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Investors withdraw from clean energy, turn to drilling

May 07, 2013
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renewable energy
Solar and wind power and biofuels have failed to live up to initial expectations, according to investors.

At the start of the 21st century, the global energy sector looked pretty straight-forward -- investors and businesses focused on development of renewable energy resources and tried to move away from fossil-fuel based energy. Over the past few years the situation has become more complicated, as solar and wind power and biofuels have failed to live up to initial expectations, while natural gas and oil industries have seen a huge increase, the Associated Press reported last week.

In a bid to stay true to their environmentalist ideals and make a profit, investors have stretched the definition of clean energy to previously unthinkable levels, so that today's investment funds are no longer trying to support the fossil-fuel industry phase-out but to reduce its negative effect on the environment by helping companies to make drilling and mining greener.

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It is obvious that oil and gas are here to stay for a very long time, commented Wal van Lierop, chief executive of Canadian venture capital firm Chrysalix. The most important thing that needs to be done is to make the industry as clean as possible, he added. Chrysalix supports firms that develop clean energy in its traditional sense, such as Bridgelux, which makes energy-saving light bulbs, and Agilyx, which produces fuel from plastic waste. However, another of the projects it backs is MineSense, which aims to facilitate mining operations by allowing the quality of the ore to be assessed more quickly and efficiently. It also helps GlassPoint, a project bent on improving oil extraction using steam generated with solar power.

Chrysalix is not the only investment fund that looks to combine the oil and gas industry with clean energy and the trend in North America is leaving environmentalists with mixed feelings, at best. On the one hand they are happy to see that attempts to minimize the environmental footprint of oil and gas are being made, but on the other they fear that the newly discovered and developed oil and natural gas deposits are distracting investors, industry representatives and regulators from their main task -- to consign energy from fossil fuels to history.

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According to Alan Salzman, managing partner of VantagePoint Capital Partners, there are still venture firms that are trying to oppose the trend and keep their focus on renewables. A more environmentally friendly way to extract fossil fuels may increase production and consumption.

Meanwhile, things are not looking bright for “cleantech.” An index of clean energy companies has dropped 69% since it was first set up in 2005. By contrast, a similar index of traditional energy companies has increased by 75% over the same period. Moreover, the value of global clean technology deals fell 29% last year to $7 billion, from a record $9.9 billion in 2011, figures released by the Cleantech Group showed. However, the proportion of that sum devoted to conventional fossil fuels nearly tripled, to a record $556 million.

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