Eight Cleantech Developments to Watch for in 2008

cleantech
By Nicholas Parker
December 18, 2007

With the end of each year come the inevitable end-of-year lists.

So, as 2007 draws to a close, let me offer some of the Cleantech Group’s thoughts on what developments the sector might see in 2008, based on what we’re hearing and seeing first hand and from industry insiders around the globe.

While some of the predictions below could be considered worrisome, as with all emerging trends, we encourage readers to ask yourself whether you believe our assertionsÑand, if you do, consider how you can best capitalize on them.

The following list debuted to members of the Cleantech Network at the Cleantech Forum in Toronto in October.

1. Green as global political platform

Articulating cleanÑor “green,” to use language that seems to be resonating best with votersÑpolicies will no longer be differentiation for political candidates in 2008. If 2007 was the year that environmental concerns emerged from the margins to become a central leg of a politician’s platform, then 2008 will be the year that articulating environmental positions and cleantech initiatives will be table stakes for any world leader. Indeed, expect international political cooperation on some major environmental topics to accelerate while the environment also becomes a major trade and security issue.

Green policies were a cornerstone of 2007’s 17th national congress of the Chinese Communist Party. They were fundamental in the election of German Chancellor Angela Merkel and French President Nicolas Sarkozy, and are central tenets of all candidates jockeying for position for the 2008 U.S. election. And, of course, the year has come to an end with a new Kyoto-friendly federal government in Australia.

In 2008, green credentials will be de rigour for aspiring politicians everywhere: from Chinese mayors to U.S. Senators. The next generation of green political leadership understands “smart” environmental policies create knowledge-based jobs, revitalize economies and solve major sustainability challenges.

2. Cleantech drives new business and financing models

This year saw enthusiastic adoption of new financing models to accelerate cleantech adoption. One of the most visible examples: the solar power purchase agreement (PPA), which offers organizations the ability to receive a solar system for free, as long as they agree to pay the owner of the system a fixed price for the electricity generated by the array over its lifetime. More and more companies are now rushing to offer PPAs in solar and other energy sectors.

In 2008, look for the lines between venture and project financing to blur even more than they started to this year, as in cellulosic ethanol investments. And watch for even more new, creative models in 2008 intended to jump-start the adoption of clean technology, from asset-backed finance to carbon debit cards.

Bringing cleantech to market is requiring a suite of financing that is only just starting to come together.

3. Price per bushel on par with price per barrel

The front-month contract for a bushel of corn (56 pounds) on the Chicago Board of Trade was $1.86 at the end of 2005. Recently, it hit an all time high of $9/bushel, due to an unprecedented combination of droughts, sky-rocketing demand and diversion of land for fuel crops, causing a cascade of repercussions.

Much has been written about the impact of corn prices on the largely corn-based ethanol market (two of our own articles: Corn ethanol unprofitable by 2008, says Iowa State and Ethanol sector slapped on bad VeraSun earnings). Similar relationships exist with the price of soybeans, the dominant biodiesel feedstock.

The prices of commodities like corn and soy in 2008 will continue to pose profitability challenges for current ethanol and biodiesel pure plays, much like the oil crisis of the 70s impacted virtually all manufacturing industries.

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