this with some kind of view towards business strategy either as the business they want to go in or as a technology they would need to adopt to remain competitive."

"Unlike the Internet of seven or eight years ago, which was pretty much largely US-centric -- there wasn't a lot going on outside the US in that arena -- this is not US-centric at all. In fact, some of the most exciting developments are happening outside of the US. So we see this as a huge opportunity that is just now beginning to coalesce. And what we're looking to do at Clean Edge is to help measure this, make this information available to the investment community, the entrepreneurial community and to the end user community. To help them find opportunities to implement this, or to invest in this or to develop these. It's a little catalytic force that we're looking to be."

Who's Doing What?

The Clean Tech: Profits and Potential report lists some of the key players who have already jumped with both feet into the green technology arena. Makower listed some of the more prominent names in what he calls the four domains of clean water, clean energy, clean materials and clean transportation.

While names like Ballard and Plug Power and Fuel Cell Energy are now familiar to many investors, Makower also added to this list of fuel cell developers, Dupont, Shell, and Siemens Westinghouse. "A number of very large companies have gotten into (fuel cells)".

In the microturbine marketplace once dominated by Capstone, others are now looking to join the fray including Honeywell and Ingersoll-Rand.

In photovoltaics, BP Solar is the world's largest manufacturer of solar electric cells and panels, but Japanese firms as an aggregate now dominate the market. Other PV players include Siemens Solar and Shell, Makower reported.

In the wind energy market, the Germans and Danes currently dominate, despite the fact that the technology was pioneered in the US.

Letting Business Slip Through US Fingers

From a purely American perspective, many of the clean technologies first developed in the US, are now being commercialized by others, Makower observed. The irony of the US utility companies having to buy their wind turbines from the Danes and Germans hasn't been lost on those individuals familiar with the US wind industry over the last three decades. America's cheap energy policies undercut the commercial viability of renewables like wind and solar and forced what once seemed like marginal technologies overseas. Now America's lack of foresight and addiction to cheap oil, may be coming back to haunt the nation the Summer of 2001.

Makower noted that, "Many of these technologies; solar, photovoltaics and wind turbines were really commercialized here (in the USA) or the US, at least, had a major role in a lot of these things. But they are being now being mass merchandized, in effect, by, in this case, Japan or Denmark or Germany."

"So, there is a major opportunity here at a time when the e-Biz revolution is sort of ebbing or at least slipping away from a lot of companies that thought that that was going to be the promise land. We think that there is a huge opportunity here to be focusing investment dollars, entrepreneurial spirit and innovative market designs and business models in the arena of clean technology. Companies are doing that and they are going to be doing that. The question is, Are they going to be US companies or will it be much like the electronics revolution in the 80s and 70s where we invented VCRs and caused the Japanese to take over that market. Are we going to participate?"

Projecting Clean Tech Market Growth

Clean Edge's report does offer some encouraging numbers when looking at the potential growth of the clean technology marketplace. In the case of clean transportation, Makower and Pernick estimate the market will be $42 billion (US dollars) in size by 2010. Clean energy is projected to growth from $7 billion today to $82 billion by 201. Of that number $43 billion represents the wind turbine industry and $23.5 billion is photovoltaics.

Makower told EV World that his firm conducted numerous interviews and looked at a lot of data collected by other market researchers to arrive at their numbers, but he added this caveat, "Market projections are just that, projections. One of the challenges is there is so much going on here, no one has gotten their arms around some of these markets. We're starting to do that and will continue to do that in a number of different ways."

Continued next week . . . we look more closely at the forces propelling the clean tech revolution and what other nations are doing to implement this new technology.

Times Article Viewed: 6544
Published: 28-Apr-2001

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