Clean tech investing spans many industry verticals, and refers to products and technologies that aim to reduce negative impacts on the environment.
Cleantech, also referred to as clean technology and greentech, is an umbrella term that spans several industry verticals. Essentially, cleantech refers to products, services and technologies that aim to increase performance while reducing negative environmental impacts.
In a MoneyTree report, PwC describes clean tech as a combination of “agriculture and bioproducts, energy efficiency, smart grid and energy storage, solar energy, transportation, water and waste management, wind and geothermal, and other renewables.”
EcoConnect, a green energy business network, breaks the concept down further by identifying eight key categories of clean tech: renewable energy generation, energy storage, energy efficiency, transportation, air and environment, clean industry, water and agriculture. Together, these areas constitute the diverse arena of clean tech investing.
In that regard, here’s a brief overview of cleantech investing and what the market looks like today.
Cleantech investing: coming into its own
Cleantech investing began to gain prominence in the mid-2000s, when mainstream investors started investing in the environmental, alternative and renewable energy sectors. A decade later, the sector has become an important venue for innovation.
Substantial progress has been made in the areas of wind power, solar photovoltaics, advanced batteries, energy-efficient lighting and fuel cells. For example, according to the White House, the cost of solar energy systems has decreased by 50 percent in the last five years alone.
In Canada, the story is similar: solar panel prices have been coming down, and it’s becoming more popular. While a solar panel unit may cost $30,000 to install, it will reportedly save $150 in energy costs per month.
In the US, President Donald Trump proposed a $1.15 trillion budget in March that would cut a number of departments to fund and increase in military, as well as payment towards building the US-Mexico wall.
Included in the proposal were cuts to former president Barack Obama’ Clean Power Plan. Two weeks later, Trump signed an executive order that would scrap Obama’s plan, which of course does not bode well for the cleantech industry in the US. And it doesn’t stop there: in June, Trump announced that the US would be withdrawing from the Paris Climate Accord, and confirmed those plans in August.
Still, it’s been opined that the cleantech industry is here to stay, ‘with or without Donald Trump.’
Clean Energy Canada notes there has been more power brought online from renewables than fossil fuels each year. In fact, the three world’s largest electricity markets–China, the US and India–accounted for half of global clean energy investment in 2016–roughly $348 billion.
“As President Trump decides how to approach clean energy, he will no doubt be informed by two key metrics: the opinion of his supporters and what the sector means for jobs. On both counts, the odds are in clean energy’s favour,”Dan Woynillowicz, Policy Director at Clean Energy Canada said in the report.
Up north, Canada–the US’ neighbour–plays host to a number of clean energy technology companies. The Clean Energy Canada report notes that the country is also in a good position to become a dominant force in terms of global clean energy demand.
The Canadian government’s 2017 federal budget is also good news for Canada’s cleantech industry. For example, $400 million over five years–beginning in 2017-18–will support projects across the country to “develop and demonstrate new clean technologies that promote sustainable development” regarding environmental issues such as climate change, air quality, clean water and clean soil.
An additional $200 million over four years will go to the Natural Resources Canada, Agriculture and Agri-Food Canada, and the Fisheries and Oceans Canada for clean technology research. While the funding doesn’t stop there, Business Vancouver states the budget will fund roughly $1.4 billion to Canada’s clean tech market.
Looking ahead, the overall sector is expected to be worth as much as $2.5 trillion by 2020. In Canada, Canadian Business writes that the country is “ahead of the curve” with almost 800 firms. In addition to the 2017 federal budget, there’s no doubt plenty to be optimistic about regarding the future of Canada’s cleantech industry.
Under a Trump presidency in the US, however, its future might seem a little uncertain. That said, as mentioned above the US cleantech industry isn’t showing any signs of slowing down. With nearly 300,000 Americans employed in the solar industry–more than double the amount from 2010–the cleantech industry is no doubt unstoppable in the US.
All in all, these major investments in the clean tech sector illustrate the growing economic importance of this ethically oriented market. It will certainly be an interesting arena for investors to watch moving forward.
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This article was originally published on the Investing News Network in 2015.
Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.