A brief history of cleantech

After an initial frenzy in mid-noughties, cleantech appears to be making its big comeback. Since 2018, there has been a record level of investments (an increase in 60% compared to 2017), the independent renewable energy producer Neoen made its stock market debut and there is a growth in specialist startups… So what really happened and how can we explain today’s upturn?

Did you say cleantech? 

The notion of cleantech is synonymous with greentech, or rather eco-innovation. Its definition is quite broad, as the term generally refers the way the hi-tech sector (that’s to say, high-value innovation) aims to create “environmental added value”. In the book The Clean Tech Revolution, which popularized the term and gave it some theoretical background, the American consultancy firm Clean Edge defined it according to three characteristics: 

  • Using natural resources, energy, water and raw materials to vastly improve efficiency and productivity. 
  • To systematically create less associated waste and toxic material.
  • To guarantee performance that is identical to or better than the desired result compared to traditional technologies, resulting in improved results for users.

The cleantech industry covers areas such as energy (renewable energies, smart grid energy optimization, energy efficiency), water and air cycles, waste treatment, transport, and, more cross-sectorally, improving industrial process efficiency with a view to reducing resource consumption.  

The term can thus refer to both actual technological innovation, but also secondarily to  procedures, for example, in green building. Nonetheless, tech innovation generally accounts for a major part of cleantech. What’s more, the term has brought the idea of green growth to life.

Constitution then explosion

In the middle of the 2000s, the clean tech sector was the target of massive investment: in 2006, $75 billion was invested in clean technology projects and businesses worldwide. Just take the solar energy company Heliovolt, which raised $230 million. Between 2006 and 2007, investments grew by 60% and the market was estimated to triple or quadruple by 2012. But in 2018, the clean tech bubble suddenly burst with a downturn in venture capital investments, which lasted until 2016.

How do we explain this bubble? The first explanation is clearly linked to the 2008 financial crisis. While the downturn was particularly brutal compared to across other sectors, this was because cleantech only delivered weak returns on investments, far from what the market had hoped for. The risk factors were much higher, especially due to lengthy development cycles: it takes a very long time to prove both technical-economic and industrial relevance for such innovative solutions.

This also adheres to what Philippe Bihouix calls “l’effet parc” (literally translated as “grid effect”) in L’Âge des low tech (’The Age of Low Tech’). For example, there is one consequence to phasing out our current coal-fired power station grid: replacing it with renewable energy solutions is not immediately profitable. What’s more, huge sums of equity are required, both in terms of the precious materials used but also in relation to production levels needed to have scale effects. And finally, the first American shale oil extractions in the mid-2000s caused a huge decrease in the incentive for alternative energy production.

New cleantech boom 

Our understanding of the climate crisis is increasing as the effects are becoming increasingly tangible. Following the COP21, major public measures which merge technology and the environment have been put in place. On a European scale, the EIB (European Investment Bank) outlined its aim to invest €20 billion annually in the sector until 2020. 

In order to limit global warming to 2°C, clean tech is lingering somewhat over carbon capturing and storage techniques, which also apply to greenhouse gases in general. Such negative-emission technologies (NET) are indispensable according to the IPCC, and we’re seeing numerous companies devoting themselves to them: Climeworks is developing CO2 vacuum cleaners, Fermentalg is banking on algae and Dutch artist Daan Roosegaarde is using ionization technology… So what’s the next step? Making these technologies widely available.

 

On a national scale, France is supporting the development of a decarbonized economy, notably with its latest energy plan and low-carbon strategy which spans several years and features clean tech. The energy efficiency and transport sectors were rather dynamic in 2018. For example in the energy sector, the startup Sweetch Energy produces electricity from salt water desalination (especially in estuaries). Meanwhile, in green building, the deep tech startup Woodoo modifies the composition of wood to make it more resistant and suitable for constructions. 

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