Towards A Cleaner Future

What is Cleantech?

Cleantech is more of an investment theme than a strictly defined market sector. Global investment group 3i, for example, defines cleantech as the knowledge-based technologies, products and services which optimise the use of natural resources while reducing ecological impact and adding economic value by significantly lowering costs and improving profitability.

Cleantech delivers solutions to some of the most pressing problems threatening long-term economic growth: climate change; energy dependency; pollution; and unsustainable urbanisation. These issues align the interests of companies, governments and consumers, creating a strong demand for new solutions.

Those new solutions fall into a number of broad categories, many of which hold the potential for sustained growth and the returns demanded by the venture capital industry.

The largest category is energy, accounting for roughly half of cleantech investment in the US and three-quarters in Europe.

Demand for alternative energy sources, including solar, wave, wind and biofuel, is growing strongly, thanks not just to environmental concerns but also awareness of the political and financial costs of relying on fossil fuels. Government intervention is boosting demand in many areas, while carbon trading schemes in Europe and parts of the US mean that there is an immediate value in reducing energy consumption.

There is also strong demand for efficiency improvements in existing oil and gas technologies, as well as innovation in energy infrastructure and storage, including a growing demand for fuel cells. An efficient means of storing energy produced by renewable production methods has been called the holy grail of cleantech.

Water treatment and purification, by desalination or other means, is the area forecast to see the greatest growth. Increasing urbanisation means that demand for clean water is increasing steadily, particularly in India and China.

Similarly, increasing urbanisation and continuing pollution are forcing demand for air filtration products.

The broadest category involves anything that can provide gains in industrial production efficiency or reduce waste, from new materials and catalysts to sensing and monitoring systems.

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