Posts tagged biofuels

Notes from Cleantech Panel Discussions at BioFinance

As mentioned in my prior post, there was a first at BioFinance this year – a panel on Cleantech, and a number of Cleantech presenting companies.

The discussion began with the question: Is cleantech the future of life science? (maybe for investors looking for quicker and more reliable returns on investment?! take a look where the dollars are going! The Cleantech sector is now outperforming other sectors, it is the best sector in US stock market and was up 46% last year.

Deloitte is compiling the “Green 15″, from 150 candidates who have submitted profiles this year. Interestingly, some companies seem to be waivering between life sciences and cleantech – they just can’t decide where they are or where they should be. After all, if they call themselves a life science company, investors approach cautiously … but that’s just me being cynical.

Susan McLean, a Senior Manager of Business Development at the TSX, gave an interesting overview of the sector. The TSX had 94 cleantech issues in 2007, and it is growing. In fact, there was a tripling of activity from 2005 to 2007, progressing well in 2008; there were 2.5 billion shares traded in 2007. It is looking at pure-play companies and integrated companies. Some sub-sectors of listed companies include solar, wind, hydro, geothermal, fuel cell, waste to energy, and others. Now, for the best part – companies even at the $50 million value are getting analyst coverage – something unseen for many “small” companies on US exchanges.

Another panelist was a well-recognized member of Bay Street, Steven Winokur from Canaccord Adams. A few high-level points came out of his talk. He recognized Cleantech to be the best performing sector. There are a number of biotech applications in Cleantech that he mentioned:

  • Agriculture: genetic crop technologies, organic fertilizers, water/waste remediation
  • Nanotechnology for desalinization
  • Biofuels – lignol, syntec biofuel
  • Green Building – a noted possibility

Canaccord Adams puts out a newsletter with quality research reports each month, and they are a highly recommended read by Duncan Stewart, from Deloitte.

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Cleantech VCs ready for 2008

According to the National Venture Capital Association (NVCA), VCs are going to continue to pour money into Cleantech areas beyond solar and biofuels. There will be consolidation, more venture-backed IPOs and an eventual over-valuation of the sector. See the NVCA Report.

Will the sector really become over-valued though? With global demand increasing everyday from the emerging market – notably the drastic increases seen in the middle classes of India and China – it is very hard to state exactly where an upper boundary exists. Growth these days is not limited to the US, but it is measured in a global framework that is only beginning to be defined by newer business trends and strategies.

Global warming and energy reserves continue to be an issue that becomes more evident everyday. Until realizable change is evident, the cleantech market will continue to grow and expand at obscene CAGRs. We are only at the dawn of a new era in renewable energy and cleantech; hang on for the ride.

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Cleantech Jobs on the Rise

I am not surprised to read (Newsweek via MSNBC) that job opportunities are on the rise in the cleantech “green-revolution” sector. Notable niche areas mentioned include solar energy, biofuels. The article describes an upcoming trend:

Based on the flow of venture capital, K. R. Sridhar, CEO of the fuel-cell
start-up Bloom Energy, believes the clean-tech sector could produce 50,000 new
jobs by 2010. Peter Beadle, president of Greenjobs.com, cites estimates that the
solar sector alone could employ 2 million people by 2020.”

Interestingly, these jobs are geographically dispursed (across the US), unlike clusters of high-tech startups found in Silicon Valley during the tech boom.

From a finance perspective, analysts at Lux Research state that venture-capital investments in the clean-tech sector jumped from $623 million to $1.5 billion (2005 to 2006), led by solar power and biofuel.

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Biofuels Outlook Update

Invest in biofuels today. At least, 2 people think you should — Vinod Khosla of Khosla Ventures, and Dr. Jens Riese of McKinsey & Co. who gave keynote speeches at the World Congress on Industrial Biotechnology and Bioprocessing.

An article from TheAutoChannel discussed this in further detail, but I want to highlight some important points from the post:

In a speech titled “The Role of Venture Capital in Developing Cellulosic Ethanol,” Khosla outlined the range of technologies currently being commercialized to convert cellulosic biomass to transportation fuels. Khosla said that the U.S. Department of Energy’s recent grants to cooperatively fund biorefineries that produce ethanol from cellulose is an acknowledgment that the technology is moving faster than expected. He said that a 100 percent replacement of petroleum transportation fuels with biofuels is achievable, and predicted that ethanol from cellulose technology will be cost competitive with current ethanol production by 2009.

Dr. Jens Riese of McKinsey & Co. also addressed the World Congress plenary session with a speech titled “Beyond the Hype: Global Growth in the Biofuels Industry.” Riese predicted that global annual biofuel capacity would double to 25 billion gallons over the next five years and could reach 80 billion gallons – meeting 10 percent of world transportation fuel demand, enough to replace the annual oil production for fuel of Saudi Arabia – by 2020. According to McKinsey & Company’s model, biofuels can economically replace 25 percent of transportation fuel with crude oil above $50 per barrel. He concluded that the race is on to build a biofuels industry and that companies should invest now.

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