World is Green

V.C.’s Clean Energy Investments - National Business News - Portfolio.com

“You start to see this rise in enormous appetite for energy, and someone’s got to feed that mouth,” says Erik Straser, general partner at Mohr Davidow Ventures, a V.C. firm that has invested more than $400 million in clean energy ventures.
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“The primary difference between what is happening now and what has
happened in prior market cycles is it’s now economically feasible and
desirable to pursue these types of solutions,” says John Balbach,
managing partner at Cleantech Group, a network of clean technology
investors and companies. “If the outcome is less pollution or reduced
carbon or some impact on climate change, that can benefit in a positive
way, but the primary [concern] is return on investment.”

The Wall Street Journal chimes in on the climate change opportunity. (Hat tip: Crikey)

…If you’re worried that stopping global warming will wreck the economy, you’re looking at this all wrong. Solving global warming will be an added cost, yes – but a bargain compared with the economic cost of unchecked climate change. And fixing this problem will create an historic economic opportunity.

Energy is the biggest business in the world, “the mother of all markets,” says venture capitalist John Doerr, Google’s first funder. The winners of the race to reinvent energy will not only save the planet, but will also make megafortunes.

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A Silicon Valley firm, Innovalight, has figured out a way to harvest solar energy much more cheaply than present technology allows by dissolving silicon nanocrystals in ink, which will ultimately be printed onto roof panels like we print ink onto paper. Using a platform they developed as postdoctoral students at Berkeley, the founding scientists of a company called Amyris have re-engineered yeast to ferment sugar into pure hydrocarbon fuels. Unlike ethanol, the fuel has the energy density of gasoline (or jet fuel, if that’s what they program the yeast to produce) and can be shipped through existing pipelines and pumped into any car now on the road.

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Under a cap-and-trade regime, Congress will set limits on greenhouse gas pollution, and ratchet down those limits over time. Congress won’t dictate to business which technologies to use – the marketplace will determine the ones that work best at the lowest cost. Cap-and-trade is a proven approach. When applied to acid rain pollution in the 1980s, it solved the problem faster and cheaper than anyone thought possible.

Global warming skeptics notwithstanding, fixing global warming won’t be a drain on the economy. On the contrary, it will unleash one of the greatest floods of new wealth in history. When Congress finally acts, America’s entrepreneurs and inventors will find the capital they need to solve global warming – and a lot of people will make a killing.

Roger James in the Business Spectator:

There was a time when green beer was something strange they did with the brews in Irish pubs on St Patrick’s day. Not any more. Green beer is now a deadly serious marketing strategy, with Foster’s and Lion Nathan releasing products which they say reach the consumer being fully carbon offset in their production, packaging and distribution. Foster’s even goes to the trouble of printing its labels using inks made from vegetable oils.

Will consumers change their beers, perhaps even their brand, in response to this? There is no doubt that being carbon neutral, having carbon offsets or reducing your carbon footprint are all issues that have recently sprung to the fore in business, in marketing and in the community.

A new target market for a new beer.This initiative raises a lot of questions about green marketing strategies.

Will consumers select beers based on their green credentials? A question for Seth Godin I guess. Here’s my take. Consumers may change products like dish washing liquids or even clothes based on their green credentials. Cars come into this category too. However, beers are different. They are personal, taste based and connect to past preferences and habits. Lion Nathan and Fosters may be better off spending their green dollars on other initiatives.

Here’s a thought: what if your most popular beer is made “green”; would that make a difference? Will it get more customers to choose that beer, bring in a new customer?

What if the company developed a greener supply chain and manufacturing systems and built their overall green image. Will that create a blanket of goodwill on all their products? Is that better?

What is a better strategy? New green products, green old products or green the company?

Sustainability as a Business Strategy was the title of my previous post. Well, The Greenest Host is a fine example of that.

Data centers are big consumers of energy around the world. There has been reports that the IT industry’s emissions are equivalent to the airline industry. Google has talked about bring about efficient data centers. Sun Microsystems has launched it’s eco-efficient data center design.

Now, Greenest Host comes out of a good idea to capture a green niche. According to the company, they have built a energy-efficient data center which is powered 100% by solar energy. Unlike their competitors who buy Renewable Energy Credits to offset their energy use, Greenest Host uses 100% clean energy.

In terms of branding, they have captured a piece of the consumers mind in the data center space. It needs to be seen how they will actually perform in the marketplace however, this is a really good green strategy which captures a growing Green niche.

Update: A little search suggests that there are other clean energy powered green hosts.

Sustainability is turning up new niche areas of business opportunity. One major area is finance. I came across this bank today called - Ekobanken from Sweden. They have squarely targeted the growing understanding among consumers for sustainability and the increasing innovation from businesses in this field.

This is created in the form a member bank or what in Australia can be called a credit union with the participation of consumers as members or shareholders in the bank. In essence, the goals of users and owners are the same.

They work in the areas which increases social, environmental and cultural initiatives for a sustainable society. It says, “The public good and the benefit of our members is our main driving force and the reason why Ekobanken finances initiatives within the social economy. We are also interested in sustainable business that takes the environment and human being into account.”

In order to target the areas of finance which their members want; Ekobanken has created a unique set of accounts which use the deposits in these accounts to fund projects in that area. For example: savings in the Ecology Account “are used for loans to alternative energy, ecological and biodynamical agriculture, conservation, research and other ecological projects” whereas savings in the Culture account “finances loans to culture houses, artistic projects, community colleges, publishing, production of periodicals and adult education.”

At the time of joining the bank, members can choose to inform the bank to use their bank in all of their initiatives or as the example above suggests to a particular target area. These areas are broadly classified into Ecology, Culture, Healthcare, Child and Youth, The Way Out, Fair Trade and Sustainable development in the local area.

In the area of reporting they are very, very transparent. They produce a loans report every year, (latest is 2006, PDF Download) which takes a few areas of their work like Food, Pre-school and Micro-credits in the 2006 edition and explain their thinking in that field, examples of projects that they have funded and some links. At the end of the report they provide a list of all the projects that they have funded in each of the target areas. An amazing degree of transparency for a bank.

In terms of financial performance, the bank has been growing its deposits steadily, in fact almost doubling in the five years ending 2006; operating revenue growing a decent pace and profits more than doubling in the same period.

The banks vision, theme, products and marketing are all centered around the growing sustainability sector. A fine example of innovation and working in a market niche in this area.