So the buzz word today is Clean-tech. What is it and what is the future significance. We will cover each and every aspect of it.
From the perspective of finance, any business or venture which improves environmental sustainability is said to be a clean technology. Few people also call it as green technology or green-tech. Simply because it reduces carbon emission and helps in reduced or optimized use of natural resources. Solar, wind or hydroelectric power plants are best example of clean-tech. As they don't use fossil fuel to generate electricity and helps environment by not emitting pollutants as bi-products.
Clean-tech is a business term most of the Fortune 500 talk about. For their CSR activities they are investing around $20 Billion in greentech every year as per the standard report published in 2018.
Any business can go green, there are large number of manufacturing included in greentech business arena. They could be green technology, recycling, renewable energy, electric vehicles, lightning, green transportation to name a few.
CleanTech Alliance, a non-profit organization established in Seattle, is the largest trade level association of 3000 companies running green business. It focuses on greentech growth, jobs, educational programs, research and products in this area.
World level conferences which emphasized on Climate Change awareness are - United Nations Climate Change Conference -2009 Copenhagen, 2015 Paris and 2019 New York. Paris Climate Change Conference is assumed to be most successful among these. 55 countries agreed upon taking initiative to control carbon emissions and reduce greenhouse gases.
One of the major reason for clean-tech growth is considered to be rising oil prices and countries taking control on carbon emission. As per the United Nations Environment Program companies received close to $148 Billion new funds in the year 2007. The investment provided to companies working on green energy such as wind power, solar photovoltaic, and bio-fuels. With a belief that this clean-tech sector will be around $320 Billion in future.
Some of the venture capital firms participated in this growth oriented investments are Foundation capital, NTEC and Greentech Ventures. This sector is projected to be worth of $4.3 trillions by 2030.
Let's have a look on countries which are being named as front-runner in this multi-billion dollar clean-tech sector. India, North America, China actively participated in the initial growth. In the year 2014 Finland, Israel and US also jumped into this revolution and supported numerous companies running green business. Later on Russia and Greece also joined the green-tech race. China is considered to have major investment in clean-tech and enjoying the profits. Germany is leader in world, it uses 12% of green energy of it's total energy consumption. Renewable energy hold 26% account of world's total energy consumption.
Recently in June 2020 everywhere it was the news flooded about Adani Green Energy received word's largest project of $6 Billion from India Inc. The Solar Energy Corporation of India , has awarded this project to Mr. Gautam Adani to build 8GW solar power plant. This project is quite ambitious in nature for Modi government whereby it claims to create 400,000 new jobs . Other major green-tech power player in India are ReNew Power and Azzure Power.
Until now we discussed the greener side of the so called lucrative business. Now let's see some of the major setbacks and hurdle of clean-tech. As per the MIT Energy Initiative paper published in 2016 the half of the investment made in this sector was not fruitful. One of the reason for failure is the investors had lack of vision and understanding of the business. Then most of the ventures tried to reduce the cost of energy production instead the advancements in materials being used as resources. In the early 2000 few venture capital invested 60% of their funds in green energy and they anticipated it would be bigger than the internet boom. CleanTech firms require high upfront cost, big hardware setups , they face certain manufacturing challenges and uncertainty in high volatile energy markets. Financial market for solar energy is in its nascent stage. The government regulations and policies for answering the climate changes is also a hurdle in this segment.
On a lighter note, green technology is the future of business , with the advancements in applied materials we can see this sector again a big win for investors. Structured financing, sales and acquisition of projects under guidance of experience partner is need of the hour in this industry.
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