The Key Drivers for Cleantech, From Weather to World Economies

cleantech 5 year outlook photo

Photos via Jaymi Heimbuch

John Denniston of Kleiner Perkins Caufield & Byers, a major investment firm supporting cleantech, gave a keynote speech at Cleantech Forum five years ago, discussing the major drivers pushing the industry forward. He was invited back at this year's Cleantech Forum in San Francisco earlier this week to update us on the same topic, and listening to how events and circumstances around the globe have altered the motivators behind innovation was interesting. Most encouraging, though, is that despite the drivers changing, the speed with which the industry is plowing forward hasn't slowed at all. How Cleantech Drivers Have Shifted Over Last 5 Years
Denniston pointed out the three themes discussed five years ago, which included energy security and sources of the world's oil supply which is located in unstable or hostile countries; the fact that climate change is real and here to stay; and the emergence of China as a competitor in cleantech.

Interestingly, the drivers both have and haven't changed. We're still sweating about energy security, though the countries highlighted as unstable or in transition have shifted; we're focusing more on how climate change is impacting global weather and therefore the world food supply; and China is not just an emerging competitor anymore but has surpassed us as a leader in cleantech. And possibly the most important change is we have been struggling with the Great Recession.

Changing Climate Impacts Food Production Worldwide
Denniston highlighted that food prices have gone up by 2.5x over the last 5-10 years, and for families in developing nations in particular, this adds up to a food crisis. As noted in a New York Times editorial from February regarding the unrest in North Africa and the Middle East, "There's little question that sky high food prices have been an important trigger for popular rage."

And of course the cause of food price inflation is the extreme weather worldwide that has impacted crops. China has had the worst drought in 50 years (though not only is that a climate issue, but also one of how water resources have been and are being allocated); India had its weakest monsoon in 40 years; East Africa had a major drought that caused a 40% decline in corn harvest and a massive die off of livestock; and the list goes on.

Since Denniston gave his last keynote at Cleantech Forum, he notes that the chain of events has been clear: extreme weather events cause food shortages; food riots in several areas around world; uprisings transformed into social change revolution; uprisings change price of oil; hurts transportation & fertilizer costs which in turn harms food distribution/production.

cleantech 5 year outlook photo

The Great Recession Slows Cleantech
Denniston stated that the Great Recession is perhaps single largest impediment to the progress of the clean tech industry.

"Credit market debt has risen to 350% of GDP. Every time US in a bad spot, the same group of people rose to save it: the American consumer. Going forward, we can't count on the American consumer to save the economy when the economy is in trouble. To me, the solution must be manufacturing and exports."

Essentially, Denniston is still promoting relying on consumers to solve our economic woes, just not American consumers. Instead, he'd like to see the cleantech industry create blue collar jobs (or rather, green collar) and be an active part of pulling the country out of its economic woes. And the sector he feels can most aptly do this is solar.

According to Denniston, solar has been the biggest growing manufacturing area in the last few years and is a market valued at over $50 billion. While solar is still subsidized, he points out that it is less and less so, and is coming to grid parity -- and is even at grid parity in some areas -- and will continue to be a major player in clean energy. Wind is following the same trail, and Denniston notes that it will eventually become the cheapest source of energy.

Cleantech Will Innovate, Because It Has To
Denniston stated that these changes will come as cleantech innovations roll out, and the innovations will happen "because the world needs it to be so."

While slightly idealistic, it's true. We need these changes to happen fast, happen now, because the consequences of not making the changes are too dire. From energy security to food security, from a struggling economy to coping to natural disasters, we need cleantech to solve some major problems.

Denniston believes that like the television, refrigerator, Internet and airplanes were some of the greatest innovations of the last century, advancements in water, energy storage, fuels, transit, smart grid, energy efficiency, and power generation will be the great innovations of this century.

"We simply must move faster with a great sense of urgency"

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