Grazing green dollars

Bowen%2C%20James-120X210.jpgFor cleantech investors it’s all about being able to produce at a comparable cost. Once enterprise can do that, we will see investors move to cleantech readily.

By James Bowen
From SCAN's Print Edition

Cleantech investment is growing. Unfortunately, little is cropping up on Canadian soil. While money around the world migrates from the traditional tech industry to create new products for the emerging clean technology market, here at home there is much talk but little evidence of a move to cleantech investment.
Last November, Google jumped headlong into cleantech when it launched its Renewable Energy Cheaper Than Coal initiative, which could see the multi-billion dollar company someday soon investing heavily in alternative energy technology and licencing it to the world. The enviro-minded Google wants to play a part in creating alternative energy products – such as solar, thermal, wind and geothermal energy technologies – that would lessen our dependence on coal. Founder Larry Page recently said, “Over 40% of [the world’s] electricity is generated from coal. Solar thermal is cheaper than coal. The goal is to produce a gigawatt of energy (enough to power San Francisco) in years, not decades.” Not to be outdone, co-founder Sergey Brin hinted that the company might invest in or acquire cleantech companies in a bid to drive the industry into high gear.

Globally, more and more high tech companies like Google are investing in cleantech. Some Canadian technology companies are starting to follow suit, investing through VCs specializing in clean technology, according to Claude Haw, Ottawa’s foremost clean technology advocate and managing partner of Venture Coaches. Mr. Haw would like to see Alberta oil companies join the “cleantech investment” trend.

“These days traditional oil and gas companies are enjoying increasing revenues but are currently only interested in improving the efficiency of their oil extraction and conversion systems,” he says. “Globally, they only invest .5% in R&D.” It would seem that the traditional energy companies spend more time talking about cleantech than investing in it, even though a few changes in their own backyard would put money in their pocket. According to Mr. Haw, “If [oil companies] increase the efficiencies of their refineries, it will make a greater reduction in greenhouse gas emissions than switching to ethanol.”

Mr. Haw points out that in Canada, most cleantech investment is coming from angels and VCs. “The big difference between us and Europe is that investment dollars aren’t coming from the big corporations, partly because we are risk-averse and partly because we have mostly branch offices of foreign companies that aren’t interested in investing here.”

Zurich-based VC firm Emerald Technology Ventures has invested US$380 million in 27 clean technology companies across Europe and North America. According to an Oct., 2006 study by UK-based cleantech advocacy and advisory firm New Energy Finance Ltd., European venture capital investors are on track to realize annualized gross returns above 50% from investment in clean energy companies. Findings by Michigan-headquartered Cleantech Network show European and North American VCs invested $3.5 million in clean technology in 2006 – a 45% increase from 2005. The network numbers more than 8,000 international investors, 6,000 companies and 3,500 professional services organizations specializing in clean technology.

At the Cleantech Forum XIV in Toronto last November, Corporate Knights magazine announced its Next 10 Emerging Cleantech Leaders of Tomorrow, six of which are in Ottawa. The list was by no means another “slapdash” compendium thrown together by an assistant editor to fill white space. The judging panel comprised a “who’s-who” of Canada’s top cleantech insiders and thinkers: Vicky Sharpe, president and CEO of Sustainable Development Technologies Canada; Andrew Heintzman, president, Investeco Capital Corp.; Tom Rand, director of VCi Green Funds Inc.; Tyler Hamilton, energy reporter, Toronto Star; and Nicholas Parker, chairman, Cleantech Venture Network.
Mr. Parker, an Ottawa native and one of the world’s leading business commentators on cleantech issues, remarked proudly, “In Canada, Ottawa cleantech and clean energy companies are in the front row. It’s gratifying to see businesses from my hometown ‘going for it’ in global cleantech markets. Kudos to all!”

The six Ottawa companies on the list are:

Ensyn Technologies, which owns a process for transforming wood and other biomass into “bio-oil” which in turn is used to produce renewable fuels and chemicals.

Group IV Semiconductor, which makes all-silicon, solid-state devices that generate light using semiconductors instead of gases or filaments. Iogen Corp., a recognized world leader in technology to produce ethanol from cellulose.

Magenn Power, whose MARS lighter-than-air, tethered wind turbine generates electricity at high altitudes.

Menova Energy, maker of The Power-Spar, a high-efficiency solar concentrator that can be configured for electricity, heat, cooling and/or lighting solutions.

Plasco Energy Group, which has plasma gasification technology that converts household, commercial or industrial waste into green energy.
This cleantech sextet is not only being recognized at industry love-ins in Toronto; it is also being noticed by investors and media worldwide.

Ensyn, founded in the mid-80s, has been busy hosting a stream of large corporations who’ve come round with an eye on the company’s Rapid Thermal Processing (RTP) technology. President and CEO, Tom Gale, compares the RTP process of extracting bio-oil to throwing water at a frying pan. “[The biomass] turns to stream instantly – we convert solid biomass to a gas then to a liquid in less than two seconds.” The company has to date used its RTP for applications in the food and chemical industries, but is intent on bio-oil’s lucrative potential in the renewable fuels market. Mr. Gale notes that Ensyn’s process has an advantage over other approaches for making alternative fuel in that it uses waste by-products, such as sawdust, bark and straw, from forestry and agriculture rather than valuable crops or wood.

In December, Magenn Power and its high-flying turbine got ink in the lofty pages of the New York Times. Magenn’s floating wind catcher promises not to only replace enviro-messy coal and diesel generators but wind towers as well. With a global “wind map” of the stratosphere, according to Mac Brown, Magenn’s chief marketing officer and co-founder, MARS turbines can be tethered anywhere in the world.

At Bionorth 2007, Chris Henderson, chairman of the Delphi Group, convened a session to gauge what’s driving the cleantech market. He cast his net wide. Is it the construction industry? The automobile sector? Is it government? He summarizes observations made by Kevin Hydes, chair of the World Green Building Council, and Dr. Peter Frise, from the Ontario BioAuto Council as a “call to go beyond thinking of buildings and cars as simply fuel consumers but as a system of parts and processes.” He explains that by making cars and buildings out of lighter, recycled or recyclable materials that contain less toxic chemicals, we can drastically reduce the environmental footprint of these products.

So clean technology isn’t just about reducing fuel emissions from cars and building a better light bulb. It’s also about reducing the toxic chemicals and the emissions that arise from the processes used to make the multitude of parts that go into such products. Where cleantech investors are concerned, however, it’s all about being able to produce these parts at a comparable cost. Once enterprise can do that, we will see investors move to cleantech readily. The demand for clean technology is here. And when the costs are aligned, the investors will be there.

James Bowen, PhD, PMP, CMC is an Ottawa technology entrepreneur and adjunct professor at UOttawa’s Telfer School of Managemen.

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