This Sunday's New York Times Magazine had a cover story on green investment titled "Capitalism to the Rescue". We've mentioned in other posts that venture capital investment in clean energy is on the rise. This article was interesting in that it profiled one particular venture capital firm, Kleiner Perkins. The author interviewed the firm's partners about why they see clean energy as such a good investment.
To start with, explained partner Randy Komisar, the current energy market is so large and outdated that "green-tech" is a huge and relatively low-risk opportunity. And we're not, as many think, waiting for the new inventions to come. We're waiting for federal policy to give private investment incentive. That is, we're waiting for a mandatory carbon cap.
Many great technologies have already been developed. But, says partner Bill Joy, they're "not yet commercialized because they had been frozen by the low price of oil. The innovation had occurred, but they hadn't been deployed." Using the example of green-tech firm Ausra:
A price on carbon could, in one stroke, make Ausra's carbon-free solar electricity even cheaper than coal- or gas-powered electricity, which would both rise in cost because they produce CO2; as a result, there would be virtually no limit to the demand for Ausra's power. That's how you get a green-tech Google.
Or as economist Jeffrey Sachs puts it, "The policy elicits the technology."
The most effective action the government can take is to set policy that gives incentive for private innovation. This is because (quoting Al Gore – also a partner) "more money is allocated in the private markets in one hour than in all of the budgets of all of the governments of the world in a year's time."
Why don't we hear more about these new inventions? Some are described in the article and many more in Fred Krupp's book, Earth: The Sequel. But most are kept under tight wraps because of their profit potential:
Last summer, the growing number of stealth companies involved with clean energy formed a kind of dark matter in the Silicon Valley universe, businesses that could not be seen yet nevertheless exerted a discernible gravitational pull. Executives would suddenly leave jobs at established companies to join ventures with no official name.
When brought to scale, these enterprises will have a wonderfully energizing effect on our economy:
Amid economic hardship and turmoil within the financial-services industry, such efforts could also contribute to a profusion of green jobs in technology as well as in manufacturing.
So what are we waiting for?
This post is by Sheryl Canter, an online writer and editorial manager at Environmental Defense Fund.