Clean Energy: Wall Street's New Love Affair


BusinessWeek is reporting that energy independence is becoming a national imperative, and renewable energy is attracting an unprecedented array of groups. "We're seeing an alignment of the environmental interests, automakers, the agricultural industry, the security and energy-independence proponents, even the evangelicals," says billionaire venture capitalist L. John Doerr. "When did all those [interests] come together before?" You know a cultural movement is real when the money men get on board. In just the past year a broad swath of financiers -- venture capitalists, hedge funds, investment banks, public pension funds, and even stodgy insurers -- have begun sinking billions of dollars into producers of ethanol, fuel cell superbatteries, microscopic bugs that turn glucose into plastic, environmentally friendly pesticides, anything that might tap into the green craze. Saving the planet, protecting America, doing God's work, cynically exploiting a feel-good trend -- call it what you will. Wall Street sees money to be made. When John V. Veech, a managing director at Lehman Brothers Inc. (LEH ), showed up at a renewable energy conference in June, he was amazed to see that it was standing room only. "If you went five years ago you'd see a lot of ponytails," he says. "Now these conferences are packed with suits."

The U.S. is not about to resemble an eco-utopia anytime soon. For all the happy talk about clean energy and green technology since the 1970s, people just haven't adopted the gadgets and concoctions written about in science magazines. The government has provided billions in subsidies over the decades for ethanol, wind, and solar technologies to help make them more economically competitive -- without much success. In 1975 renewable energy accounted for 6.6% of total energy consumption. By 2005 the figure had slipped to 6.1%. It would take decades more and tens of trillions of dollars to produce the countless windmills, solar panels, geothermal plants, and power-generating dams needed to mothball the nation's coal- and gas-fired electric plants. And production of biofuels such as ethanol and biodiesel would need to soar from 325,000 barrels a day to nearly 16.5 million to replace conventional road fuels. Getting there quickly would be "physically impossible," says Steven C. Taub, director of emerging-generation technologies at Cambridge Energy Research Associates, a firm that advises big oil companies and utilities.

Via: Business Week