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Investment in clean energy expected to rise 35% |
Venture capital powers clean technology shift
Global investment forecast to rise 35 per cent this year over 2006
Scott Simpson,
Vancouver Sun
October 24, 2007
Clean technology is a global investment darling that's poised to set a record in 2007 for attracting funding, according to research released on Tuesday.
A mid-year report from Ernst & Young and Dow Jones VentureOne indicates global venture capital investment will grow by 35 per cent over 2006, and Canadian companies in the sector can expect to benefit.
The report says the U.S. is the single-largest investment hub for the sector. Globally, solar energy development is attracting the largest share of the money.
"There is a lot of venture capital looking at the clean-tech sector, and that sector is a very broad sector," Ernst & Young partner David Boomer said in a telephone interview from Toronto. "A lot of companies and a lot of industries get grouped into that category."
Boomer said Canadian companies get a comparatively large boost from government, through Sustainable Development Technology Canada (SDTC), in getting access to seed money for research and development to bring
products to commercial sale.
The Ernst & Young survey does not provide a breakdown on Canadian investment, but Boomer passed along information from SDTC showing that, nationally, the energy exploration and production sector has received the single greatest share of funding awards -- 27 per cent.
Power generation was the biggest recipient in B.C., and SDTC charts show that companies leveraged an average 69 per cent of their funding from investment, based on a 31-per-cent contribution from government.
In total, government and private-sector contributions to B.C. clean-technology development total $183 million since the SDTC project was launched in 2002.
The Canadian government recently announced that SDTC will be managing
a new $500-million project aimed at expanding the nation's biofuels
sector.
Ernst & Young's global report on clean-tech venture capital indicates
that in the United States companies raised $893 million through the
first six months of 2007 -- compared to $1.149 billion in all of 2006.
Globally, the sector attracted more than $1 billion in the first six
months of 2007.
Energy generation dominates, attracting $458 million from January
through June 2007 in the U.S.
Boomer cited several reasons for the investment boom.
Clean-tech companies, and their customers, are keying in on growing
public interest in reducing greenhouse gas emissions associated wit
climate change, and on saving money through conservation and energy
efficiency.
"There is an economic benefit to being more efficient on power usage,"
Boomer said.
One lingering concern is that governments haven't settled on specific
policies and support mechanism in the realms of greenhouse gas
reduction and alternative energy.
Boomer said the United States has shifted its support from the
production of ethanol from corn to less-expensive cellulose --
threatening investments in the corn-based version of the
transportation fuel.
Jonathan Rhone, CEO of British Columbia-based Nexterra Energy,
received seed funding from government for his company's alternative
energy systems, but has since found a willing and eager private-sector
partner, Alberta-based ARC Financial.
"The world is living with $90 oil," Rhone said in an interview.
"Natural gas prices are volatile and projected to be increasingly
volatile. We know that in Western Canada exploration companies can't
make money below $7 a gigajoule, which is pretty high.
"Last year, there were $30 billion worth of carbon credits transacted
globally. Those are all important drivers that are creating
opportunities for companies like ours," he added.
"Building conventional power is challenging from a whole number of
perspectives, be it environmental, be it economic, be it access to low
cost fuel.
"Much of the alternative energy sector, or the clean energy sector, is
about providing consumers of energy with clean alternatives and
options that deal with all of those issues.
"In the case of Nexterra, we are in the business of providing little
plants to convert low cost biomass into a gas that can be used to
displace natural gas for industrial customers and institutional
customers.
"Our customers are looking for a solution that provides them with a
lower cost fuel, but by replacing fossil fuels with biofuels it
reduces greenhouse gas emissions."
So far, Nexterra has received three rounds of equity financing from
ARC Financial.
Most of the $1.8 billion the company has under management is invested
in ventures related to oil and gas, but the company also supports
energy investments such as Nexterra. |
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