Silicon Valley's next big thing: 'clean tech'
Engineers aim to transform solar, fuel-cell, and biofuel projects into viable industries.
from the May 11, 2007 edition
Page 2 of 3
"The industries they are attacking are so immense. We import tens of billions of dollars of gasoline each year," says Ron Pernick, coauthor of the forthcoming book, "The Clean Tech Revolution." [Editor's note: The original version had the incorrect dollar amount of gasoline imports.]
That huge market potential is luring big players such as General Electric and Sharp into the sector. Citigroup announced this week a $50 billion investment in clean tech. British Petroleum is investing $400 million in biofuel research at the University of California at Berkeley.
Startups are cropping up as well. Mr. Pernick's market research firm, Clean Edge, now tracks 45 clean-energy companies listed on US stock exchanges. The index is up 12 percent since February. Just three years ago, Pernick says, it would have been impossible to find enough companies to track.
Silicon Valley is buzzing with optimism. Venture capital funding jumped sixfold to $300 million from the first to the third quarter last year. But some analysts see limits to clean tech's potential.
"While clean technology [companies] will grow, and they become very important, especially here in California, they're not going to replace the fossil-fuel based system," says Anne Wenzel, principal economist at Econosystems, a market research firm in the Bay Area.
Fossil fuels are so efficient, and the existing infrastructure to deliver them so vast, that clean energies will remain a small percent of the overall market, she says. Nor does she expect clean tech to surpass the current titans of the Valley. "As far as overtaking software or biotechnology or web and search engines: no," she adds. "But it's a very viable business."
Historically, alternative energy has flourished during energy crises, only to sharply contract when fossil-fuel prices drop and stabilize.
Many in the clean-tech community argue that the days of cheap fossil fuels are over, due to their scarcity, the rapid economic rise of India and China, and the effects of global warming beginning to be felt by businesses.
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