More Energy for Clean Energy

I was lucky enough to spend part of last week at the Energising South East Asia Conference, Australia’s largest sustainable energy expo, organised by the Sustainable Energy Association here in Perth. It was great event, with stellar keynote addresses by Professor Peter Newman of Curtin University and Dr Tony Wilkins, the Manager of Environment and Climate Change for News Limited (plus lots of other great talks and debates).

But to be honest, it was the exhibitors that I found most compelling – hundreds of companies working to commercialise new and existing sustainable energy technologies. My inner geek spent two days soaking up information about alternatives to coal – solar, wind, wave, biomass and geothermal. The passion the exhibitors exuded about their businesses, and the potential of their technology, was inspiring.

And it’s a good thing they’re so passionate. And dedicated. And intelligent. Because being in the renewable energy (or broader cleantech) sector in Australia is not easy, despite the fact that we desperately need them to succeed.

We need them to succeed in part because we have a fairly ambitious renewable energy target – Australia has committed that by 2020, 20% of our electricity supply will come from renewable sources. That means in less than ten years’ time, the amount of energy coming from sustainable sources will be roughly equal to our current household electricity use.

But unfortunately in the Australian cleantech sector, the investment money doesn’t seem to follow the need. As Giles Parkinson aptly summarises in the Climate Spectator, “…investors in Australia…cannot see a clear path to a sustainable industry – at least not with current policy settings.”

Cleantech is Hot, Except Here

The good news is that globally, the cleantech sector is hot. In Europe, growth has been driven largely by regulatory measures. In China, regulatory measures have been paired with massive green stimulus packages to drive investment. And in the US, venture capital has been a big player in the cleantech market. Take these facts for example:

  • In 2010, worldwide finance and investment in the clean energy sector grew 30% to a record $US243 billion, according to the US-based Pew Charitable Trust. Moreover, according to the same study, the sector has witnessed 630% growth in finance and investments since 2004.
  • Data also released in 2010 by Deloitte and the US-based Cleantech Group showed a record $US1.9 billion in technology venture investments in North America, Europe, China and India in the March quarter alone – up 83% from the previous year.
  • 2008 was the first year money invested in new renewable energy generation projects was greater than that invested in new fossil fuel energy generation.

Pushing Water Uphill: A Hard Way to Make Energy

Sadly, though, Australia is lagging behind the rest of the world. Which makes it harder for the companies I met at the conference to cross the great divide between R&D and commercialisation, and for Australia to meet its renewable energy commitment.

Australia ranked 12th overall in the Pew Charitable Trust’s 2010 global ranking of cleantech investment — well  behind China, Germany, the US and Italy, who occupy the top four positions. The Australian Venture Capital Association estimates that just over $25 million was invested in Australia in cleantech venture companies in 2009. Phyllis Cuttino, the director of the Pew Clean Energy Program, says of Australia, “Certainly the coalition government has given investors a signal that things are uncertain and that’s the way investors have reacted.”

Echoing that sentiment In the Australian Cleantech Review 2010, Managing Director John O’Brien says, “Australia is lacking the drivers that are seen elsewhere in the world. The government stimulus is fragmented and small, the regulatory measures are providing only some assistance and the venture capital industry is under-funded.”

Look at all that Sun….

We must get our act together in Australia. We are a country that arguably has the greatest potential to tap renewable energy sources, and we’re not doing enough to support the businesses trying to do exactly that. Focusing incentives on grants to a few selected “winners” in the sector is not working – we need much broader investment and support.

A carbon tax may help, but it’s not enough. We have the advantage of being able to look around the world at best practices and develop a model that drives real investment, through a combination of regulatory measures and market-driven mechanisms. We must consider things that have worked elsewhere, such as loan guarantees, tax concessions, and feed in tariffs.

As the Pew report succinctly states, “The extraordinary worldwide growth in clean energy investment over the past six years has been defined by a simple fact: where supportive clean energy policies are adopted, investment follows.”

In the meantime, I sincerely hope those passionate people who were patiently explaining their businesses and technologies to me last week hang in there. You are an inspiration and we’re counting on you.